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■^ij??. 


THE  LIBRARY 

OF 

THE  UNIVERSITY 

OF  CALIFORNIA 

LOS  ANGELES 

SCHOOL  OF  LAW 
GIFT  OF 

U-C.  L.  U. 


m.  ■■■■  ,  ^ '-' 


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PURE  OIL  TRUST 


vs. 


STANDARD  OIL  COMPANY, 


BEING 


The  Report  of  An  Investigation 


BY  THE 


United  States.  Industrial  Commission, 


Compiled  From  Private  and  Official  Sources 

By  The. Oil  City    Derrick, 

1899=1900. 


1901: 

DERRICK  PUBLISHING  CO.,  PRINTERS, 

OIL  CITY,  PA. 


„2 


P 


X 


^^  PREFACE. 


A  desire  for  fair  play  has  caused  the  compilation  of  this  volume. 

After  the  Industrial  Commission,  authorized  by  the  United  States  Con- 
gress by  an  act  approved  June  18,  1898,  had  got  fairly  started  in  its  work, 
the  commission  began  an  investigation  of  trusts  and  industrial  combinations. 
It  soon  became  evident  that  the  Standard  Oil  Company  was  to  be  the  chief 
subject  of  this  investigation.  Vice-Chairman  Thomas  W.  Phillips,  who  has 
amassed  a  large  fortune  in  the  oil  industry,  and  who  for  years  has  been  an 
active  competitor  of  the  Standard  Oil  Company,  presided  at  nearly  all  of  the 
meetings  of  the  commission  in  the  absence  of  Senator  Kyle,  the  chairman. 
It  will  be  remembered  that,  as  a  member  of  Congress,  Mr.  Phillips  introduced 
a  bill  which,  with  slight  modifications,  became  a  law,  by  which  the  Industrial 
Commission  was  authorized. 

The  Standard  Oil  Company,  realizing  that  a  selfish  incentive  naturally 
animated  its  competitors  in  the  oil  business,  who,  headed  by  Vice-Chairman 
Phillips,  were  to  attack  it  through  the  commission,  took  an  active  interest  in 
w-atching  the  proceedings  of  that  body  as  soon  as  the  investigation  of  trusts 
and  industrial  combinations  was  commenced.  In  order  that  it  might  be  fully 
informed  of  the  proceedings  it  made  arrangements  to  secure  a  stenographic 
report  of  the  testimony  taken  by  the  commission.  Apparently  it  was  the 
only  industrial  combination  that  so  carefully  looked  after  its  interests  on 
that  occasion,  and  it  did  so  because  it  thoroughly  understood  the  selfish 
motives  of  its  competitors. 

The  efforts  of  the  competitors  of  the  Standard  Oil  Company  to  injure 
that  company  resulted  in  a  farce.  Excepting  Attorney-General  Monnett,  of 
Ohio,  the  main  witnesses  who  testified  against  the  Standard  Oil  Company 
were  the  competitors  who  were  stockholders  in,  or  prominent  as  managers 
of,  the  Pure  Oil  Trust  of  New  Jersey;  discharged  and  disgruntled  employes 
and  men  who,  even  while  the  commission  was  holding  its  investigation,  were 
attempting  to  sell  their  oil  properties  to  the  Standard  at  extortionate  prices 
or  were  seeking  an  agreement  for  the  division  of  territory  in  order  to  get 
rid  of  competition.  Mr.  Archbold  testified  that  even  Mr.  Phillips,  vice- 
chairman  of  the  commission,  had  sought  officials  of  the  Standard  Oil  Com- 
pany for  the  purpose  of  making  an  agreement  with  them  for  a  division  of 
territory  for  the  sale  of  oil  by  the  Standard  and  the  Pure  Oil  Trust,  which 
was  clearly  in  restraint  of  trade  and  in  violation  of  the  Sherman  anti-trust 
law.  When  he  went  on  the  stand,  Mr.  Phillips  did  not  deny  that  he  had 
sought  such  an  agreement,  but  attempted  to  justify  his  act. 

A  large  number  of  producers  and  refiners  of  oil,  many  of  whom  were 
associated  with  Mr.  Phillips  in  business,  were  brought  before  the  commis- 
sion to  give  their  "testimony,"  which  in  almost  every  case,  was  an  attack 
on  the  Standard  Oil  Company  in  the  form  of  sensational  allegations,  most 
of  which  were  widely  circulated  through  the  public  press.  A  very  large 
portion  of  these  statements  were  in  the  nature  of  hearsay  testimony.  The 
larger  part  of  them  consisted  of  a  reiteration  of  testimony  that  had  been 
given  in  two  previous  investigations  on  the  subject  of  trusts,  one  by  the 
Hepburn  Committee,  authorized  by  the  Legislature  of  New  York  and  held 
in  New  York  City  in  1879-80,  and  another  before  the  Committee  on  Manufac- 
tures of  the  House  of  Representatives,  commonly  referred  to  as  the  Bacon 
Committee,  held  in  Washington,  D.  C.  during  1888.  A  great  deal  of  the  tes- 
timony that  had  been  submitted  in  the  State  of  Ohio  vs.  the  Standard  Oil 
Company  of  Ohio,  prosecuted  by  Attorney-General  Monnett,  of  Ohio,  was 
also  repeated. 


4  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

Those  whose  information  concerning  the  numerous  and  scurrilous 
charges  that  have  been  made  against  the  Standard  Oil  Company  is  based 
upon  detached  portions  of  testimony  they  have  read,  can  have  formed  but 
a  very  imperfect  idea  of  what  this  investigation  has  really  shown.  It  is  in 
order  that  this  class  of  persons,  who  may  be  interested  in  knowing  the  facts 
concerning  this  investigation  and  its  developments,  may  readily  inform 
themselves  on  this  subject  that  this  volume  has  been  compiled.  That  they 
may  not  be  burdened  by  the  reading  of  repetitions  and  unimportant  matter, 
some  of  the  testimony  has  been  eliminated  and  other  portions  have  been 
briefly  summarized.  Care  has  been  taken,  however,  to  give  the  testimony  of 
Messrs.  Thomas  W.  Phillips,  J.  W.  Lee  and  Lewis  Emery,  Jr.,  complete,  as 
these  were  the  most  prominent  witnesses  in  opposition  to  the  Standard  Oil 
Company,  who  should  have  made  out  a  "case"  against  that  company  if  any 
one  could  have  done  so.  This  compilation  is  based  upon  an  exceedingly 
complete  and  what  is  believed  to  be  an  extremely  accurate  stenographic 
report  made  by  Mr.  James  E.  Wilkinson,  of  Baltimore,  Md.,  who  is  recog- 
nized as  one  of  the  leading  stenographers  of  the  United  States. 

Those  who  are  interested  in  learning  more  regarding  the  attacks  that 
have  been  made  upon  the  Standard  Oil  Company  than  is  contained  in  this 
volume,  are  referred  to  the  records  of  the  two  investigations  and  the  court 
trial  referred  to  above,  as  well  as  to  the  official  report  of  the  Industrial 
Commission.  The  testimony  of  the  Industrial  Commission  was  edited, 
through  which  many  leading  questions  and  statements  by  commissioners 
during  the  progress  of  the  investigation  were  eliminated.  It  was  also  sub- 
mitted to  the  witnesses  for  their  correction  and  approval.  For  these  reasons 
the  ofiicial  report  and  the  report  contained  in  this  volume  will  be  found  to 
lack  uniformity  in  many  instances. 

There  have  also  been  included  in  this  volume  several  chapters  review- 
ing the  history  of  the  legislation  leading  up  to  the  formation  of  the  Indus- 
trial Commission,  and  some  statements  concerning  the  witnesses  who  testi- 
fied on  the  subject  of  the  oil  industry,  which  will  probably  be  read  with 
interest,  as  it  is  believed  they  will  tend  to  elucidate  the  general  subject  of 
the  investigation.  The  commission  introduced  an  innovation  in  the  pre- 
sentation of  the  testimony  it  secured  by  having  prepared  a  "review"  and  a 
"digest"  of  evidence  with  the  purpose  of  presenting  in  a  brief  form  the 
salient  features  of  the  investigation,  so  that  a  clear  idea  could  be  had  of  it 
without  the  labor  of  reading  the  testimony.  A  short  chapter  has  been 
devoted  to  showing  some  of  the  misrepresentations  contained  in  both  the 
"review"  and  the  "digest,"  both  of  which  will  be  found  untrustworthy  by 
anyone  wanting  to  secure  a  correct  understanding  of  the  testimony. 

This  volume  will  have  fulfilled  its  purpose  if  it  succeeds  in  inciting 
something  like  a  thorough  investigation  of  the  subject  to  which  it  is  devoted, 
in  place  of  that  cursory  consideration  from  which  opinions  are  often  formed 
on  a  partial  and  very  imperfect  knowledge  of  the  facts.  Doubtless  the 
Standard  Oil  Company  will  be  very  willing  to  abide  by  a  judgment  of  its 
case,  when  that  judgment  is  based  upon  a  complete  knowledge  of  all  facts 
that  have  been  brought  out  in  the  several  investigations  in  which  it  has 
figured  so  prominently.  The  investigator  is  warned  that  a  sound  judgment 
can  be  secured  on  this,  as  on  every  other  subject,  by  a  due  discrimination 
between  the  statements  of  facts  and  hearsay  testimony  and  assumptions 
that  are  so  vague  that  it  is  impossible  for  those  entertaining  them  to  cite 
any  foundation  for  their  opinions  other  than  their  suspicion. 

This  summary  of  the  evidence  in  relation  to  the  Standard  Oil  Company 
has  been  made  in  a  way  that  it  is  believed  will  give  the  reader  a  clear  idea 
of  the  whole  testimony,  without  the  labor  of  reading  much  that  is  unim- 
portant or  is  a  mere  repetition  of  statements. 

This  volume  is  the  result  of  serious  work  for  serious  men  who  really 
wish  to  learn  the  facts  relating  to  this  great  industry,  and  who  will  give  no 
heed  to  the  sensational  charges  of  unsuccessful  and  disgruntled  competitors, 
or  of  ambitious  demagogues,  when  wholly  lacking  evidence  of  their  truth. 


PRICES  or  CRUDEand  REFINED  OIL 

lA^A  m^7   /^^^  M^.<)  /fi7^  //?//   /^Z?  /fi7J  /fi74  /87S  /67^  /S77  /876  /S79  mo  /88I  /882  /883  m^  1885  ms  /887\/868  /889\/880  189/  /892  /893  /894  /89S  1896  /897  /898  /899  J900 

—  ^^------2                                                                                                                          •                                                            i      1   1   1      |;i|  1/-1I  II      II   1  1   M  1      1   M  1   1   M      III      III      111      IN      8  1   I      III      Mi      Ml      III      III 

::ii=f:vH^-^:i:i=::iii::i::i:i::i::i:::iii:i:i:±i:T=:=========i:.^ii 

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■    dremen 


PRICES  OF  CRUDE  AND  REFINED  PETROLEUM. 


DIAGRAM  SHOWING  COMPARISON  OF  PRICES  OF 
CRUDE  AND  REFINED  PETROLEUM. 

The  accompanying  diagram  was  prepared  by  Professor  J.  W.  Jenks, 
expert  of  the  Industrial  Commission,  and  appears  in  the  Review  of  Evidence 
which  accompanies  the  report  of  the  Industrial  Commission  on  the  subject 
of  Trusts  and  Industrial  Combinations  (Vol.  1,  p.  52).  This  diagram  shows 
that  the  prices  of  crude  and  refined  petroleum  have  run  in  substantially 
parallel  lines  from  1866  to  1900.  It  shows  that  when  the  price  of  crude  oil 
was  extremely  depressed  the  price  of  refined  oil  followed  it,  so  that  the 
consumer  at  all  times  had  the  benefit  of  low  prices  of  crude  oil.  It  shows 
that  the  Standard  Oil  Company,  as  a  refining  company,  was  not  benefited  by 
any  prevailing  low  price  of  oil  except  co  far  as  such  a  low  price  may  have 
increased  consumption.  The  Standard  Oil  Company  itself  being  a  large 
producer  of  oil  has  naturally  suffered  financial  loss  when  the  price  of  crude 
oil  has  been  depressed.  These  indisputable  facts  are  in  themselves  a  com- 
plete denial  of  the  charges  that  the  Standard  Oil  Company  has  sought  to 
depress  the  price  of  crude  oil  for  its  own  gain. 

The  following  foot  note  appears  in  the  industrial  report  (p.  47)  in  expla- 
nation of  the  data  from  which  this  diagram  was  prepared: 

"The  prices  for  crude  and  refined  oil  for  export  have  been  taken  from  the  Der- 
rick's Handbook  of  Petroleum,  with  the  exception  of  those  for  the  last  few  months, 
v/hich  have  been  furnished  by  the  Standard  Oil  Company.  The  prices  of  Standard 
White  illuminating:  oils  at  New  York,  Chicago  and  Cincinnati  have  been  furnished 
by  the  Standard  Oil  Company.  Prices  were  given  in  bulk,  and  2ii>  cents  per  gallon 
was  added  for  the  cost  of  the  barrel.  This  cost  of  the  barrel  would  of  course  vary 
slightly,  but  the  rule  of  2V^  cents  per  gallon  is  one  that  is  laid  down  in  the  Hand- 
book of  Petroleum,  and  is  probably  a  fair  general  aveiage.  The  prices  of  export 
oils  at  Bremen  were  taken  from  the  Handbook  for  the  earlier  period,  and  for  the 
last  few  months  have  been  furnished  by  the  Standard  Oil   Company." 


CHAPTER  L 
INTRODUCTION. 


Anyone  who  has  carefully  perused  the  testimony  given  before  the 
United  "states  Industrial  Commission  at  Washington,  D.  C,  in  relation  to  the 
Standard  Oil  Company  must  have  discovered  that  there  was  a  concensus 
of  opinion  on  the  part  of  almost  all  witnesses  who  referred  to  the  propor- 
tion of  traffic  in  refined  oil  handled  by  the  Standard,  that  that  company 
supplies  to-day  at  least  eighty  per  cent,  of  the  trade  of  this  country.  Mr. 
Archbold  gave  a  statistical  report  to  show  that  for  the  five  years  from  1894 
to  1898,  inclusive,  the  aggregate  percentage  of  all  business  done  by  the 
Standard  Oil  Company  was  eighty-two  and  three-tenths  as  against  their  com- 
petitors' seventeen  and  seven-tenths.  The  fact  that  will  interest  the  public 
is  the  means  that  have  been  pursued  in  order  to  bring  about  this  condition. 
If  it  is  shown  that  one  company  has  secured  even  100  per  cent,  of  a 
business  because  it  supplies  the  consumers  more  satisfactorily  than  any- 
one else,  no  one  has  been  injured  except  the  unsuccessful  competitors  who 
are  left  behind  in  the  race  for  trade.  Mr.  G.  Waldo  Smith,  president  of 
the  Wholesale  Grocers'  Association  of  New  York  and  vicinity,  testified  on 
June  12,  1899,  that  there  was  a  practical  monopoly  of  the  trade  in  baking 
powders  because  one  company  had  advertised  so  extensively  that  practically 
everybody  used  its  product.     Mr.  Smith  said; 

"The  Royal  Baking  Powder  is  a  good  deal  like  a  patent  medicine  that 
has  been  extensively  advertised:  that  monopoly  is  the  result  of  advertising 
and  not  combination.  They  made  the  people  believe,  by  persistent  adver- 
tising, that  their  baking  powder  was  the  only  baking  powder.  That  is  legiti- 
mate.    Others  have  tried  it  and  failed." 

It  is  difficult  to  imagine  how  a  law  could  be  framed  that  would  prevent 
fifty,  sevpnty-five  or  one  hundred  per  cent,  of  the  people  of  the  country 
from  buying  the  same  article,  or  would  prevent  them  from  buying  it  from  a 
single  producer.  But  there  was  a  long  series  of  criticism  on  the  part  of  the 
vice-chairman  of  the  commission  and  other  competitors  of  the  Standard  Oil 
Company  from  the  fact  that  they  had  been  unable,  during  a  number  of  years, 
to  successfully  compete  with  this  company  in  the  markets  of  the  world. 

In  th*^  case  of  the  oil  industry,  no  considerable  tariff  has  ever  been 
enacted  to  keep  out  of  this  country  foreign  competition,  and  neither  the  tariff 
act  of  1894  nor  of  1897  gave  that  industry  any  protection. 

The  officials  of  the  great  railroads  o^  the  United  States,  covering  the  sec- 
tion in  which  these  gentlemen  complained  they  were  unable  to  be  suc- 
cessful competitors,  as  well  as  practically  the  entire  country,  testified  before 
the  commission  that,  since  the  passage  of  the  interstate  commerce  act  in 
1887,  there  had  been  absolutely  no  discrimination  in  rates  in  the  handling 
of  oil,  so  that  any  shipper  might  transport  this  product  on  equal  terms  with 
any  other  shipper.  The  witnesses  who  appeared  against  the  Standard  Oil 
Company  laid  great  stress  upon  the  advantage  they  alleged  that  that  com- 
pany had  received  from  freight  rate  discriminations,  and.  practically  with- 
out exception,  these  witnesses  seemed  to  think  that  the  Standard  Oil  Com- 
pany had  every  railroad  of  the  United  States  under  its  control.  From  their 
remarks  one  would  judse  that  the  transportation  of  oil  was  the  great  sup- 
port of  the  railroad  systems  of  this  country.  The  fact  is  that  the  oil  which 
passes  over  the  railroads  is  infinitesimal  in  amount  when  compared  with 
the  entire  amount  of  freight  of  all  kinds  that  is  handled.  As  Mr.  Howard 
Page,  vice-president  of  the  Union  Tank  Line  Company,  testified,  "the  total 


INTRODUCTION.  7 

consumption  of  oil  in  tons  in  the  United  States  is  less  than  one-half  of  one 
per  cent,  of  the  total  tonnage  moved  by  the  railroads  of  the  United  States." 
This  statement  was  based  on  well-known  statistics  in  the  oil  industry  and 
the  official  record  of  Mr.  Edward  A.  Moseley,  secretary  of  the  Interstate 
Commerce  Commission.  These  figures  alone  indicate  that  the  railway  freight 
discrimination  bug-a-boo.  which  has  frightened  hysterical  people,  is  not  so 
tangible  as  many  witnesses,  who  ought  to  have  known  better,  endeavored 
to  impress  upon  the  public. 

The  impression  the  uninformed  reader  would  get  from  the  testimony 
of  the  competitors  of  the  Standard  Oil  Company  in  relation  to  the  practice 
of  railroads  in  making  special  contracts  with  shippers,  involving  freight 
rate  discriminations,  before  the  interstate  commerce  law  was  passed,  is 
that  these  discriminations  related  especially  to  the  oil  industry,  whereas 
the  fact  is  they  were  practiced  in  all  lines  of  business.  So  far  as  the  trans- 
portation of  oil  was  concerned,  it  would  be  as  reasonable  to  assume  that  one 
shipper  got  discriminatory  rates  as  well  as  another.  The  chief  reason  pre- 
sented by  the  competitors  of  the  Standard  Oil  Company  for  believing  that 
that  company  got  lower  freight  rates  than  themselves  was  the  fact  that  it 
was  successful  in  business  while  they  failed  in  many  instances  to  secure 
satisfactory  profits.  None  of  them,  apparently,  either  presumed,  believed 
or  suspected  that  they  were  troubled  with  that  well-known  ailment — ineffi- 
ciency. 

A  careful  and  comprehensive  review  of  all  the  testimonj''  that  has  been 
taken  before  the  Industrial  Commission  in  regard  to  the  oil  industry  will 
indicate  that  brains,  energy  and  persistent  effort,  that  have  been  made 
available  by  the  corporation  that  refines  and  distributes  most  of  the  oil  of 
the  country,  have  brought  about  the  conditions  complained  of.  The  vice- 
chairman,  who  complained  of  the  killing  competition  to  which  he  was  sub- 
jected, is  reputed  to  be  a  millionaire  several  times  over  and  to  have  made 
every  penny  of  his  money  in  the  oil  industry.  He  has  been  a  producer 
and  shipper  of  oil  for  a  third  of  a  century.  He  has  complained  that  con- 
ditions have  been  made  of  a  character  by  his  competitor  that  reduce  his 
profit  much  lower  than  it  should  have  been.  It  is  probable  that  very  few 
men  connected  with  the  Standard  Oil  Company  have  during  their  lifetimes 
accumulated  greater  wealth  than  has  come  to  him.  He  did  not  attempt  to 
testify  as  to  the  amount  of  profit  he  had  received  in  his  business,  but 
apparently  he  has  felt  that  the  millions  that  have  come  to  him  should 
have  been  doubled,  trebled  or  quadrupled,  and  considered  himself  a  poor 
man  compared  with  the  Croesus  he  might  have  been  had  he  received  what 
he  would  have  considered  to  be  "reasonable  profits."  Unquestionably  he 
could  not  have  received  greater  profits  unless  he  had  taken  them  from  the 
consumer,  and  that  could  be  done  in  no  way  except  to  have  increased  the 
price  of  oil. 

It  was  shown  by  the  testimony  that  the  proposition  of  Vice-Chairman 
Phillips,  made  to  the  Standard  Oil  Company,  by  which  he  desired  to  have 
the  Pure  Oil  Trust  and  the  Standard  Oil  Company  act  in  unison,  was 
promptly  rejected.  It  will  be  left  to  the  reader  to  judge  whether  such  an 
agreement  would  not  have  been  in  violation  of  the  Sherman  anti-trust  act. 

The  Standard  Oil  Company,  it  has  been  claimed,  has  been  the  main 
instrument  in  bringing  about  the  low  price  of  oil.  which,  after  being  refined, 
was  retailed  practically  all  over  the  world,  at  the  time  of  the  investiga- 
tion, at  about  ten  cents,  or  less,  per  gallon.  It  has  been  unfortunate  for  the 
vice-chairman  of  the  commission  and  others  who  have  interests  in  common 
with  him.  that  this  reduction  in  the  price  of  oil  has  been  brought  about,  but 
surely  the  great  mass  of  people  throughout  the  country  can  feel  little 
sympathy  with  this  millionaire  in  his  failure  to  secure  what  he  would  term 
"reasonable  profits."  The  people  are  to-day  having  the  benefit  of  cheap  oil 
and  are  likely  to  oppose  any  effort  that  may  be  made,  from  whatever 
source  it  may  come,  for  the  purpose  of  making  them  pay  a  greater  tribute  to 
the  oil  industry. 

There  is  one  very  peculiar  fact  in  connection  with  the  investigations  of 
the  Standard  Oil  Company.  After  testimony  had  been  presented  to  the  com- 
mission from  the  people  best  qualified  to  give  it,  showing  that  the  Standard 


8  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

had  enjoyed  no  peculiar  privileges  beyond  its  own  ability  to  do  business  at  a 
percentage  of  profit  that  it  has  been  claimed  has  been  ruinous  to  its  com- 
petitors, no  effort  was  made  to  solicit  testimony  by  which  the  methods  of 
the  Standard  Oil  Company  and  the  Pure  Oil  Trust,  the  members  of  which 
are  commonly  referred  to  as  the  "independents,"  could  be  compared.  If  the 
commission  had  seen  fit  to  go  into  this  question,  and  if  the  companies  in- 
volved in  it  had  been  willing  to  describe  their  methods  of  handling  and 
refining  oil,  it  would  undoubtedly  have  been  shown  that  the  organization  of 
the  Standard  and  the  manner  in  which  it  conducts  its  business  are  re- 
sponsible for  its  ability  to  supply  the  country  with  oil  at  a  very  low  rate  per 
gallon.  It  is  hardly  possible  that  superior  methods  of  this  character  would 
be  condemned  by  any  fair-minded  man.  As  they  are  the  basis  of  all  suc- 
cessful business  enterprises,  it  is  but  reasonable  that  they  should  receive 
the  commendation  of  all  men,  especially  of  those  who  are  obliged  to  purchase 
and  use  the  products  of  crude  oil.  A  comparison  of  this  kind  was  evidently 
not  to  the  taste  of  the  so-called  "independents." 

Another  interesting  feature  of  the  testimony  is  the  fact  that  no  effort 
was  made  on  the  part  of  the  vice-chairman,  when  the  oil  industry  was  being 
inquired  into,  to  discuss  the  question  of  wages  paid  by  the  various  oil  pro- 
ducers and  refiners  of  the  country  and  the  conditions  under  which  their 
employes  labor.  If  the  main  purpose  of  Vice-Chairman  Phillips  was  to 
inquire  into  the  conditions  of  labor  in  this  country,  it  is  indeed  strange  that 
he  should  have  entirely  overlooked  the  subject  of  labor  in  the  oil  industry. 
Whether  or  not  the  so-called  independents  feared  the  developments  that 
might  have  grown  out  of  the  exposure  of  their  own  methods  of  hiring  help, 
and  of  the  wages  paid  by  them,  can  only  be  surmised.  Their  attack  on  the 
Standard  Oil  Company  has  been  so  methodical  that  it  does  not  appear 
probable  that  their  omissions  were  a  result  of  oversight.  It  is  not  intended 
to  suggest  that  the  conditions  under  which  their  employes  work  are  to 
any  appreciable  extent  different  from  those  of  the  Standard  Oil  Company, 
as  the  labor  market  in  the  oil  industry  would  naturally  control  their  dealings 
with  their  employes.  This  omission  in  the  series  of  their  studied  attacks 
on  the  Standard  Oil  Company  must  be  interpreted  as  being  at  least  extremely 
complimentary  to  that  company,  so  far  as  its  relations  with  the  labor  it 
employs  are  concerned.  The  fact  that  the  Industrial  Commission  was 
formed  for  the  avowed  purpose  of  inquiring  into  conditions  of  labor  should 
not  be  lost  sight  of,  Mr.  Phillips  in  his  speech  in  Congress  urging  the 
passage  of  the  bill,  dwelling  almost  entirely  upon  the  need  of  such  an 
inquiry. 

Prices  of  labor  in  the  oil  industry  have  .remained  practically  the  same 
for  the  last  twenty  years,  so  that  one  who  is  seeking  to  ascertain  the  way 
in  which  the  price  of  oil  has  been  cheapened  must  look  beyond  the  wages 
of  workmen.  Cheaper  processes  of  manufacturing,  and  transportation  and 
economies  of  utilizing  as  by-products  what  was  formerly  thrown  away  as 
refuse,  will  explain  much  of  the  lowering  of  prices.  Crude  oil  has  been 
subjected  to  the  laws  of  supply  and  demand  as  have  all  other  products,  and 
the  abundant  supply  has  taken  from  that  industry  the  enormous  profits  that 
were  secured  when  there  was  a  production  that  could  but  partially  supply 
the  market.  As  in  all  other  lines  of  industry,  prospective  gain  has  allured  to 
that  business  enough  capital  and  energy  to  bring  it  on  the  same  level  of 
profit  of  other  industries  and  improved  drilling  and  means  for  pumping  oil 
have  also  further  cheapened  the  product  in  the  market  without  deducting 
from  the  profit  of  the  operators.  But  in  whatever  varied  ways  this  cheap- 
ened profit  has  been  attained  it  has  clearly  not  come  from  a  cut  in  wages, 
and  the  fact  that  Vice-Chairman  Phillips  and  his  associates  made  no  attempt 
to  show  a  dei)rossion  in  wages  as  one  cause  of  this  condition  is  ample  evi- 
dence that  they  had  no  basis  for  an  attack  on  their  competitor  on  that  ac- 
count. On  the  other  hand,  they  acknowledged,  and  they  could  not  have  dis- 
puted the  fact,  that  the  Standard  Oil  Company  paid  good  wages. 

The  concerted  attack  by  the  competitors  of  the  Standard  Oil  Company 
on  that  corporation  was  begun  May  11,  189S.  when  Mr.  James  W.  Lee.  the 
president  of  the  Pure  Oil  Trust,  and  for  many  years  the  attorney  for  com- 
petitors of  the  Standard  Oil  Company,  appeared  before  the  Industrial  Com- 


FORMATION  OF   THE   COMMISSION.  9 

mission.  One  week  later  he  was  followed  by  Mr.  F.  S.  Monnett,  attorney- 
general  of  the  State  of  Ohio;  Mr.  Monnett  having  a  short  time  previously 
been  the  prosecuting  attorney  in  the  case  of  the  State  of  Ohio  vs.  the 
Standard  Oil  Company  of  Ohio  et  al.  The  following  appeared  in  the  same 
interest  on  the  dates  indicated:  June  8,  Mr.  W.  H.  Clark,  of  Newark,  Ohio, 
a  former  employee  of  the  Standard  Oil  Company,  who  was  shown  by  the 
testimony  of  Mr.  B.  A.  Mathews  and  Mr.  Archbold  to  have  been  discharged 
from  the  company  because  he  was  short  in  his  accounts;  June  9,  Mr.  T.  F. 
Davis,  of  Marietta,  Ohio,  oil  refiner,  who  endeavored  to  sell  his  refinery 
to  the  Standard  Oil  Company  immediately  after  he  had  given  his  testimony; 
Mr.  T.  B.  Westgate,  of  Titusville,  Pa.,  oil  refiner;  June  17,  Mr.  M.  L.  Lock- 
wood;  September  9,  Mr.  Thomas  W.  Phillips,  vice-chairman  of  the  Industrial 
Commission;  September  11  and  12,  Mr.  Lewis  Emery,  Jr.,  of  Bradford,  Pa., 
producer  and  refiner  of  oil;  November  11,  Mr.  George  Rice,  of  Marietta, 
Ohio,  producer  and  refiner  of  oil.  All  of  these  names  will  be  familiar  to 
those  who  have  read  testimony  given  in  former  investigations,  in  which 
the  affairs  of  the  Standard  Oil  Company  were  the  subject  for  consideration. 

In  addition  to  the  above,  the  following  witnesses  before  the  commission 
were  asked  questions  which  bore  upon  the  affairs  of  the  Standard  Oil  Com- 
pany: Mr.  P.  C.  Boyle,  Oil  City,  Pa.,  statistician  on  the  oil  industry  and 
editor  and  proprietor  of  The  Oil  City  Derrick,  representing  the  oil  interest 
in  general;  Mr.  F.  B.  Thurber,  of  New  York,  president  of  the  United  States 
Export  Association;  Mr.  Henry  O.  Havemeyer,  of  New  York  City,  president 
American  Sugar  Refining  Company;  Mr.  G.  Waldo  Smith,  of  Long  Island, 
New  York,  president  Wholesale  Grocers'  Association  of  New  York  and 
vicinity;  Mr.  Martin  R.  Cook,  of  New  York  City,  wholesale  liquor  dealer; 
Mr.  Charles  C.  Clarke,  of  Peoria,  111.,  distiller;  Mr.  George  J.  Kindel,  of 
Denver,  Colo.,  manufacturer  of  bedding,  etc.;  Mr.  Samuel  Spencer,  of  New 
York  City,  president  Southern  Railway;  Mr.  Martin  A.  Knapp  and  Mr.  C. 
A.  Prouty,  Interstate  Commerce  Commissioners,  and  Mr.  P.  E.  Dowe,  of  New 
York  City,  president  Commercial  Travelers'  National  League. 

Those  who  were  called  to  testify  in  behalf  of  the  Standard  Oil  Com- 
pany, and  who  replied  to  many  of  the  statements  that  had  been  made  con- 
cerning that  company,  were:  Mr.  John  D.  Archbold,  New  York  City,  vice- 
president  of  the  Standard  Oil  Company  of  New  York;  Mr.  H.  H.  Rogers, 
New  York  City,  vice-president  of  the  Standard  Oil  Company  of  New  Jersey; 
Mr.  B.  A.  Mathews,  of  Marietta,  Ohio,  manacrer  of  the  Standard  Oil  Com- 
pany for  central  and  southern  Ohio,  and  Mr.  Howard  Page,  New  York 
City,  vice-president  of  the  Union  Tank  Line  Company. 

Mr.  John  D.  Rockefeller,  president,  and  Mr.  S.  C.  T.  Dodd,  solicitor  of 
the  Standard  Oil  Company  of  New  Jersey,  submitted  to  the  commission  in 
writing  replies  to  specific  questions  which   were   furnished  them. 


CHAPTER  II 
FORMATION  OF  THE  COMMISSION. 

It  was  in  the  Fifty-third  Congress  that  Representative  Thomas  W. 
Phillips,  of  Pennsylvania,  introduced  a  bill  which,  in  its  essential  features, 
was  similar  to  the  act  finally  signed  by  President  McKinley,  under  the  au- 
thority of  which  the  United  States  Industrial  Commission  was  formed  and 
began  its  work. 

Not  until  the  closing  hours  of  the  Fifty-fourth  Congress  was  this  bill 
passed.  It  was  taken  to  President  Cleveland  a  few  minutes  before  12 
o'clock,  but,  having  no  time  to  examine  the  measure,  he  refused  to  sign  it. 
In  accordance  with  his  policy  that  required  the  enactment  of  legislation 
sufficiently  early  to  permit  him  to  examine  its  provisions. 


10  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

The  action  of  the  Fifty-fourth  Congress  had  resulted  in  making  the  bill 
acceptable  to  Senators  and  Representatives  who  had  at  first  objected  to  its 
passage  for  one  reason  or  another.  It  was  again  taken  up  in  the  Fifty- 
fifth  Congress  and  enacted  into  law  in  the  following  form: 

AN  ACT  AUTHORIZING  THE  APPOINTMENT  OF  A  NON-PARTISAN 
COMMISSION  TO  COLLATE  INFORMATION  AND  TO  CONSIDER 
AND  RECOMMEND  LEGISLATION  TO  MEET  THE  PROBLEMS  PRE- 
SENTED BY   LABOR,  AGRICULTURE,  AND  CAPITAL. 

Be  it  enacted  by  the  Senate  and  House  of  Representatives  of  the  United 
States  of  America  in  Congress  assembled,  That  a  commission  is  hereby 
created,  to  be  called  the  "Industrial  Commission,"  to  be  composed  as  follows: 
Five  members  of  the  Senate,  to  be  appointed  by  the  presiding  officer  thereof; 
five  members  of  the  House  of  Representatives,  to  be  appointed  by  the 
Speaker,  and  nine  other  persons,  who  shall  fairly  represent  the  different 
industrial  employments,  to  be  appointed  by  the  President,  by  and  with  the 
advice  and  consent  of  the  Senate. 

Sec.  2.  That  it  shall  be  the  duty  of  this  commission  to  investigate 
questions  pertaining  to  immigration,  to  labor,  to  agriculture,  to  manufactur- 
ing, and  to  business,  and  to  report  to  Congress  and  to  suggest  such  legisla- 
tion as  it  may  deem  best  upon  these  subjects. 

Sec.  3.  That  it  shall  furnish  such  information  and  suggest  such  laws 
as  may  be  made  a  basis  for  uniform  legislation  by  the  various  States  of  the 
Union,  in  order  to  harmonize  conflicting  interests  and  to  be  equitable  to  the 
laborer,  the  employer,  the  producer,  and  the  consumer. 

Sec.  4.  That  the  commission  shall  give  reasonable  time  for  hearings, 
if  deemed  necessary,  and  if  necessary  it  may  appoint  a  sub-commission  or 
sub-commissions  of  its  own  members  to  make  investigation  in  any  part  of 
the  United  States,  and  it  shall  be  allowed  actual  necessary  expenses  for 
the  same.  It  shall  have  the  authority  to  send  for  persons  and  papers  and 
to  administer  oaths  and  affirmations.  All  necessary  expenses,  including 
clerks,  stenographers,  messengers,  rent  for  place  of  meeting,  and  printing 
and  stationery,  shall  be  paid  from  any  money  in  the  treasury  not  otherwise 
appropriated;  however,  not  to  exceed  fifty  thousand  dollars  per  annum  for 
expenditures  under  this  section. 

Sec.  .5.  That  it  may  report  from  time  to  time  to  the  Congress  of  the 
United  States,  and  shall  at  the  conclusion  of  its  labors  submit  a  final  report. 

Sec.  6.  That  the  term  of  the  commission  shall  be  two  years.  The  salary 
of  each  member  of  this  commission  appointed  by  the  President  shall  be 
three  thousand  six  hundred  dollars  per  annum.  Each  member  of  the  com- 
mission shall  be  allowed  actual  traveling  expenses. 

Sec.  7.  That  any  vacancies  occurring  in  the  commission  by  reason 
of  death,  disability,  or  from  any  other  cause  shall  be  filled  by  appointment 
by  the  officer  and  in  the  same  manner  as  was  the  member  whose  retirement 
from  the  commission  creates  the  vacancy.  That  in  case  the  term  of  a 
Senator  or  Representative  expires  while  a  member  of  this  commission,  said 
Senator  or  Representative  shall  not  thereby  cease  to  be  a  member  of  said 
commission,  but  shall  serve  until  the  expiration  of  the  term  for  which  he 
was  appointed,  drawing  pay  from  the  time  his  term  as  Senator  or  Repre- 
sentative expires,  at  the  same  salary  as  those  members  of  the  commission 
appointed  by  the  President  of  the  United  States. 

Sec.  8.  That  a  sum  sufficient  to  carry  out  the  provisions  of  this  act 
is  hereby  annropriated  out  of  any  money  in  the  treasury  of  the  United 
States  not  otherwise  appropriated. 

Approved  .Tune  18,  1898. 

The  second  section  of  the  above  act  makes  it  "the  duty  of  this  com- 
mission to  investigate  questions  pertaining  to  immigration,  to  labor,  to 
agriculture,  to  manufacturing,  and  to  business,  and  to  report  to  Congress 
and  to  suggest  such  legislation  as  it  may  deem  best  upon  these  subjects." 

The  scope  of  the  investigation  provided  for  in  this  section,  when  given 
a  broad  interpretation,  is  practically  limitless,  but  if  anyone  will  read  the 
debates  that  occurred  in  Congress  when  bills  to  authorize  the  formation  of 


VICE-CHAIRMAN  PHILLIPS'   SPEECH,  11 

the  Industrial  Commission  were  under  consideration,  it  will  be  made  plain 
to  them  that  the  one  paramount  reason  that  was  urged  upon  Congress  for 
this  legislation  was  the  necessity  to  provide  a  means  to  discover  the  cause 
of  discontenfamong  workingmen  that  had  prevailed  in  some  sections  of  the 
country.  This  discontent  was  also  widespread  among  the  farmers  in  some 
States,  and  among  workingmen  it  had  caused  numerous  strikes  and  had 
led  to  acts  of  lawlessness  that  seemed  to  threaten  widespread  disturbance 
of  the  business  interests  of  the  United  States.  It  was  desired  to  ascertain 
the  cause  that  led  to  these  troubles,  and,  if  possible,  to  suggest  legislation 
that  might  improve  the  condition  of  workingmen  and  bring  about  a  much 
desired  harmony  between  capital  and  labor.  In  the  minds  of  members  of 
Congress  and  of  prominent  labor  leaders  throughout  the  country,  this  was 
practically  the  entire  purpose  of  the  bill,  if  the  purpose  of  its  supporters 
may  be  judged  by  their  utterances.  Labor  organizations  were  anxious  for 
the  enactment  of  this  law,  and  their  officials  not  only  secured  the  signing 
of  numerous  petitions  to  Congress  praying  for  its  passage,  but  they  went  to 
Washington  and  used  their  influence  to  secure  the  passage  of  the  measure. 

The  argument  contained  in  the  speech  of  Representative  Phillips,  de- 
livered in  the  House  of  Representatives  May  21.  1896,  in  favor  of  his  bill 
was  apparently  a  complete  representation  of  his  views  on  this  question,  but 
as  an  indication  of  the  course  he  was  to  pursue  in  the  investigation,  after 
it  was  once  under  way.  it  was  extremely  misleading  and  unsatisfactory. 
One  cannot  read  that  speech  without  being  impressed  with  the  idea  that  the 
chief  purpose  of  its  author  was  to  relieve  struggling  humanity,  as  represented 
by  the  wage  earners  of  the  country.  Throughout  it  is  an  appeal  for  a 
better  treatment  of  workingmen.  There  is  a  hint  at  the  necessity  for  pro- 
tecting the.  people  against  unjust  discriminations  and  against  unfair  com- 
petition, whatever  these  terms  may  mean,  but  there  was  no  indication  of  the 
course  he  pursued  when  the  work  of  the  commission  had  been  started. 

In  emphasizing  the  purpose  of  the  law  as  being  in  favor  of  the  working 
people,  Mr.  Phillips,  in  circulating  his  own  speech,  appended  endorsements 
of  the  bill,  written  by  Samuel  Gompers,  president  of  the  American  Federa- 
tion of  Labor;  H.  C.  Demming,  secretary  executive  committee.  National 
Farmers'  Alliance  and  Industrial  Union;  J.  W.  Boden,  chairman,  C.  R.  White, 
E.  M.  Warden,  conference  committee  National  Farmers'  Alliance  and  In- 
dustrial Union;  J.  R.  Sovereign,  general  master  workman,  M.  J.  Bishop, 
G.  W.  F.,  John  W.  Hayes,  G.  S.  T.,  C.  A.  French.  T.  B.  McGuire,  .1.  M. 
Kenny  and  H.  B.  Martin,  general  executive  board  Knights  of  Labor;  B.  E. 
Clarke.  Order  of  Railway  Conductors;  F.  P.  Sargent.  Brotherhood  of  Loco- 
motive Firemen;  P.  H.  Morrissey.  Brotherhood  of  Railroad  Trainmen;  P.  M. 
Arthur.  Brotherhood  of  Locomotive  Engineers,  and  W.  V.  Powell,  Order  of 
Railroad  Telegraphers. 

MR.  PHILLIPS'  SPEECH. 

In  advocacy  of  the  appointment  of  an  Industrial  Commission,  delivered  in 
the  House  of  Representatives  May  21,  1896,  which  he  has  widely  circulated, 
follows: 

"Mr.  Chairman.  The  bill  (H.  R.  6119)  now  before  the  House  is  de- 
signed to  better  our  industrial  system.  No  demand  of  the  people  in  any  age 
has  met  with  such  general  response  as  the  demand  for  a  better  industrial 
and  social  or.ganization  of  society. 

"No  sentiment  has  attracted  such  widespread  attention  or  has  had  such 
rapid  growth.  Our  government  is  republican;  and  to  be  effectual  and 
durable  it  must  have  proper  regard  for  all  departments  of  human  activity. 
Legislation  must  have  just  respect  for  the  wage  earner  and  for  the  wage 
payer,  for  the  producer  and  consumer.  This  government  cannot  endure  if 
more  than  one-half  of  its  people  are  discontented,  distressed  and  suffering, 
for  it  is  a  government  of  all  and  by  all. 

"Mr.  Chairman,  this  bill  calls  attention  to  the  fundamental  principle  of 
our  government — the  equality  of  man — and  seeks  a  more  equitable  dis- 
tribution of  the  burdens  and  benefits  of  our  free  government.  While  it  is 
not  the  function  of  the  State  to  guarantee  individual  happiness,   it  is  its 


12  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

function  to  guarantee  each  individual  the  right  to  pursue  happiness,  and 
so  enact  laws  that  one  class  may  not  be  compelled  of  necessity  to  work 
solely  for  another  class,  regardless  of  their  personal  comfort  and  improve- 
ment. Rights  do  not  belong  to  one  class  and  duties  to  another.  Physical, 
intellectual  and  moral  ability  can  not  be  made  equal,  but  each  capacity  may 
be  met;  each  cup,  be  it  large  or  small,  may  be  filled.  Circumstances  can  not 
be  made  equal,  but  law  can  be  adapted  to  circumstances. 

"Mr.  Chairman,  the  danger  to  this  government  is  not  external,  but 
internal.  In  the  progress  of  human  society  the  battles  of  the  world  are  shift- 
ing from  conflicts  with  nations  to  a  conflict  within  nations  for  better  govern- 
ment and  more  equitable  laws.  We  must  recognize  the  fact  that  more  are 
now  peacefully  organized  and  enlisted  in  the  cause  of  industrial  equity 
than  in  all  the  armies  of  the  world.  The  people  of  civilized  nations  will  not 
always  continue  to  flght  for  national  honor  and  supremacy  while  their  in- 
dividual rights  are  not  protected  within  the  nation.  National  glory  must 
henceforth  be  based  more  and  more  upon  the  prosperity  and  happiness  of 
the  individual  citizen.  After  more  than  six  thousand  years  of  experience  the 
people  are  beginning  to  learn  that  government  belongs  to  them:  that  they 
are  not  owned  by  the  government,  but  that  they  own  the  government,  and 
that  it  must  respect  their  rights  by  meeting  their  just  demands. 

"If  laws  are  derived  from  the  governed,  they  should  meet  the  just  de- 
mands of  all  the  governed.  This  Nation  took  the  most  advanced  stand  in 
civilization,  and  is  the  best  prepared  to  meet  the  industrial  issues  of  to-day 
by  building  on  the  foundation  it  laid  more  than  one  hundred  years  ago  by 
conforming  law  to  its  declared  principles  of  right,  freedom,  and  equa'ity. 
and  thus  organize  our  social  and  industrial  system  upon  a  more  just  and 
equitable  basis  than  has  yet  obtained  in  the  world. 

"Mr.  Chairman,  in  entering  upon  the  discussion  of  the  subject  matter 
of  this  bill  I  wish  to  make  three  observations  in  regard  to  man,  which  are 
stated  in  the  first  chapters  of  Genesis. 

"First,  the  unity  of  the  race  and  equality  of  man  was  shown  in  crea- 
tion; God  created  man  and  gave  him  dominion  as  man.  He  was  to  'subdue 
the  earth'  and  'have  dominion  over  the  fish  of  the  sea.  over  the  fowls  of  the 
air,  and  over  every  living  thing  that  moveth  upon  the  earth.'  But  he  was  not 
given  dominion   over  his   fellowman. 

"Second,  before  God  created  man  it  was  said:  'And  there  was  not  a  man 
to  till  the  ground.' 

"In  the  third  place,  man  was  told  by  the  Creator:  'In  the  sweat  of  thy 
face  Shalt  thou  eat  bread  till  thou  return  unto  the  ground  '  To  all,  therefore, 
who  believe  in  the  Bible  account  of  creation,  which  I  believe  is  also  in  strict 
accord  with  science,  fact,  and  history,  these  three  things  are  indisputable: 

"First — That  when  God  created  man,  he  gave  him  dominion  as  man. 
not  over  his  fellowman,  luit  over  beast  and  bird  and  fish:  over  all  animate 
nature   below   him. 

"Second — That  he  was  to  till  the  soil  as  his  chief  occupation. 

"Third — That   his   life   was   to  be   sustained   by  labor. 

"All  this  agrees  with  reason;  shows  equality  in  creation;  that  sus- 
tenance comes  from  the  ground;  that  labor  is  the  normal  condition  of  man; 
and  it  is  a  fact  that  no  man  enters  into  rest  unless  it  is  upon  his  own  labor 
or  the  labor  of  others.  The  government,  therefore,  that  does  not  strive  to 
meet  these  three  great  cardinal  principles  of  reason  and  revelation  in  the 
highest  possible  degree  will  perish  from  the  earth. 

"Mr.  Chairman,  this  bill  provides  for  the  appointment  of  a  non-partisan 
commission,  to  be  composed  of  five  members  repi'esentatives  of  labor,  five 
representatives  of  agriculture,  five  of  manufacturing,  and  five  of  business. 
The  importance  of  labor  to  our  being  and  well-being  can  not  be  overstated. 
Labor  is  one  of  the  foundation  principles  upon  which  organized  society 
rests.  All  kinds  of  labor  is  necessary,  from  digging  in  the  ditch  to  measur- 
ing space  and  counting  the  stars,  yet  the  lower  forms  of  labor  are  more 
intimately  connected  with  our  existence  and  needs.  The  most  despised  is 
often  the  most  useful.  The  man  who  digs  the  foundation  is  more  important 
to  the  structure  than  he  who  frescoes  its  walls.  Without  the  grading  of  the 
roadbed  there  would  be  no  stockholders,  no  locomotive,  or  railroad  president. 


VICE-CHAIRMAN  PHILLIPS'   SPEECH.  13 

If  all  manual  labor  were  to  stop,  if  all  wage  earners  were  to  cease  work, 
there  would  be  no  value  in  property  and  a  large  part  of  the  race  would 
perish. 

"That  our  relations  are  most  intimately  bound  up  with  the  wage  earner 
is  shown  by  the  many  strikes  and  lockouts  in  recent  years  which  have  en- 
tailed great  suffering  and  loss  of  property,  as  well  as  the  sacrifice  of  life. 

"I  sumbit  a  summary  from  Hon.  Carroll  D.  Wright,  Commissioner  of 
Labor,  on  the  subject  of  strikes  and  lockouts  from  January  1,  1881,  to  June 
30,  1894,  being  a  period  of  thirteen  and  a  half  years.  For  this  period  it  will 
be  seen  that  there  were  14,390  strikes;  that  there  were  69,167  establishments 
involved;    that  there  were  3,794,406  employees  thrown  out  of  employment: 

"It  will  also  be  seen  that  the  loss  to  strikers   was    $163,807,866 

"For  the  same  period  in  lockouts  the  loss  to  employes  was  26,t585,.516 

"Assistance  to  strikers  by  labor  organizations   10,914,406 

"Assistance  in  lockouts , 2,524,298 

"Total  loss  to  employes $203,932,076 

"Loss  to  employers  for  the  same  period  by  reason   of  strikes $  82,590,386 

"Loss  to  employers  for  the  same  period  by  reason  of  lockouts 12,235,451 

"Total  loss  to  employers $  94,825,837 

"Total  loss  to  both  employes  and  employers $298,757,913 

"These  figures  represent  the  actual  loss  to  the  parties  engaged,  and 
do  not  represent  the  enormous  loss  which  incidentally  came  to  the  com- 
munity by  reason  of  such  disturbances;  but  the  injury  to  society,  the  de- 
moralization, suffering,  and  death,  can  not  be  estimated.  All  admit  that 
something  must  be  done,  and  a  commission  composed  of  those  directly  in- 
terested in  this  great  labor  problem,  in  my  judgment,  is  the  proper  means 
through  which  to  seek  the  cause  of  this  violent  disturbance  and  propose 
a  remedy,  as  our  legislative  bodies  are  not  meeting  the  issue.  Again,  Mr. 
Chairman,  the  agricultural  industry  is  the  most  important  of  all  industries. 
All  civilized  life  depends  upon  the  products  of  the  soil.  All  food  and 
clothing  come  from  the  soil;  yet  this  most  important  industry  is  greatly 
depressed.  The  constant  settling  in  the  value  of  farm  products  and  farm 
lands  in  recent  years  in  a  large  portion  of  the  United  States  has  made 
great  discontent  and  unrest  among  farmers.  Many  of  them  can  not  hope  to 
have  their  children  succeed  them  in  husbandry,  and  they  are  exhausting 
their  limited  means  to  fit  them  for  pursuits  in  the  crowded  town  or  city. 

"In  1870  the  value  of  farm  lands  in  the  United  States  was $  9,262,803,861 

"In  the  same  year  the  total  value  of  all  property    in    the    LTnited    States 

was  30,068,000,000 

"The  value  of  farm  lands  was,  therefore,  about  33  per  cent,  of  the 
value  of  all  property. 

"In  1880  the  value  of  farm  lands  in  the  United  States  was  $10,197,096,776 

"In  the   same  vear  the   total  value   of  all  property  in  the  United  States 

was  43,600,000,000 

"The  value  of  farm  lands  was,  therefore,  only  about  24  per  cent,  of  the 
value  of  property  in  1880. 

"In  1890  the  value  of  farm  lands  in  the  United   States   was $13,279,252,649 

"In  the  same  year  the  total  value  of  all  iiruperty   in   the   United   States 

was  65,000,006,000 

"The  value  of  farm  lands  was,  therefore,  only  about  19  per  cent,  of  the 
value  of  property  in  this  later  period.  Thus  in  twenty  years  the  farm  lands 
settled  from  33  to  19  per  cent,  as  compared  with  the  total  value  of  all 
property,  and  this  notwithstanding  the  opening  up  of  millions  of  acres  rich 
in  soil. 

"These  are  startling  figures  when  we  consider  that  the  value  of  farm 
lands  is  not  increasing  in  due  proportion  to  all  other  property;  that  agricul- 
ture is  the  foundation  of  all  other  industries,  and  that  40  per  cent,  of  the 
toiling  people  are  engaged  in  tilling  the  soil. 


14  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

•'No  country  can  prosper  when  the  agricultural  interest  is  suffering. 
This  commission  is  needed  by  the  farmers  not  only  because  of  these  facts, 
but  on  account  of  their  growing  discontent  as  shown  by  their  various  or- 
ganizations and  protests  against  unequal  burdens  and  discriminating  laws. 
Even  if  the  agriculturists  had  nothing  of  which  to  complain  or  to  adjust, 
they  are  needed  in  such  a  conference  as  this  to  aid  in  seeking  a  way  out  of 
the  manifold  labor  troubles  which  so  vitally  affect  their  interests  as  well  as 
those  of  the  whole  population. 

"In  regard  to  the  importance  of  the  manufacturing  industry,  I  will  state 
that  in  1890  the  number  of  persons  10  years  of  age  and  upwards  en- 
gaged in  all  occupations  was 22,735,661 

"Of  this  number  there  were  engaged  in  manufacturing  4,712,622 

"Of  this  number  there  were  engaged  in  agriculture   8,303,000 

"The  total  wage  receivers  of  all  classes  were   14,920.525 

"The   number   of  manufacturing   establishments  in  1890  was 355,415 

"Capital  employed  was   $6,139,397,785 

"Total  number  of  employes  was 4,476,884 

"Total  wages  paid  was $2,283,516,529 

"Cost  of  materials  used  was $5,162,044,076 

"Total  value  of  manufactured  products  was  $9,372,437,283 

"It  will  be  seen  trom  this  statement  that  of  the  22,735,661  of  all  occu- 
pations 4,712,622  were  engaged  in  manufacturing  and  mechanical  industries. 
More  people  are  engaged  in  this  industry  than  in  any  other,  with  the  ex- 
ception of  farming.  The  greatest  per  cent  of  actual  loss  by  reason  of  strikes 
and  lockouts  comes  to  those  engaged  in  manufacturing  and  their  employes. 
Great  good  should  ultimate  to  those  engaged  in  this  industry  by  wise  con- 
sideration of  the  violent  disturbances  which  so  vitally  affect  all  concerned. 

"This  commission  is  designed  also  to  benefit  all  other  business  pur- 
suits. The  disturbed  condition  of  affairs  has  entailed  great  loss  upon  the 
business  community.  The  loss  of  $298,757,913,  as  shown  in  table  quoted, 
in  thirteen  and  one-half  years  to  the  laborers  and  the  employers  of  labor 
is  but  a  fractional  part  of  the  loss  sustained  by  transporters,  merchants, 
and  others  engaged  in  business  pursuits.  Business  men  have  and  will  con- 
tinue to  suffer  great  depreciations  in  value  and  increasing  losses  unless  a 
better  adjustment  is  made.  Business  men  need  and  business  interests 
require  a  just  and  more  satisfactory  settlement  of  differences  with  those 
with  whom  they  deal  and  upon  whose  labor  and  products  successful  busi- 
ness must  depend.  The  better  labor  is  protected  in  all  its  rights  the  greater 
will  be  the  security  for  earnings.  No  intelligent  business  man  can  oppose 
any  just  and  fair  effort  to  harmonize  conflicting  interests  in  a  legal  and 
peaceable  way,  for  all  such  must  know  and  see  from  the  history  of  the  recent 
past  that  the  great  industrial  problem  may  shortly  be  met  by  violence  if 
not  worked  out  in  peace  by  law. 

"Mr.  Chairman,  this  bill  is  designed  to  give  an  impartial  hearing  to 
those  who  complain  of  discriminating  laws  and  unequal  burdens.  It  is  ex- 
pected that  it  will  be  composed  of  the  ablest  and  best  of  each  class  named. 
It  will  bring  into  conference  representative  men  of  labor,  agriculture,  manu- 
facturing, and  business,  thus  bringing  together  the  aggrieved  and  those 
against  whom  the  grievance  is  made,  whose  duty  it  will  be  to  consider  the 
disturbing  causes  and  recommend  laws  looking  toward  a  more  just  distribu- 
tion of  the  burdens  and  benefits  of  our  free  government.  It  is  designed 
to  be  impartial,  non-partisan,  seeking  exact  facts  and  conditions,  and  to  con- 
form legislation  to  the  foundation  principles  of  our  government — to  place 
all  men  on  an  equal  footing  before  the  law. 

"I  believe  such  a  commission  the  most  practical  way  to  meet  the  issue. 
Our  National  and  State  legislative  bodies  are  not  so  constituted  as  to  give 
proper  time  to  the  consideration  of  the  industrial  questions  presented  in  this 
bill.  They  have  not  mot  and  are  not  meeting  them,  as  discords,  strikes  and 
violence  are  constantly  increasing.  These  bodies  are  not  made  up  equally 
of  representative  men,  such  as  are  proposed  by  this  bill;  they  are  besieged 
by   men   lobbying  for   special   privileges,   while   none  are   lobbying  for  the 


VICE-CHAIRMAN   PHILLIPS'    SPEECH.  15 

good  of  all.  If,  therefore,  such  representative  men  as  are  proposed — men 
who  suffer  most  from  the  great  conflict  of  interest — can  not  agree  in  recom- 
mending more  equitable  laws  looking  to  a  peaceful  solution  of  the  question 
unsolved,  it  can  not  be  solved  by  a  free  government  in  a  peaceful  way. 

"Mr.  Chairman,  I  believe  Congress  is  the  proper  body  to  authorize  the 
appointment  of  such  a  commission,  as  it  is  composed  of  members  coming 
from  all  parts  of  every  State.  However  jealous  we  may  be  of  the  rights 
of  the  States,  no  one  can  object  to  such  a  commission  making  recommenda- 
tions to  Congress  and  furnishing  information  to  the  States  which  may  be 
of  the  greatest  value. 

"Again,  the  commission  could  utilize  a  large  amount  of  statistical  infor- 
mation gathered  at  great  cost  by  various  agricultural  and  labor  organiza- 
tions, and  especially  could  use  to  great  advantage  the  information  collected 
by  the  various  labor  committees  appointed  in  recent  years,  both  State  and 
National,  in  our  own  country,  and  by  other  nations  most  advanced  in  civili- 
zation. The  facts  so  ably  compiled  by  the  Hon.  Carroll  D.  Wright,  Commis- 
sioner of  Labor  for  the  United  States,  would  be  of  incalculable  value.  This, 
together  with  the  findings  of  similar  commissions  appointed  by  32  of  our 
different  States,  could  be  utilized.  It  would  also  have  the  benefit  of  the 
completed  work  of  the  English  royal  commission  of  labor,  and  also  the  pro- 
gressing work  of  the  higher  council  of  labor  established  in  France,  and  the 
higher  council  of  labor  appointed  in  Belgium.  Not  only  would  it  have  the 
benefit  of  all  such  recently  accumulated  facts,  but  it  would  be  in  position  to 
study  the  best  laws  of  civilization  and  the  best  thoughts  of  the  age,  and 
thus  be  able  to  recommend  more  equitable  laws  than  now  exist,  looking  to 
the  solution  of  the  most  vital  and  pressing  political  and  economic  ques- 
tions of  the  age. 

"Labor  statistical  bureaus  are  of  recent  origin,  and  were  first  estab- 
lished in  the  United  States — the  first  one  in  Massachusetts  in  1869.  They 
have  since  been  established  in  32  of  our  States.  The  first  Commissioner  of 
Labor,  the  Hon.  Carroll  D.  Wright,  was  appointed  under  the  general  govern- 
ment in  1885.  The  English  royal  labor  commission  was  appointed  by  royal 
wawant  dated  April  2,  1891,  and  was  composed  of  27  members.  The  fifth 
and  final  report  of  this  commission  was  made  to  both  houses  of  Parliament 
in  June,  1894.  The  German  commission  of  labor  statistics  was  appointed  in 
1891,  and  it  consists  of  14  members,  168  civil  servants,  and  84  assistants. 
The  higher  council  of  labor  was  established  in  France  in  1891.  It  consists 
of  50  members,  chosen  from  among  manufacturers,  workingmen  and  persons 
well  informed  upon  economics  and  social  questions.  The  Belgians'  higher 
council  of  labor  was  appointed  in  1892.  It  consists  of  48  members,  chosen  in 
equal  numbers  from  workingmen,  employers  and  specialists  in  economic 
science.  Both  these  latter  are  authorized  to  examine  into  and  recommend 
legislation.  These  foreign  commissions  are  cited  as  precedents  and  to  show 
that  civilized  nations  are  progressing  along  the  line  of  our  declared  princi- 
ples of  equality  which  are  recalled  by  this  bill. 

"Mr.  Chairman,  after  referring  to  these  foreign  commissions  I  wish  to 
state  that  some  of  the  most  important  results  in  our  own  history  have  been 
accomplished  through  the  instrumentality  of  commissions,  notable  among 
which  was  the  production  of  the  Constitution  of  the  United  States.  On  the 
28th  day  of  March,  1785,  the  joint  commissioners  of  the  States  of  Virginia 
and  Maryland  met  at  Mount  Vernon,  under  the  auspices  of  Washington. 
These  commissioners  prepared  the  terms  of  a  compact  between  the  two 
States  for  the  jurisdiction  over  the  waters  of  Chesapeake  bay  and  the  rivers 
that  were  common  to  both  States,  and  conforming  to  the  wishes  of  Wash- 
ington, they  requested  Pennsylvania  to  grant  the  free  use  of  the  branches  of 
the  Ohio  river  within  its  limits  for  establishing  the  connection  between  that 
river  and  the  Potomac.  The  preliminary  object  of  the  commission  being 
fulfilled,  they  took  up  matters  of  general  policy  and  recommended  to  the 
two  States  uniform  duties  on  imports,  a  uniformity  of  commercial  regula- 
tions, and  a  uniformity  of  currency.  George  Mason  was  charged  with  a 
report  of  their  doings  to  the  Legislature  of  his  State — Virginia. 

"In  pursuance  with  this,  the  Legislature  of  Virginia  invited  all  the  States 
to  appoint  commissioners  to  meet  at  Annapolis  on  the  first  Monday  in  Sep- 


16  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

tember,  1786.  This  convention  became  the  ground  of  hope  of  the  Nation. 
No  State  north  of  New  York  was  represented,  or  south  of  Delaware,  save 
Virginia.  It  was  a  meeting  of  central  States,  and  it  resulted  in  calling  a 
convention  of  all  the  States  to  meet  at  Philadelphia  on  the  second  Monday 
of  May,  1787.  The  result  of  this  convention  of  commissioners  was  the  form- 
ing of  the  Constitution  of  the  United  States,  which  saved  and  perpetuated 
the  Union. 

"There  was  great  disturbance  and  distress  then,  and  Congress  and  the 
States  were  powerless  to  meet  the  situation.  It  should  not,  therefore,  be 
forgotten  that  it  was  a  commission,  an  advisory  body  and  not  a  legislative 
one,  that  wrought  this  great  change  and  perpetuated  this  government. 

"Now,  under  the  Constitution,  as  then,  under  the  Articles  of  Confedera- 
tion, neither  Congress  nor  the  State  governments  are  meeting  the  disturbed 
condition  of  our  new  industrial  environments,  and  the  only  road  open  to  us 
now,  as  then,  is  through  a  commission,  an  advisory  body. 

"Mr.  Chairman,  the  Committee  on  Labor  did  not  consider  the  commis- 
sion too  large  to  represent  a  continent  such  as  ours,  with  its  vast  and  varied 
industries.  The  difference  in  climate,  the  difference  between  plain  and 
mountain,  the  difference  between  North  and  South,  East  and  West,  give  rise 
to  great  industries  in  one  section  that  are  not  well  understood  in  another; 
all  of  which  should  have  representative  men  serve  on  the  commission. 
Even  the  number  provided  for  will  not  represent  all,  but  it  is  believed  that 
it  will  have  reasonable  knowledge  of  all  the  great  pursuits  of  our  country, 
and  will  be  in  full  sympathy  with  all,  so  as  to  hear  and  recommend  for  the 
greatest  good  for  the  greatest  number.     (Applause.) 

"Again,  the  Committee  on  Labor  do  not  think  the  appropriation  required 
by  this  bill  too  large  to  secure  and  compensate  such  representative  men  as 
it  requires.  While  the  government  is  appropriating  millions  of  dollars  for 
internal  improvements,  for  material  development,  for  defense  on  land  and 
sea.  it  should  not  hesitate  to  grant  such  a  comparatively  small  sum  to  inves- 
tigate the  industrial  questions  and  recommend  some  remedial  legislation  for 
its  industrial  classes  to  prevent  violent  disturbances  which  cause  so  many 
million  dollars  of  loss  to  the  people.  ♦ 

"Mr.  Chairman,  the  question  is  one  of  equality.  The  equality  of  man 
was  shown  in  creation,  affirmed  in  redemption  and  first  declared  as  the 
foundation  of  human  government  in  the  new  world  120  years  ago.  This  is 
the  greatest  political  question  of  the  Nation  and  of  the  world.  The  barbar- 
ous ages  are  passed,  feudalism  is  gone,  serfdom  has  been  destroyed,  and 
slavery  has  perished  from  the  earth,  but  the  question  of  equality  has  come 
to  the  front  and  is  pressing  for  solution  with  irresistible  power. 

"The  history  of  the  world  teaches  that  God  holds  nations  responsible 
to  the  standard  they  set  up.  Our  standard  was  the  highest  erected  since  the 
dawn  of  time,  yet  it  must  now  be  apparent  that  this  Nation  has  been  as 
false  to  its  declared  principle  of  equality  as  it  was  to  its  declared  principle 
of  freedom.     (Applause.) 

"Mr.  Chairman,  when  this  Nation  was  founded  and  equality  declared 
there  were  only  3,000,000  of  inhabitants  who  owned  this  continent,  capable 
of  sustaining  in  comfort  one-half  of  the  inhabitants  of  the  civilized  globe; 
yet  in  a  hundred  years  we  have  exploited  it  and  distributed  its  land  and 
wealth  most  unequally.  We  have  wantonly  destroyed  many  of  its  forests, 
its  animals,  fish,  and  birds,  instead  of  utilizing  them  for  the  benefit  of  man, 
and  are  now  trying  to  replace  them.  We  have  unequally  divided  the  public 
domain;  have  been  prodigal  of  land,  giving  it  by  the  millions  of  acres  for 
development.  This  waste  fitly  ended  in  a  great  scramble  for  the  last  public 
lands  in  Oklahoma,  where  the  strong  bore  down  the  weak  and  the  man  with 
the  swiftest  liorse  took  possession,  not  in  right,  justice  or  mercy,  but  by 
physical  force  and  endurance. 

"Mr.  Chairman,  with  a  continent  vast  in  extent,  incomparably  rich  in 
soil  and  mineral,  teeming  with  vegetable  and  animal  life;  with  its  mechani- 
cally multiplied  labor  forces,  capable  of  sustaining  hundreds  of  millions  of 
inhabitants;  and  yet,  with  only  65,000,000,  there  have  been  and  are  yet  large 
numbers  out  of  work,  seeking  employment  and  finding  none;  many  needy, 
hungry,  and  poor;  all  this  with  granaries  and  storehouses  full  of  all  the  com- 


VICE-CHAIRMAN  PHILLIPS'   SPEECH.  17 

modities  of  life;  yet  millions  of  laborers  can  not  earn  and  have  no  money 
to  buy.  We  have  thus  recently  presented  the  anomalous  condition  that  in 
the  times  of  the  greatest  abundance  we  have  had  the  greatest  want.  This 
can  only  be  accounted  for  upon  the  ground  of  unequal  opportunities,  unequal 
privileges,  and  unequal  distribution. 

"We  have  been  as  brave  and  patriotic  as  any  people;  we  have  fought 
three  foreign  wars  and  the  gi-eatest  civil  war  in  recorded  time;  we  have 
been  as  generous  to  forgive  as  we  were  brave  in  battle;  yet  in  business  we 
have  been  prodigal  of  our  inheritance  and  unjust  in  its  distribution. 

"Mr.  Chairman,  the  massing  of  capital  and  labor  which  has  been  caused 
by  the  discovery  and  use  of  steam  and  electric  power  and  invention  of  mod- 
ern machinery  has  brought  us  to  face  a  new  industrial  problem  of  the  great- 
est magnitude.  History  furnishes  us  with  no  precedent  or  example  for  its 
solution.  This  age  is  one  of  concentration,  corporation,  and  centralization. 
It  is  an  age  of  organization;  and  if  organized  capital  deals  with  labor  it 
must  expect  to  deal  with  organized  labor.  Organization  on  the  one  hand 
implies  organization  on  the  other,  so  that  there  may  be  two  equal  parties 
to  the  agreement,  otherwise  the  first  party  would  dictate  and  the  other  sub- 
mit. Ours  is  the  contract  system.  While  this  is  the  best  order  of  society 
that  has  yet  obtained  in  the  world,  yet  men  will  not  continue  to  contract  as 
freemen  while  believing  that  they  must  submit  as  slaves. 

"There  must  be  two  parties  to  the  contract. 

"Industrial  corporations  largely  control  the  production  and  exchange 
of  this  continent.  Massed  capital  and  massed  labor  are  largely  controlling 
production,  manufactures,  and  transportation,  the  very  sources  of  supply 
and  demand  upon  which  all  depend.  These  are  now  so  frequently  in  conflict 
that  all  the  relations  of  life  are  being  disturbed.  Society  has  rights  which 
must  be  respected  by  both  these  contending  forces,  and  its  good  order  and 
peace  demand  a  settlement  which  should  be  equitable,  just  and  durable. 
(Applause.) 

"Again,  this  centralization  of  capital  and  labor  has  produced  a  world- 
wide war  of  competition  in  which  labor  suffers,  fortunes  are  wrecked,  and 
homes  are  destroyed.  Honorable  competition  is  considered  the  life  of  trade, 
but  the  weapons  which  are  more  and  more  being  used  are  cruel;  they  are 
reduction  of  wages  and  adulteration  and  counterfeiting.  Low  bids  are  made 
to  secure  large  contracts,  with  no  other  hope  to  meet  them  than  by  the 
reduction  in  wages,  and  labor  has  lost  in  all  these  battles.  Another  weapon 
in  this  competitive  battle  is  adulteration.  This  occurs  in  medicine,  food  and 
raiment.  There  are  adulterations  and  counterfeiting  in  all  we  eat,  drink 
and  wear,  thus  endangering  health,  comfort  and  life.  While  we  have  ade- 
quate laws  to  punish  the  counterfeiting  of  money,  the  more  dangerous  and 
damaging  counterfeiting  of  the  commodities  of  life  goes  unpimished.  If 
passing  pewter  for  silver  or  brass  for  gold  is  punished,  the  other  should  be 
more  severely  punished.  The  first  means  only  loss  in  value,  the  latter 
means  loss  in  value  and  endangers  life  and  health.  Dishonest  men  engaged 
in  the  war  for  gain  grow  rich  in  selling  counterfeit  commodities,  while 
many  honest  competitors  fail  and  their  fortunes  are  wrecked. 

"Mr.  Chairman,  the  war  of  competition,  as  now  waged,  instead  of  being 
the  life  of  trade,  too  frequently  means  the  death  of  one  of  the  contending 
parties  or  a  combination  in  which  the  people  lose.  Property  won  by  fair 
competition  or  honest  toil  will  be  respected;  but  won  by  special  privileges, 
unjust  competition,  or  fraud  in  adulteration  can  not  be  respected,  and  the 
time  is  fast  approaching  when  such  methods  of  acquisition  will  not  be  tol- 
erated. The  holder  of  such  property  can  not  atone  in  acts  of  charity,  return- 
ing in  part  to  the  few  that  which  he  has  wrongfully  taken  from  the  many. 
(Applause.)  Philanthropy  is  one  of  the  noblest  traits  of  man;  but  it  should 
be  expended  in  teaching,  in  lifting  up  the  race,  in  caring  for  the  disabled, 
the  suffering,  and  the  helpless.  All  that  others  require  is  an  equal  chance 
in  the  race  of  life,  with  none  to  hinder  and  none  to  handicap.  They  require 
justice,  not  charity.     (Applause.) 

"Mr.  Chairman,  it  is  most  apparent  that  our  laws  have  in  no  sense 
kept  pace  with  the  new  discoveries,  inventions  and  developments  of  the  age. 
The  world  has  made  more  advancement  in  physical  development  and  scien- 


18  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

tific  discovery  in  the  last  100  years  than  it  did  in  the  preceding  6.000.  While 
the  founders  of  this  Republic  declared  new  principles,  yet  the  laws  they 
adopted  were  largely  taken  from  a  monarchy,  and  belonged  to  a  darker  age, 
when  labor  was  oppressed,  had  no  voice  in  the  government,  and  had  not 
even  the  right  of  organization.  We  thus  put  our  'new  wine  into  old  bottles,' 
and  they  are  bursting. 

"We  say,  'Government  exists  for  the  people.'  yet  we  adopted  the  laws  of 
those  who  say  that  'the  people  exist  for  the  government.'  New  conditions 
confront  us  on  every  hand,  in  the  concentration  of  capital  and  organized 
labor,  in  new  improvements,  in  the  instruments  of  husbandry,  in  the  mode 
of  manufacturing,  transportation,  travel  and  communication.  All  these  have 
been  revolutionized  within  a  generation.  We  have  been  offering  premiums 
for  inventions,  discovery  and  development,  for  labor-saving  machines  and 
devices  of  all  kinds,  until  we  have  changed  the  whole  order  of  industrial 
pursuits,  of  production  and  distributioa.  While  we  have  had  thousands 
inventing  and  discovering,  we  have  offered  no  pi-emiums  for  talent  or 
energy;  have  had  no  men  studying  these  new  conditions  and  adjusting  laws 
to  our  new  environments;  hence  there  is  friction,  discontent  and  violence, 
destroying  peace,  property  and  life. 

"Max  Muller  has  stated  that  the  word  'mankind'  is  not  found  in  human 
language  before  Christ.  There  was  nothing  in  language  to  express  the  kin- 
ship of  the  race.  It  was  Mede,  Persian.  Grecian.  Roman,  bond  and  free.  But 
since  the  human  race  has  learned  its  kinship  and  the  word  'mankind'  has 
expressed  this  relation — this  brotherhood — the  laws  of  society  must  more 
and  more  recognize  the  obligations  and  rights  gi'owing  out  of  this  relation. 
Our  government  is  one  government,  our  body  politic  being  one  body;  when, 
therefore,  any  'one  member  suffers,  all  members  suffer  with  it.'  When  a 
number  of  the  members  of  the  human  body  suffer,  and  are  not  speedily 
healed,  the  body  dies;  so  eventually  will  the  body  politic  die  if  many  mem- 
bers suffer.  By  not  caring  for  others  we  injure  ourselves,  as.  for  example, 
poverty  and  the  want  of  sanitary  conditions  breed  physical  disease.  This  is 
true  in  a  community,  in  a  nation,  and  in  the  world.  Even  the  world  is  bound 
together  by  ties  of  humanity  which  may  not  be  disregarded  without  injury. 
Pestilence  follows  famine.  This  was  recently  demonstrated  by  the  outbreak 
of  cholera  in  Russia,  which  caused  many  deaths  in  other  nations,  and  for  a 
time  affected  the  commerce  of  the  world.  If  a  small  portion  of  the  loss 
sustained  by  other  nations  had  been  spent  in  promptly  relieving  want,  and 
caring  for  the  afflicted  in  Russia,  millions  of  money  would  have  been  saved, 
and  the  angel  of  death  would  not  have  spread  its  wings  over  the  world.  It 
must  not  be  forgotten  that  in  our  body  politic  when  one  member  suffers  all 
the  members  suffer. 

"In  the  last  analysis  of  human  government  it  will  be  found  that  it  must 
be  based  upon  principles  which  meet  the  highest  wants  and  guarantee  the 
best  good  of  all.  in  view  of  our  common  origin,  common  interests  and  com- 
mon destiny.  No  self-government  can  exist  without  a  community  of  inter- 
ests. Equality  can  not  be  denied  nor  favors  granted.  Every  man  according 
to  his  ability  must  contribute  part,  otherwise  he  becomes  a  privileged  per- 
son.* No  man  can  obtain  true  success  who  lives  and  acts  solely  for  self.  A 
purely  selfish  existence  is  worse  than  no  existence.  The  highest  happiness 
is  to  be  and  to  do  for  others,  and  no  government  of  the  people  and  for  the 
people  can  fulfil  its  mission  unless  it  has  constantly  in  view  the  highest 
good  of  all.  We,  in  this  self-government,  have  plighted  faith  to  each  other. 
Every  loyal  citizen  must  be  protected  in  all  his  rights,  because  he  is  a  citizen 
and  a  part  of  this  government.  No  discrimination  in  favor  of  any  individual, 
company,  or  class  can  be  tolerated  in  such  a  government,  yet  the  cry  of 
discrimination  comes  to  us  from  every  State  and  district  over  the  whole 
continent,  and  it  demands  prompt  consideration  and  just  action.  (Applause.) 

"Mr.  Chairman,  the  Fifty-third  Congress  spent  the  larger  part  of  two 
sessions  discussing  the  silver  question  and  the  tariff  issue,  and  a  consider- 
able portion  of  this  session  has  been  spent  discussing  the  same  subjects. 
These  two  questions,  important  as  they  are,  constitute  only  a  part  of  the 
great  industrial  issues;  yet  upon  this  fractional  part  Congress  has  con- 
sumed all  this  time,  leaving  the  greater  needs  of  the  people  unanswered. 


VICE-CHAIRMAN  PHILLIPS'   SPEECH.  19 

It  will  be  found  that  when  this  labor  question — the  industrial  issue — equality, 
which  is  the  final  problem  of  the  world — is  understood,  that  tariff  and  the 
coinage  of  silver  are  only  a  small  pait  of  it.  In  fact,  we  have  been  doing 
like  the  Pharisees  of  old.  'Tithing  mint,  anise,  and  cummin,'  and  have  omitted 
the  weightier  matter  of  the  law,  'judgment,  mercy  and  faith.'  'These  we 
ought  to  have  done,  and  not  left  the  others  undone.'  As  important  as  tithes, 
tariff,  or  silver  may  be,  they  are  not  all-important.  The  laborer  and  agi'icul- 
turist  are  not  organizing  and  protesting  on  account  of  the  coinage  of  silver 
or  the  tariff  issue,  but  on  a  question  of  right;  and  right,  like  truth,  is  eternal 
and  will  prevail.     The  levying  of  tariff  will  not  settle  it. 

"Protection  against  the  product  of  the  underpaid  labor  of  Europe  can 
never  settle  the  question  of  equality  and  just  distribution  among  our  people. 
This  has  been  demonstrated  in  both  tariff  and  free-trade  countries.  In 
European  countries,  which  are  not  disturbed  by  tariff  agitation  or  the  free 
coinage  of  silver,  we  find  the  industrial  question  to  the  front  and  threaten- 
ing the  very  existence  of  nations.  In  all  our  discussions  how  often  have  we 
heard  the  rights  of  the  laborer,  the  farmer,  the  manufacturer,  and  business 
man  spoken  of  except  in  connection  with  tariff  and  free  trade  or  the  free 
coinage  of  silver?  Yet  their  rights  are  superior  to  both,  and  the  disturbed 
condition  of  the  country  can  not  be  settled  by  the  adjustment  of  these  ques- 
tions. I  believe  in  protection,  and  have  advocated  it  in  this  House  upon 
both  moral  and  economic  grounds.  I  believe  in  bimetallism;  in  the  widest 
possible  use  of  silver  with  safety  to  our  business  Interests,  and  that  all  dol- 
lars should  be  equal  in  value,  but  do  not  believe  in  either  one  or  both  of 
these  measures  as  a  cure  for  all  the  ills  of  society.  I  do  not,  therefore, 
believe  in  'cure-alls,'  but  do  believe  in  'all  cures.'     (Applause.) 

"Again,  too  much  of  our  law  is  made  up  of  compromise  measures.  All 
compromise  laws,  from  the  Missouri  Compromise  to  the  present  time,  if  not 
in  all  time  and  in  all  nations,  have  been  disappointing,  if  not  disastrous.  If 
there  be  any  great  compromise  law  in  nature,  scientists  have  not  yet  discov- 
ered it.  If  there  be  any  great  compromise  law  in  the  Bible,  theologians 
have  not  yet  expounded  it.  We  cannot  compromise  truth  or  principle,  facts  or 
figures.  If  there  be  no  great  compromise  principle  in  nature,  reason,  math- 
ematics, or  revelation,  compromises  should  not  enter  so  largely  into  our  law. 

"I  believe  that  in  the  last  analysis  of  this  industrial  problem,  in  view  of 
our  common  origin,  interests,  and  destiny,  the  golden  rule  will  be  its  solu- 
tion, and  that  a  large  per  cent  of  existing  laws  will  be  stricken  from  the 
records  by  inserting,  'All  things  whatsoever  ye  would  that  men  should  do 
to  you,  do  ye  even  so  to  them.'  This  is  in  strict  accord  with  our  declared 
principles  of  freedom  and  equality,  and  we  must  return  and  build  again 
upon  this  everlasting  foundation  of  justice,  mercy  and  right. 

"Mr.  Chairman,  the  rights  of  woman  must  be  more  fully  recognized  in 
the  future  than  they  have  been  in  the  past.  She  is  constantly  entering  new 
industrial  fields  and  meeting  their  requirements  with  fidelity  and  ability. 
Her  advancement  in  intellectual  and  moral  pursuits  is  without  a  parallel  in 
history.  She  is  beginning  to  dominate  along  all  the  lines  that  lead  to  the 
betterment  of  the  race.  She  has  built  and  endowed  more  institutions  of 
benevolence  and  charity  for  the  relief  of  want  and  suffering  in  the  past  .50 
years  than  were  established  by  both  sexes  in  all  precedins:  time.  Yet,  not- 
withstanding all  this,  many  of  her  sex  still  toil  in  sweat-shops,  fighting  an 
uneven  battle  for  child  and  home  with  avarice  and  greed.  This  blot  upon 
civilization  must  be  removed,  and  woman's  rights  and  influence  be  recog- 
nized in  any  future  movement  for  the  betterment  of  our  industrial  system. 
(Applause.) 

"The  requirements  of  this  enlishtened  age  for  a  better  industrial  and 
social  system  must  be  met.  Too  many  of  the  toiling  millions  are  not  prop- 
erly housed,  fed.  clothed  and  educated. 

"They  must  have  homes,  not  hovels:  must  have  proper  food,  clothing, 
education;  must,  in  our  unlimited  fields  of  industry,  have  a  chance  to  sow 
and  reap  and  rest  after  toil;  must  share  in  the  comforts  of  life,  if  they 
endure  its  burdens. 

"Mr.  Chairman,  it  is  painful  to  live  in  a  land  of  such  bounty  and  see 
so  much  suffering.     It  is  distressing  to  feast  while  so  many  are  hungry;   to 


20  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

be  clothed  in  comfort  while  many  are  clad  in  scanty  garments  or  rags;  to 
be  sheltered  in  pleasant  homes  while  so  many  live  in  hovels;  to  meet  dis- 
tress on  every  hand  and  be  unable  to  relieve  it.  Individual  effort  can  accom- 
plish but  little;  only  by  united  effort,  upon  principles  of  humanity  and  by 
doing  unto  others  as  we  would  have  them  do  unto  us.  can  our  government 
be  established  upon  a  foundation  which  no  storm  can  move. 

"Mr.  Chairman,  all  this  can  be  done  and  more;  not  out  of  our  abun- 
dance, but  out  of  our  superabundance.  This  is  sufficient  to  meet  every 
physical  want  and  relieve  all  distress  that  comes  from  man's  inhumanity 
to  man. 

"Mr.  Chairman,  while  this  bill  seeks  to  meet  the  just  demands  of  all 
classes,  it  must,  however,  be  borne  in  mind  that  this  is  not  a  class  govern- 
ment, not  a  government  of  laborers,  farmers,  manufacturers,  transporters, 
or  business  men,  but  is  a  government  of  the  people.  No  one  class  estab- 
lished this  government  in  eight  years  of  war;  no  one  class  saved  it  in  four 
years  of  rebellion,  and  no  one  class  can  ever  govern  it  unless  it  be  by 
despotic  rule. 

"Mr.  Chairman,  as  this  Nation  was  the  first  on  earth  to  declare  the  true 
principles  of  government,  my  greatest  desire  is  that  it  shall  be  true  to  these 
principles  and  go  on  winning  new  fame  and  glory,  through  the  ages,  and 
that  wherever  its  flag  floats  on  sea  or  land  it  may  be  the  symbol  not  only  of 
freedom,  but  of  equality.     (Loud  applause.) 

"I  wish  to  call  attention  to  the  general  desire  of  the  people,  especially 
of  the  labor  and  farm  interest  of  our  country,  in  favor  of  this  measure,  as 
shown  by  petitions,  resolutions,  and  letters  addressed  to  the  Labor  Commit- 
tee of  the  last  Congress,  and  also  to  the  Labor  Committee  of  this  Congress, 
some  of  which  I  append: 

"  "New  York,  January  7,  1S95. 

"  'My  Dear  Sir— It  is  with  more  than  ordinary  pleasure  I  note  that  House  bill 
7756  has  been  referred  to  the  Committee  on  Labor,  of  which  you  are  the  lionored 
chairman,  and  that  the  prospects  are  good  for  a  favoral^le  report  from  the  commit- 
tee to  the  House.  ^ 

"  'In  my  report  as  president  of  the  American  Federalion  of  Labor,  to  the  frjur- 
teenth  annual  convention,  recently  held  at  Denver,  Col.,  I  took  occasion  to  say  tlie 
following  in  reference  to  the  bill:  , 

"  '  "A  bill  was  introduced  by  the  Hon.  Thomas  W.  Phillips  in  the  House  for  the 
purpose  of  creating  a  commission  to  be  appointed  by  the  President,  for  the  jiur- 
pose  of  inquiring  into  the  condition  of  industry  and  to  what  extent  the  people  liave 
been  deprived  of  the  rights  guaranteed  by  the  CoiiStitution  of  the  United  States  and 
the  Declaration  of  Independence.  The  bill  prescribes  that  representatives  from  or- 
ganized labor,  business  men  and  farmers  shall  be  appointed. 

"  '  "Tile  executive  council  endorsed  the  bill  and  organized  labor  generally  ap- 
proved it,  forwarding  resolutions  to  their  respective  Congressmen  and  Senators 
certifying  to  that  effect.  It  is  desirable  that  the  bill  before  its  final  passage  should 
receive  the  consideration  of  this  convention  to  say  whether  any  amendments  may 
be  required. 

"  '  "Copies  of  the  bill  will  be  laid  before  the  appropriate  committee  to  which 
this  subject  may  be  referred." 

"  'The  subject  matter  was  referred  to  the  committee  on  president's  report,  which 
subsequently  reciuested  that  a  special  committee  be  appointed  for  the  purpose 
of  expressing  the  sentiments  of  the  convention  thereon.  The  special  committee 
reported  in  favor  of  the  bill  and  recommended  its  endorsement  by  the  convention. 
It  also  made  the  following  recommendations: 

"  '  "We  would  also  recommend  that,  in  case  the  said  bill  becomes  a  law,  all 
matters  Indorsed  by  this  body  requiring  Congressional  action  shall  be  submitted  to 
the  icpresentatives  of  labor  provided  for  in  the  bill,  and  that  efforts  be  put  forth  by 
the  t-xectUive  council  to  s^-cure  the  appointment  of  union  men  as  such  representa- 
tives. 

"  '  "We  would  further  recommend  that  all  budi.'S  affiliated  with  the  American 
Federation  of  Labor  petition  their  respective  Senators  and  Representatives  in  Con- 
gress to  vote  for  the  passage  of  the  above-named  measure." 

"  'The  report  of  the  committee,  I  take  pleasure  in  saying,  was  adopted  by  the 
convention  by  an  overwhelming  majority. 

"  'In  all  likelihood  I  may  be  in  Washingt(jn  during  the  coming  week,  and  if  I 
am  I  shall  deem  it  botli  a  pleasure  as  well  as  a  duty  to  call  upon  you  in  connection 
with  this  bill  and  other  measures  in  which  the  organized  wage  workers  of  our 
cotuitrv  are  interested.  "  'Truly  yours, 

"  'SAMUEL  GOMPERS. 
"  'Hon.   Lawrence   K.   McCann.   Chairman  Committee  on  Labor,  House  of  Represent- 
atives, Washington,  D.  C 


VICE-CHAIRMAN  PHILLIPS'   SPEECH.  21 

"  'Philadelphia,  Pa.,  December  14,  1894. 

"  'Sir— Understanding-  that  your  committee  have  now  under  consideration  H.  R. 
7756,  introduced  by  Congressman  PhiUips,  of  Pennsylvania,  being  "A  bill  authorizing 
the  appointment  of  a  non-partisan  commission  to  collate  information  and  to  con- 
sider and  recommend  legislation  to  meet  the  problem  presented  by  labor,  agriculture 
and  capital,"  I  beg  leave  to  offer  my  personal  and  official  indorsement  of  the  propo- 
sitions therein  contained.  It  is  not  possible  witliin  the  prescribed  limits  of  a  letter 
to  g've  all  my  reasons  therefor,  but  suffice  to  say  for  the  present  that  it  seems  to 
me  this  would  be  a  practicable  way  not  only  of  securing  the  best  information  as  a 
basis  for  the  making  of  laws  conserving  the  interests  of  all  classes,  but  would,  to  a 
considerable  extent,  do  away  with  the  necessity  for  various  organizations  of  labor, 
capital  and  agriculture  sending  committees  to  Washington  to  influence  legislation 
and  lobbying  in  the  interest  thereof.  The  prosperity  of  the  urban  working  classes 
is  so  Closely  interwoven  with  that  of  the  agriculturist  and  the  manufacturer  tliat  I 
doubt  very  much  if  any  of  us  know  where  the  interests  of  each  begin  or  end.  Such 
a  commission  as  proposed  by  the  bill  would  have  the  combined  advantage  of  being 
representative  of  all  classes,  and  securing  information  hardly  accessible  under  other 
conditions. 

"  'The  weight  of  recommendations  from  such  a  commission  to  the  lawmaking 
power  of  States  and  Nation  would  certainly  be  much  greater  than  similar  recom- 
mendations coming  from  any  other  source,  inasmuch  as  it  would  be  non-partisan 
and  representative  of  all  classes. 

"  'Believing  I  voice  the  hearty  concurrence  of  the  large  constituency  I  have  the 
honor  to  be  afiiliated  with  and  represent  in  tlie  above  indorsement,  I  am 

"  'Very  truly  yours, 

"  'JOHN  W.  HAYES, 
"  'General    Secretary-Treasurer. 
"  'Hon.   Lawrence  McGann,  Chairman  Committee  on  Labor,  Washington,  D.  C 

"  'Harrisburg,  Pa.,  December  22,  1894. 
"  'Dear  Sir— My  attention  having  been  called  to  House  Bill  No.  7756,  Fifty-third 
Congress,  second  session,  entitled  "A  bill  authorizing  the  appointment  of  a  non- 
partisan commission  to  collate  information  and  to  consider  and  recommend  legisla- 
tion to  meet  the  problems  presented  by  labor,  agriculture  and  capital,"  and  having 
examined  the  said  bill  with  much  care,  I  had  it  laid  before  the  Farmers'  Alliance 
council  of  tills  county,  where  it  met,  after  discussion,  -tvith  unanimous  approval. 

"  'This  week  it  was  laid  before  the  council  of  the  Pennsylvania  State  Farmers' 
Alliance  and  Industrial  Union,  its  provisions  discussed,  and  the  measure  was  prac- 
tically unanimously  approved. 

"  'The  bill  has  been  laid  before  a  majority  of  the  members  of  the  executive  com- 
mittee of  the  National  Farmers'  Alliance  and  Industrial  Union,  and  has  their  ap- 
proval. 

"  'Personally,  I  hope  it  will  become  a  law  at  a  very  early  day,  as  the  agricul- 
tural element  of  the  United  States,  I  am  sure,  will  be  greatly  benefited  by  the  labors 
of  a   commission   appointed   in   the   manner  proposed  by  the  bill  referred  to. 

"  'Very  respectfully, 

"   H.    C.   DEMING, 
■■  'Secretary   Executive   Committee, 
"  'National  Farmers'   Alliance   and   Industrial   Union. 
"  'Hon.   Lawrence  E.   McGann,   M.   C,   Chairman  of  the  Congressional  Committee  on 
Labor." 

"  'Des  Moines,  Iowa,  December  18,  1894. 
"  'Dear  Sir— H.  R.  7756  having  been  called  to  my  attention,  I  take  great  pleasure 
in  informing  you  that  it  meets  my  most  hearty  approval. 

"  'It  seems  to  me  that  the  bill  promises  more  for  the  harmony  of  conflicting 
interests  at  this  time  than  any  other  measure  now  pending  in  Congress. 

"  'Thanking  you  for  the  introduction  of  so  just  and  timely  a  measure,  and  trust- 
ing for  its  immediate  passage,  I  am, 

"  'Respectfully  yours, 

"  'J.  R.  SOVEREIGN, 
"  'Grand  Master  Workman. 
"  'Hon.  T.  W.  Phillips,  M.  C,  Washington,  D.  C 

"'INDORSEMENT     OF    THE    NATIONAL    FARMERS'    ALLIANCE    AND 

INDUSTRIAL   UNION. 

"  'Washington,  D.  C.  February  7,  1896. 
"  'A  bill  known  as  the  "Industrial  Commission  bill"  (H.  R.21),has  been  introduced 
In  the  first  session  of  the  Fifty-fourth  Congress.    The  position  of  the  National  Farm- 
ers' Alliance  and  Industrial  Union  on  the  pioposition  is  as  follows: 


22  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

"  'We  favor  the  appointment  of  a  non-partisan  commission  to  collate  informa- 
tion and  to  consider  and  recommend  legislation  to  meet  the  problems  presented  by 
labor,  agriculture  and  capital.  Inasmuch  as  it  is  to  be  preliminary  to  proposed 
wholesome  National  legislation,  and  as  the  work  of  such  a  commission  will  gather 
many  facts  and  ligures  into  official  form,  all  at  the  expense  of  the  general  gov- 
ernment, we  indorse  such  legislative  action. 

"  'In  indorsing'  such  a  commission,  however,  we  are  firmly  of  the  opinion  that 
the  appointment  of  the  commission  should  be  surrounded  by  such  safeguards  as  to 
insure  the  appointment  of  members  favorable  to  the  industrial  classes.  The  ex- 
penses of  such  a  commission  should  be  kept    within    the    limits    of    strict    economy. 

"  'J.   \V.   BOWDEN,   Chairman. 
"  'C.  R.  WHITE, 
"  'E.   M.   WARDELL, 
"  'Conference  Committee  of  the  N.   F.  A.  and  I.  U. 
(Certified  copy.)  "  'J.  W.  BOWDEN,  Chairman." 

*'  'Office  of  General  Assembly,  Order  of  Knights  of  Labor, 

"  'Washnigton,  D.  C,  January  20,  1896. 
"  'Gentlemen— We,  the  undersigned  general    oflicers    of    th.e    Knights    of    Labor, 
acting  on  behalf  of  the  entire  organization,    cordially    commend    to    your    favorable 
and  prompt  consideration  the  bill,   H.   R.  21,   introduced   by  Hon.   T.   W.   Phillips,   of 
Pennsylvania,   which  is  entirely  acceptable  to  our  members. 

"  'Most  respectfully, 

"  'J.   R.  SOVEREIGN,   G.   M.  W. 
"  'M.  J.  BISHOP,  G.  W.  F. 
"  'JOHN  W.  HAYES,  G.   S.  T. 
"  'C.  A.   FRENCH, 
"  'T.   B.   McGUIRE, 
"  'J.  M.   KENNEY, 
"  'H.   B.   MARTIN, 
"  'Members  of  General  Executive  Board. 
"  'The  Committee  on  Labor,  House  of  Representatives,    Fifty-fourth   Congress.' 

"From  the  report  of  the  committee  on  president's  report,  made  to  the 
fifteenth  annual  convention  of  the  American  Federation  of  Labor,  held  at 
New  York,  N.  Y.,  December  9  to  17,  inclusive,  1895,  the  following  extract  is 
taken: 

"  'Renewed  efforts  should  be  made  to  secure  the  passage  of  the  Phillips  bill, 
which  was  defeated  at  the  last  session  of  Congress,  and  a  committee  should  be 
appointed   by   this   convention   to   urge   the  passage  of  this  bill.' 

,"  'Washington,   D.    C,   March   18,   1896. 
"  'Dear  Sir— We  have  carefully  considered  the  bill,   H.   R.   21,  commonly   known 
as  the  bill  creating  a  commission  to  inquire  as  to  what  legislation  is  necessary   to 
the  btst  interests  of  the  people,  and  as  it  goes  to  the  House  from  your  committee, 
we  gladly  lend  it  our  indorsement. 

"  'It  appears  to  us  as  a  strictly  non-partisan  and  impartial  measure,  and  we 
commend  it  because  it  singles  out  no  class,  creed,  or  party  to  conduct  said  investi- 
gation and  proposes  no  legislation  in  favor  of  any  class,  creed  or  party.  Were  it 
otherwise  we  would  not  feel  that  we  could  lend  it  our  indorsement  or  approval. 

"  'Very  truly  yours, 

"  'B.  E.  CLARK, 
"  'Order  of  Railway  Conductors. 
"  'F.  P.  SARGENT, 
"  'Brotherhood  of  Locomotive  Firemen. 

"  'P.   H.   MORRISSEY, 
"  'Brotherliood  of  Railway  Trainmen. 
"  'P.  M.  ARTHUR, 
"  'Brotherhood  of  Locomotive  Engineers. 
"  'W.  V.  POWELL, 
"  'Order   of   Railway   Telegraphers. 
"  'Hon.  Thcmas.  W.  Phillips,  Chairman  Committee  on  Labor,  House  of  Representa- 
tives, Washington,  D.  C  " 

Not  only  did  the  speeches  in  Congress  point  to  the  friction  between 
capital  and  labor  as  the  great  purpose  of  the  bill,  but  that  was  the  para- 
mount reason  urged  for  its  passage  in  reports  that  were  made  upon  it.  On 
Fel)ruary  26,  1895,  during  the  third  session  of  the  Fifty-third  Congress,  Mr. 
Phillips  made  a  report  from  the  Committee  on  Labor  of  the  House  of 
Representatives  on  the  bill  introduced  by  him  (House  Bill  8494).  The  chief 
reasons  urged  in  the  report  for  enactment  of  this  bill  follow: 


VICE-CHAIRMAN  PHILLIPS'   SPEECH.  23 

"Because  there  is  wide-spread  dissatisfaction  with  the  laws  governing 
labor,  as  shown  by  discontent,  strikes  and  violence,  causing  great  misery, 
loss  and  danger  to  society. 

"Because  of  the  growing  discontent  among  farmers,  as  evidenced  by 
their  various  organizations — their  protests  against  unequal  burdens  and 
tasks,  discriminating  charges  in  transportation  and  exorbitant  charges  of 
middlemen  in  disposing  of  their  commodities. 

"Because  the  business  men  and  best  interests  require  a  just  and  more 
satisfactory  settlement  of  differences  with  those  with  whom  they  deal  and 
upon  whose  labor  and   products  successful  labor  must  depend. 

"Because  it  is  expected  that  this  commission  will  be  composed  of  ex- 
perts, the  ablest  and  best  of  each  class  named,  bringing  into  conference 
representative  men  of  labor,  agriculture  and  business,  whose  duties  will  be 
to  recommend  laws  looking  toward  a  more  just  distribution  of  the  burdens 
and   benefits   of   our   self-government. 

"Because  our  laws  have  not  kept  abreast  with  the  rapid  pace  of  de- 
velopment. New  conditions  confront  us  on  every  hand  in  the  massing  of 
labor  and  capital;  in  new  improvements  in  the  instruments  of  husbandry 
(making  great  changes  in  agricultural  pursuits)  ;  in  the  mode  of  manu- 
facture, transportation,  travel,  and  intercommunication. 

"All   have  been   revolutionized   within  a   generation. 

"We  have  been  offering  premiums  for  invention,  discovery  and  de- 
velopment, and  we  have  had  10,000  men  burning  midnight  oil  inventing 
labor  saving  machines  and  devices  of  all  kinds  until  we  have  changed  the 
whole  order  of  industrial  pursuits,  but  we  have  offered  no  premium  for  talent 
or  energy  in  ameliorating  the  altered  conditions  of  labor,  established  no  com- 
missions to  bring  up  our  laws  to  meet  these  new  conditions;  hence  there 
is  friction,  discontent  and  violence,  destroying  peace,  property  and  life. 

"Because  of  the  importance  of  the  agricultural  pursuit  to  the  welfare 
and  happiness  of  man.  In  the  very  beginning  God  sent  forth  man  to  till 
the  soil  as  his  chief  employment.  All  ci.vilized  life  depends  upon  agriculture. 
Without  the  farmer  the  world  would  be  a  wilderness.  In  our  marvelous  de- 
velopment the  interests  of  the  farmer  have  not  been  properly  guarded. 

"Because  labor  is  the  base  of  all  wealth  and  has  been  from  the  time 
when  God  said:    'In  the  sweat  of  thy  face  shalt  thou  eat  bread.' 

"Without  labor  none  can  accumulate  and  all  development  would  cease. 
The  claims  of  the  laborer  must  be  justly  met  so  that  in  bearing  the  great 
burdens  of  life  you  will  share  more  equally  in  its  enjoyments. 

"Because  business  men  have  and  will  continue  to  suffer  great  depre- 
ciation and  increasing  loss  unless  a  better  adjustment  is  made. 

"Because  the  good  of  society  demands  it  in  that  so  much  of  vital  im- 
portance of  its  well-being  and  peace  is  bound  up  in  massed  capital  and  mass- 
ed labor,  so  frequently  in  conflict  and  which  now  largely  control  production, 
manufactures,  transportation  and  development,  the  very  sources  of  supply 
and  demand  upon  which  the  good  order  of  society  depends.  The  commis- 
sion proposed  is  non-partisan,  impartial,  and  designed  to  meet  the  wants 
of  the  people. 

"Because  we  declared  equal  rights  and  millions  of  our  citizens  are 
complaining  that  they  have  not  been  pi'otected  in  them.  Rights  are  as 
eternal  and  immutable  as  truth.  There  is  always  a  way  to  do  right  and 
a  way  to  right  wrongs.  If  wrongs  exist,  they  should  be  righted.  Rights 
must  be  guarded  and  maintained.  Right  is  eternal,  and.  like  truth,  will  pre- 
vail. •  The  commission  is  important  because  of  its  inquiry  along  the  entire 
line  of  its  fundamental  principle  of  our  government  and  therefore  the  de- 
mands of  the  people  require  such  work  as  is  proposed  by  this  bill." 

The  report  continues  to  give  reasons  why  a  commission  such  as  was 
proposed  in  the  bill  before  the  House  would  be  better  adapted  to  the  w'ork 
of  making  an  inquirj'-  into  industrial  conditions  and  recommending  legisla- 
tion for  their  improvement,  than  would  be  the  National  or  State  legislative 
bodies,  and  refers  to  the  exceptional  facilities  offered  by  statistical  bureaus 
of  the  government  on  labor  questions.     Concluding  the  report  says: 

"In  addition  to  these  reasons,  we  beg  to  call  attention  of  the  members 
of   Congress   to   the   general   wish   of  the   people,   especially   of  representa- 


24  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

tives  of  the  laboring  and  farming  interests  of  our  country  as  witnessed 
by  petitions  and  resolutions  favoring  the  passage  of  the  bill,  from  which  we 
give  several  extracts  below." 

This  report  was  also  accompanied  by  endorsements  of  officials  of  the 
leading  labor  organizations  of  the  country. 

The  debates  in  Congress  that  led  up  to  the  passage  of  the  Phillips  bill 
are  of  great  interest,  as  they  indicate  the  view  that  Senators  and  Repre- 
sentatives took  of  the  measure  at  that  time  and  the  purposes  they  thought 
were  to  be  accomplished  by  the  Industrial  Commission.  There  had  been  no 
opportunity  in  the  Fifty-third  Congress  to  secure  a  discussion  of  the  bill, 
which  was  only  introduced  in  the  third  session  of  that  Congress.  Mr.  Phil- 
lips, on  February  14,  1896,  (First  Session  Fifty-fourth  Congress)  again  in- 
troduced his  bill  for  the  appointment  of  an  Industrial  Commission. 

On  June  1st,  1896,  Mr.  Bartlett,  of  New  York,  criticised  the  manner  in 
which  the  commission  was  to  be  organized  and  the  propriety  of  delegating 
to  it  what  he  considered  legislative  powers,  claiming  that  the  bill  was  un- 
constitutional.    Mr.  Henderson,  of  Iowa,  supported  the  bill,  saying: 

"I  say  to  this  House  that  the  labor  interests  and  the  agricultural  inter- 
ests of  this  country  with  united  voice  ask  for  the  passage  of  this  bill.  * 
*       *       *       *" 

Mr.  Gardner,  of  New  Jersey;  Mr.  Belknap,  and  Mr.  Howe  spoke  on  the 
measure.  Whenever  its  purpose  was  referred  to  by  these  gentlemen  it  was 
in  connection  with  its  relation  to  the  problem  of  the  strained  relation  be- 
tween capital  and  labor. 

After  the  passage  of  the  bill  by  the  House,  numerous  attempts  were 
made  to  get  it  before  the  Senate  for  consideration.  On  February  20,  1897, 
Senator  Quay  called  it  up.  Senator  Piatt,  of  Connecticut,  criticised  the 
method  prescribed  in  the  measure  for  forming  the  commission,  saying  that 
the  manufacturers  certainly  asked  for  no  commission.     Continuing,  he  said: 

"The  demand  then  for  this  legislation  comes  from  labor  and  agriculture, 
two  classes  of  our  citizens,  and  they  have  asked  that  each  of  these  classes 
shall  have  three  commissioners.     *     *     *" 

Senator  Quay  stated  that  he  called  the  bill  up  at  the  request  of  the 
representatives  of  the   great  labor  organizations  of  the  country. 

Speaking  of  the  bill,  March  3,  1897,   Senator  Hoar  said: 

"Here  is  a  proposition  to  investigate  within  two  years'  time  all  the 
great  subjects  which  affect  the  happiness  of  the  workingmen  of  our  counti'y 
who  are  in  substance  and  effect  the  country  itself.     *     *     *" 

A  substitute  for  the  House  bill  had  been  placed  before  the  Senate  and 
on  March  3,  1897,  it  was  passed  by  that  body  by  a  vote  of  44  to  6.  Just 
before  the  vote  was  taken  Senator  Shoup,  emphasizing  the  bill  as  a  labor 
measure,  stated  that  there  were  "10,000,000  toiling  men  and  women  inter- 
ested in  this  measure." 

The  bill  was  returned  to  the  House,  which  promptly  passed  it  in  the 
form  in  which  it  had  gone  through  the  Senate.  It  failed  to  become  a  law  be- 
cause, as  stated.  President  Cleveland  received  it  only  a  few  minutes  before 
12  o'clock  on  March  4,  and  he  declined  to  sign  so  important  a  measure 
when  he  had  no  time  to  examine  it. 

The  measure  was  again  introduced  in  the  Fifty-fifth  Congress  in  the  form 
in  which  it  had  previously  received  favorable  consideration  and  was  passed 
in  June,  1898,  receiving  the  signature  of  President  McKinley  on  the  18th  of 
that   month. 

Acting  under  this  authority  President  McKinley  appointed  the  follow- 
ing members  of  the  Industrial  Commission: 

SENATOR  JAMES  H.  KYLE,  Aberdeen,  South  Dakota. 
SENATOR  BOISE   PENROSE,   Philadelphia,   Pennsylvania. 
SENATOR  LEE   MANTLE,   Butte,   Montana. 
SENATOR  STEPHEN  R.  MALLORY,  Pensacola,  Florida. 
SENATOR  JOHN  W.   DANIEL,   Lynchburg,   Virginia. 
REPRESENTATIVE  JOHN  J.  GARDNER,  Atlantic  City,  New  Jersey. 
REPRESENTATIVE  WILLIAM   LORIMER,   Chicago,   Illinois. 
REPRESENTATIVE  L.  F.   LIVINGSTON,  Kings.  Georgia. 


GARBLED  TESTIMONY.  25 

REPRESENTATIVE  JOHN   C.   BELL,   Montrose,   Colorado. 

REPRESENTATIVE  THEOBOLD  OTJEN.  Milwaukee.  Wisconsin. 

MR.  ANDREW  L.  HARRIS,  Eaton,  Ohio. 

MR.   S.  N.  DEXTER  NORTH,  Boston.   Massachusetts. 

MR.   ELLISON   A.   SMYTH,   Pelzer,   South   Carolina. 

MR.  JOHN  M.  FARQUHAR,  Buffalo,  New  York. 

MR.  EUGENE  D.  CONGER,  Grand  Rapids,  Michigan. 

MR.  THOMAS  W.  PHILLIPS,  New  Castle,  Pennsylvania. 

MR.  CHARLES  J.   HARRIS,   Dillsboro,  North  Carolina. 

MR.  M.  D.  RATCHFORD,  Indianapolis,  Indiana. 

MR.  JOHN  L.  KENNEDY,  Washington,  D.  C. 

In  the  spring  of  1899  Mr.  North  resigned  from  the  commission  to  accept 
an  appointment  in  the  Census  Bureau,  and  Mr.  Albert  Clarke,  of  Massa- 
chusetts, was  appointed  in  his  place. 

When  the  Senatorial  term  of  Mr.  Mantle  expired,  on  March  4,  1899,  he 
remained  for  a  time  on  the  commission  in  accordance  with  a  special  pro- 
vision in  the  act  creating  it.  He  resigned  in  1900  and  Senator  Bard,  of 
California,  was  appointed  in  his  stead. 

The  commission  was  organized  with  Senator  James  H.  Kyle  chairman, 
ex-Representative  Thomas  W.  Phillips  first  vice-chairman,  and  Representa- 
tive John  J.  Gardner  second  vice-chairman.  Very  soon  after  this  organiza- 
tion had  been  effected  a  committee  on  procedure  was  appointed  and  made 
a  report  on  a  plan  for  work  which  involved  the  appointment  of  five  sub- 
commissions,  each  to  take  charge  of  a  branch  of  the  investigation  to  be 
pursued  by  the  commission,  these  branches  being  as  follows:  On  agricul- 
ture and  agricultural  labor,  on  conditions  of  labor  and  capital  employed  in 
manufacturing  and  general  business,  on  conditions  of  labor  and  capital  em- 
ployed in  mining,  on  transportation,  and  on  statistics. 

After  the  commission  had  begun  its  work  on  these  lines  it  determined 
to  begin  an  investigation  of  trusts  and  industrial  combinations.  No  sub- 
commission  was  appointed  to  take  charge  of  this  branch  of  the  investiga- 
tion, it  being  conducted  by  the  commission,  with  the  assistance  of  Prof.  J. 
W.  Jenks,  of  Cornell  University. 

Mr.  Phillips,  the  vice-chairman,  presided  over  nearly  all  the  meetings 
of  the  commission,  owing  to  the  absence  of  Senator  Kyle,  the  chairman,  and 
it  is  believed  that  he  was  not  absent  from  a  single  meeting  when  testimony 
was  being  given  in  relation  to  the  Standard  Oil  Company. 


CHAPTER  IIL 
GARBLED  TESTIMONY. 

The  garbling  of  the  testimony  that  was  given  before  the  Industrial  Com- 
mission was  permitted  to  such  an  extent  that  this  testimony,  as  officially 
published,  gives  but  a  very  vague  idea  of  what  actually  took  place  when 
witnesses  were  on  the  stand.  It  would  appear  that  the  rules  adopted  by 
the  commission  were  drawn  in  order  to  secure  a  truthful  report  of  the 
testimony  of  witnesses,  but  they  were  either  violated  or  the  commission 
itself  permitted  changes  in  the  testimony  to  an  extent  that  would  astonish 
any  Congressional  committee  which  is  accustomed  to  having  testimony  re- 
ported without  being  garbled  by  the  witnesses  or  any  other  person. 

The  testimony  of  Vice-Chairman  Phillips  and  of  Mr.  J.  W.  Lee,  presi- 
dent of  the  Pure  Oil  Trust,  give  the  most  prominent  examples  of  this  un- 
usual liberty  in  the  handling  of  testimony.  While  it  is  quite  common  for 
witnesses  before  Congressional  investigating  committees  to  be  furnished 
with  the  stenographic  report  of  their  remarks  before  it  is  published,  it  is 
customary  to  limit  their  power  of  correction  to  changes  in  form  of  expres- 
sion and  to  the  correction  of  grammatical  errors,  and  they  are  always  cau- 
tioned against  any  change  of  the  ideas  conveyed  in  their  testimony.     In  the 


26  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

case  of  the  witnesses  before  the  Industrial  Commission,  as  shown  in  the 
following  chapters,  questions  and  answers  have  been  stricken  from  the 
testimony  when  they  completely  changed  the  meaning  of  the  answer  that 
had  preceded  them.  It  is  shown  that  in  numerous  instances  portions  of 
answers  were  stricken  out  when  they  contained  most  important  features 
of  the  testimony  and  other  answers  were  changed  beyond  recognition.  No 
attempt  is  here  made  to  give  every  case  in  which  these  significant  changes 
occur,  but  enough  of  them  are  given  to  show  an  entirely  unreliable  record 
of  the  proceedings  of  the  Industrial  Commission  is  contained  in  the  official 
report  of  that  commission  to  Congress.  It  has  been  possible  to  show  this 
reckless  garbling  of  the  testimony,  because  an  accurate  stenographic  report, 
made  by  a  stenographer  of  National  reputation,  as  explained  in  the  preface, 
allowed  a  comparison  of  what  was  actually  said  with  the  garbled  official 
report,  indicating  the  remarkable  manner  in  which  the  testimony  has  been 
handled. 

It  is  hardly  necessary  to  suggest  that  the  questions  of  the  commis- 
sioners were  at  least  to  a  large  extent  suggested  by  the  testimony  of  the 
witnesses  themselves.  It  can  readily  be  seen  that  for  a  witness  to  in  the 
slightest  degree  change  the  sense  of  his  testimony  without  allowing  an  op- 
portunity for  commissioners  to  ask  questions  that  would  be  called  out  by 
such  remarks  is  misleading  and  unfair. 

If  Congress  or  anyone  with  authority  to  do  so  desires  additional  proof 
of  the  great  liberty  that  has  been  taken  in  editing  the  testimony  of  the 
Industrial  Commission,  that  might  easily  be  secured  by  an  examination  of 
the  reports  of  the  stenographers  of  the  commission,  the  typewritten  copies 
of  which  doubtless  contain  corrections  that  have  been  made.  If  many  of 
these  corrections  were  made  when  the  testimony  was  in  print,  a  compari- 
son of  the  typewritten  report  with  the  official  report  finally  published,  will 
show  the  extent  of  these  changes.  It  would  also  doubtless  be  a  very  easy 
matter  to  ascertain  to  what  extent  these  changes  were  made  by  the  com- 
mission's own  editor  and  by  the  witnesses  themselves. 

Mr.  William  E.  Sackett.  secretary  of  the  commission,  in  his  report  on 
the  work  of  the  commission  to  January  1,  1900,  in  referring  to  the  instruc- 
tions given  the  editor  of  the  testimony,  says: 

"So  that  he  may  know  how  circumscribed  his  lines  are,  the  commission 
at  the  very  outset  adopted  these  rules  to  govern  the  editor  in  the  treatment 
of  the  copy: 

"1.     Errors  of  grammar  should   be  corrected  in   all   instances. 

"2.  Repetitions  which  do  not  serve  to  emphasize  or  make  clearer 
matter  under  examination  shall  be  cut  out. 

"3.     Personal   opinions    of   commissioners   must  be   eliminated. 

"4.  The  name  of  the  witness,  when  used  in  a  question  addressed  to 
him,  must  be  cut  out. 

"5.  Remarks  of  commissioners  immediately  preceding  questions  which 
do  not  make  the  questions  clearer  to  the  witness  must  be  omitted. 

"6.  Answers  of  commissioners  to  questions  asked  of  witnesses  by 
commissioners  must  be  cut  out. 

"7.  Opening  remarks  of  the  presiding  officer,  with  explanation  to  wit- 
ness of  mode  of  examination,  shall  not  go  in  the  record. 

'"Complimentary  remarks  of  presiding  officer  at  conclusion  of  testi- 
mony are  to  be  omitted ;  but  the  reply  of  witness  to  same,  if  bearing  on  the 
well-being  of  his  organization  or  industry,  or  to  the  work  of  the  commission, 
shall  be  printed. 

"8.  Leading  features  fas  known  in  law)  of  a  question  should  be 
avoided  as  much  as  possible. 

"9.  Where  the  meaning  of  the  question  or  answer  is  doubtful  it  may 
be  left  intact,  or  submitted  to  the  commissioner  asking  the  question. 

"10.  When  partisan  politics  appear  in  question  or  testimony  the  same 
shall,  in  accordance  with  the  rules  of  the  commission,  be  eliminated. 

"11.  The  name  of  a  previously  examined  witness  shall  not  be  printed 
in  questions  tending  to  the  contradiction  of  his  testimony. 


GARBLED  TESTIMONY.  27 

"12.  Witnesses  shall  not  be  permitted,  without  the  consent  of  the  com- 
mission, to  eliminate  material  parts  of  their  testimony  or  change  the  form 
of  questions. 

"When  proofs  are  drawn  at  the  Government  Printing  Office  duplicates 
are  sent  to  each  witness,  in  order  that  he  may  see  for  himself  that  he  has 
been  correctly  reported.  The  witness  is  expected  to  make  in  his  copy  only 
such  verbal  changes  as  he  thinks  necessary  for  the  better  expression  of  his 
ideas  or  the  better  statement  of  his  facts.  Witnesses  have  been  permitted 
to  add  information  not  at  hand  at  the  time  of  their  appearance  before  the 
commission,  but  in  all  cases  this  was  agreed  upon  at  the  hearing." 

It  will  be  seen  by  the  above  statement  of  the  rules  governing  the  editing 
of  the  testimony  that  the  elimination  and  changes  referred  to  could  not 
properly  have  been  made  by  the  editor  nor  by  the  witness  without  the  con- 
sent of  the  commission.  It  is  hardly  reasonable  to  suppose  that  the  com- 
mission itself  would  have  permitted  these  changes.  It  would  be  extremely 
interesting  to  know  on  whom  the  responsibility  of  tampering  with  what 
should  have  been  an  accurate  and  truthful  official  record  rests. 

The  rules  themselves  indicate  rather  a  queer  style  of  proceeding  with 
an  official  investigation  of  the  industrial  conditions  of  the  country. 

Instead  of  requiring  commissioners  to  avoid  "leading  questions"  Rule 
8  provides  that:  "Leading  features  (as  known  in  law)  of  a  question  should 
be  avoided  as  much  as  possible."  The  fact  is  that  the  commission  made  no 
effort,  if  an  occasional  protest  on  the  part  of  an  individual  commissioner  is 
excepted,  to  prevent  the  asking  of  leading  questions.  The  vice-chairman 
of  the  commission  himself  not  only  at  times  preceded  his  question  with  an 
argument,  but  framed  them  so  that  they  came  within  the  class  of  questions 
which  were  to  be  avoided  under  Rule  8.  These  leading  questions  very  fre- 
quently secured  answers  that  were  little  more  than  a  repetition  of  the 
question.  When  the  testimony  was  edited  the  leading  feature  of  the 
question  was  frequently  eliminated,  while  the  answer  remained  with  noth- 
ing to  show  the  manner  in  which  it  was  brought  out. 

The  commission  adopted  no  rule  prohibiting  the  embodying  of  questions 
as  part  of  answers  of  witnesses,  but  doubtlessly  this  was  because  no  one 
ever  dreamed  of  such  a  mode  of  procedure.  This  method  is  surely  far  be- 
yond any  system  that  even  shrewd  lawyers  have  attempted  to  adopt  in 
order  to  make  their  witnesses  talk  as  they  might  desire  while  on  the  stand. 
The  use  of  such  a  system  would  be  invaluable  to  a  lawyer  who  might  find 
himself  in  a  tight  place  and  who  desired  to  put  words  in  the  mouths  of 
important  witnesses.  Of  course  it  is  not  charged  that  Mr.  Phillips  or  any 
other  particular  person  either  designed  or  made  these  changes  by  which 
questions  were  metamorphosed  into  answers  by  some  mysterious  alchemy 
in  the  editing  or  purification  of  the  testimony,  but  the  changes  are  there  and 
speak  for  themselves.  For  all  that  is  known  or  charged  here,  the  type 
might  have  got  mixed  up  while  in  the  galleys. 

Whether  such  changes  were  made  by  design  or  by  accident,  it  is  es- 
pecially appropriate  that  this  new  manner  of  arranging  testimony  for  pub- 
lication should  be  exemplified  in  the  testimony  of  a  director  of  the  Pure 
Oil  Trust  while  on  the  stand  and  being  questioned  by  another  leader  in 
the  formation  and  conduct  of  the  Pure  Oil  Trust.  It  has  been  shown  in 
another  chapter  that  that  trust  has  far  out-classed  the  Standard  Oil  Com- 
pany in  the  trust-like  features  of  its  New  Jersey  incorporation,  and  it  is 
quite  appropriate  that  through  its  prominent  members  there  should  come 
suggestions  of  new  rules  of  evidence  that  far  outclass  any  suggestion  of  the 
kind  that  can  be  foimd  on  record. 

The  conversion  of  a  question  into  an  answer  and  the  generally  remark- 
able method  by  which  the  testimony  of  the  Industrial  Commission  was 
handled  in  preparing  it  for  publication  is  illustrated  by  the  following  com- 
parison of  statements,  unimportant  in  themselves,  as  shown  by  the 
stenographic  report  and  as  officially  published: 

(This  testimony  was  given  by  Mr.  Lockwood  and  was  in  reference  to 
purchases  of  oil  property  he  said  had  been  made  by  the  Standard  Oil  Com- 
pany just  before  the  price  of  crude  oil  had  been  advanced.) 


28  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

STENOGRAPHIC  REPORT.  OFFICIAL  REPORT,  (p.  403.) 
Q.  (By  Vice-chairman  PHIL-  Q.  (By  Vice-Chairman  PHIL- 
LIPS.) Was  that  along  about  1896  LIPS.)  What  was  the  date  of  that? 
or  1897?  A.  Yes,  sir,  1896  or  1897,  A.  I  think  it  was  in  1896  or  1897. 
after  they  had  bought  all  the  prop-  After  they  had  bought  all  the  prop- 
erty they  could  the  market  went  up  erty  they  could  the  market  went  up 
very  high,  as  high,  I  think,  as  $2.60,  very  high,  as  high,  I  think,  as  $2.60, 
and  had  quite  a  high  range  of  values  and  prices  remained  high  for  a  long 
for  quite  a  long  period.                       ••  period. 

The  above  change  is  not  especially  significant,  but  as  an  example  it 
indicates  the  method  of  eliminating  leading  features  of  questions  from 
testimony,  after  they  have  been  given,  instead  of  forbidding  the  asking  of 
such  questions. 

During  the  examination  of  Mr.  T.  F.  Davis,  the  witness  said  that  the 
business  of  producing  crude  oil  was  profitable  under  present  conditions  as 
long  as  there  was  sufficient  production,  when  the  following  question  and 
answer  occurred: 

Q.  (By  Vice-Chairman  PHILLIPS.)  It  depends  on  what  you  strike; 
a  thousand-barrel  well  or  a  ten-barrel  well.     A.    Yes,  sir. 

This  question  and  answer  being  one  of  the  numerous  arguments 
throv\-n  in  the  testimony  as  side  remarks  by  the  vice-chairman  v/ere  stricken 
from  the  official  testimony,  though  it  is  difficult  to  see  why  that  was  done. 
The  question  only  indicated  what  was  shown  on  other  occasions  when  tes- 
timony tended  to  show  that  producers  of  oil  were  "getting  along,"  on  which 
occasions  Mr.  Phillips  came  in'  with  a  question  apparently  intended  to 
offset  the  effect  of  such  testimony. 

Rule  No.  7  indicates  a  clever  little  trick  by  which  the  commission  threw 
out  a  bait,  which  is  hidden  from  the  reader  of  the  testimony,  in  order  to 
catch  complimentary  remarks  about  itself.     Under  this  rule  it  is  stated: 

"Complimentary  remarks  of  presiding  officer  at  conclusion  of  testimon>-,  are  to 
be  omitted;  but  the  reply  of  witness  to  same,  if  bearing  on  the  well-being  of  his 
organization  or  industry,  or  to  the  work  of  the  commission,  shall  be  printed." 

This  rule  can  only  be  understood  when  it  is  known  that  the  commission 
adopted  a  custom  of  having  its  presiding  officer  make  a  parrot-like  state- 
ment, which  was  repeated  in  the  case  of  every  witness  who  appeared  before 
it,  and  was  in  effect  that  the  commission  was  highly  gratified  because  of 
the  very  full  and  accurate  statement  of  the  witness  relating  to  his  particu- 
lar industry.  The  witnesses,  not  knowing  that  every  one  was  accorded 
this  complimentary  statement,  in  many  instances  felt  quite  flattered  that 
they  should  have  impressed  the  commission  so  favorably,  and  very  nat- 
urally frequently  endeavored  to  reciprocate  the  compliment  by  saying 
something  equally  flattering  in  regard  to  the  courteous  treatment  they  had 
received,  or  the  great  benefits  that  they  believed  the  country  would  derive 
from  the  valuable  work  of  the  Industrial  Commission.  The  rule  of  the 
commission  provided  that  these  remarks  should  be  printed,  "If  bearing  on 
the  well-being  of  his  organization  or  industry  (that  of  the  witness)  or  to 
the  work  of  the  commission."  As  his  testimony  had  been  on  his  "organiza- 
tion or  industry,"  it  was  not  likely  that  he  should  revert  to  that  subject  in 
responding  to  a  flattering  remark  by  the  presiding  officer.  The  compli- 
mentary remarks  concerning  the  commission  that  were  secured  from  wit- 
nesses by  this  ingenious  device  were  carefully  preserved  and  published  in 
order  that  Congress  and  the  public  might  read  them,  while  they  could  not 
understand  the  little  trick  by  which  they  were  secured,  as  the  compli- 
mentary remarks  about  the  witness  were  in  all  cases  eliminated  from  the 
report. 

By  referring  to  the  closing  paragraphs  of  Mr.  Page's  testimony  it  will 
be  seen  that  a  commissioner,  in  violation  of  Rule  6,  proceeded  in  a  rather 
unusual  manner  to  himself  become  a  witness  in  rebuttal  of  Mr.  Page's 
testimony  by  quoting  the  syllabus  of  a  court  case  that  had  occurred  prior 
to  the  interstate  commerce  law — that  of  Handy  and  others,  trustees,  vs.  the 
Cleveland  &  Marietta  Railroad  Company,  about  which  the  witness  said  he 


GARBLED  TESTIMONY.  29 

knew  nothing.  Yet  when  Commissioner  Kennedy  contradicted  a  state- 
ment made  by  Mr.  Kindel,  this  contradiction  happening  to  show  that  the 
complaint  against  the  Standard  Oil  Company  as  the  refiner  of  oil  was  not 
well  founded  for  the  reason  that  the  Standard  was  not  refining  petroleum 
at  Denver,  Col.,  the  home  of  the  witness,  the  correction  was  stricken  out, 
while  the  charge  of  the  witness  was  allowed  to  remain  as  if  unchallenged. 
Mr.  Kennedy  knew  of  the  facts  in  this  case,  as  he  had  recently  been  in 
Denver  as  a  member  of  a  sub-commission  to  inquire  into  certain  matters. 

It  will  be  seen  that  Mr.  J.  W.  Lee,  president  of  the  Pure  Oil  Trust, 
after  testifying  that  the  cost  of  local  pipage  of  oil  was  only  seven  or  eight 
cents  a  barrel,  was  asked  the  specific  question  whether  that  cost  included 
fixed  charges,  and  he  replied  that  it  did  not.  This  question  and  reply,  which 
entirely  modified  the  effect  of  his  first  statement,  does  not  appear  in  the 
official  report.  Again,  the  following  question  and  answer  occurred  during 
the  testimony  of  Mr.  Dowe,  and  strangely  enough  they  do  not  appear  in  the 
official  report. 

"Q.  (By  Vice-Chairman  PHILLIPS.)  Then  it  is  quite  certain  that 
they  (the  trusts)  cannot  produce  as  cheaply  as  an  individual  who  is  capable 
of  managing  his  own  affairs?  A.  I  don't  quite  agree  with  you  in  that,  Mr. 
Chairman;  I  would  like  to  agree  with  you  entirely,  but  it  seems  to  me  that 
they  do  certainly  cheapen  the  cost  of  production." 

These  are  but  examples  of  numerous  eliminations  that  occur  through- 
out the  testimony.  To  give  all  such  instances  here  would  be  but  a  repetition 
of  what  is  shown  in  other  chapters  of  this  volume. 

The  Industrial  Commission  was  a  unique  organization  in  many  respects 
and  in  no  way  was  it  more  so  than  in  the  convenient  manner  in  which  it 
secured  a  quorum.  The  commission  consisted  of  19  members,  but  it  is  a 
perfectly  safe  statement  that  probably  not  over  five  of  its  members  heard 
any  consideiable  amount  of  the  testimony  that  was  given  before  it.  The 
average  attendance  throughout  all  the  hearings  that  were  held  in  Wash- 
ington was  probably  less  than  seven,  or  less  than  one-third  of  the  entire 
membership.  Yet  it  will  be  seen  that  in  its  preliminary  report  of  March  1, 
IPOO,  recommendations  were  made  and  signed  by  17  members,  in  fact,  by  all 
except  Senators  Daniel  and  Mallory,  Senator  Mallory  being  dangerously  ill 
at  the  time  the  report  was  made.  But  very  few  members  of  the  commission 
having  heard  the  testimony  as  it  was  actually  given,  such  information  as 
the  other  members  obtained  must  have  been  through  reading  the  garbled 
testimony  as  published  in  the  official  report,  or  the  misleading  "review"  and 
"digest"  of  the  evidence.  Anyone  who  will  carefully  read  these  pages  can 
determine  to  what  extent  an  accurate  judgment  of  the  facts  in  the  case,  as 
far  as  they  refer  to  the  oil  industry,  could  be  ascertained  from  the  official 
report  of  the  testimony. 

When  the  many  discrepancies  between  the  official  record  and  the  steno- 
graphic report  of  the  testimony  taken  before  the  Industrial  Commission  in 
relation  to  the  oil  industry  are  considered,  the  complaints  of  Mr.  M.  L.  Lock- 
wood,  regarding  eliminations  from  his  testimony,  seem  trifling,  and  yet  they 
called  forth,  when  presented  to  the  United  States  Senate,  severe  criticism. 
The  chief  elimination  complained  of  by  him  was  his  reference  to  a  distin- 
guished jurist,  and  this  statement  was  stricken  from  the  official  report 
because  it  was  considered  improper  to  allow  an  assault  on  the  personal  char- 
acter of  a  man  when  no  evidence  was  offered  to  sustain  the  charge.  This 
complaint,  made  in  the  form  of  a  statement  by  Mr.  Lockwood  and  published 
in  the  Congressional  Record  of  the  Fifty-sixth  Congress,  together  with  the 
discussions  concerning  it,  will  be  found  in  the  report  of  the  proceedings  of 
the  Senate  of  May  28,  May  29  and  June  1.  1900,  and  .January  16,  1901.  These 
discussions  show  that  the  extent  to  which  testimony,  as  officially  published, 
does  not  agree  with  the  stenographic  report  of  it,  was  not  realized  by  mem- 
bers of  the  commission  who  were  United  States  Senators.  Senator  Mallory, 
of  Florida,  a  member  of  the  commission,  in  replying  to  criticisms  by  Senator 
Allen  concerning  the  power  of  a  commission  to  revise  testimony,  declared 
that  from  his  experience  "the  case  of  Mr.  Lockwood  was  the  only  instance 
in  which  there  was  any  ground  for  such  an  accusation."  The  following  is 
from  the  record  of  the  proceedings  of  the  Senate  of  May  28,  1900: 


30  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

Mr.  MALLORY.  I  think  the  Senator  is  mistaken  in  the  statement  he 
makes  to  the  effect  that  the  commission  excluded  such  evidence  as  it  thought 
proper,  and  retained  such  evidence  as  it  thought  proper.  My  experience, 
which  extended  over  some  length  of  time,  was  that  the  case  of  Mr.  Lock- 
wood  was  the  only  instance  in  which  there  was  any  ground  for  such  an  accu- 
sation. I  did  not  approve  of  it  myself;  but  at  the  same  time  on  an  investiga- 
tion I  found  that  what  was  excluded  from  Mr.  Lockwood's  statement  was  a 
series  of  personalities  directed  against  certain  individuals,  in  which  their 
characters  were  assailed  without  any  benefit  that  would  come  to  the  public 
from  its  publication. 

Mr.  ALLEN.  I  agree  with  the  Senator  that  that  evidence  ought  to  have 
been  taken  out.    I  said  that  before  the  Senator  interrupted  me. 

Mr.  BUTLER.  I  will  say  to  the  Senator  from  Florida  that  I  have  seen 
what  purports  to  be  Mr.  Lockwood's  testimony  with  the  parts  that  have  been 
eliminated  marked  around,  and  there  are  a  gi-eat  many  facts  and  matter 
outside  of  personalities  so  marked.  I  do  not  know  whether  it  was  elimi- 
nated or  not,  and  I  can  not  know  until  I  see  the  report. 

Mr.  CAFFERY.  I  ask  the  Senator  from  Florida  whether  the  parts 
stricken  out  of  Mr.  LockAvood's  testimony  embrace  only  personalities  and 
assaults  upon  the  court? 

Mr.  MALLORY.  That  is  my  recollection.  I  was  not  satisfied  with  it, 
and  I  did  not  approve  of  striking  out  any  testimony;  but  I  examined  into  it, 
and  I  became  satisfied  that  it  was  nothing  which  it  was  material  to  elim- 
inate. 

Mr.  CAFFERY.     There  were  no  facts  eliminated? 

Mr.  MALLORY.  No  facts  with  any  material  bearing  on  the  inve'iga- 
tion  were  eliminated.     That  is  my  recollection. 

The  following  discussion  will  throw  some  light  on  the  opinion  concern- 
ing the  editing  of  the  commission's  testimony  entertained  at  that  time  by 
Senators  who  were  members  of  the  commission  and  others: 

Mr.  JONES,  of  Arkansas.  In  connection  with  that  amendment  I  should 
like  to  ask  the  chairman  of  the  Industrial  Commission,  the  Senator  from 
South  Dakota,  one  question.  I  understand  among  the  other  sub-committees 
that  the  Industrial  Commission  has  an  editing  committee.    Is  that  true? 

Mr.  KYLE.     We  have  not  an  editing  committee,  properly  speaking. 

Mr.  JONES,  of  Arkansas.     You  have  no  editing  committee? 

Mr.  KYLE.  No;  that  is.  not  for  that  purpose.  What  does  the  Senator 
mean  by  "editing?" 

Mr.  JONES,  of  Arkansas.  For  the  purpose  of  editing  the  testimony 
taken  before  the  commission  and  changing  it  to  suit  the  views  of  that  par- 
ticular committee. 

Mr.  KYLE.     No;  we  have  no  committee  that  has  any  such  power  at  all. 

Mr.  JONES,  of  Arkansas.  I  have  been  told  by  a  member  of  the  com- 
mission since  this  debate  has  been  going  on  that  such  is  the  fact;  and  the 
chairman  of  the  committee  tells  me  there  is  no  such  thing.  Of  course,  if 
what  he  tells  us 

Mr.  KYLE.  We  have  our  chief  stenographer,  who,  with  certain  other 
parties,  look  over  the  testimony  to  see  that  it  is  grammatical  or  free  from 
minor  errors.  If  there  is  any  material  change,  it  is  made  by  the  whole  com- 
mission. 

Mr.  JONES,  of  Arkansas.  Who  are  the  other  parties?  The  Senator 
says  the  testimony  is  gone  over  by  a  "stenographer  and  certain  other  par- 
ties." I  should  like  to  know  who  the  other  parties  are.  The  stenographer 
is  not  a  member  of  the  commission,  and  yet  he  is  authorized  to  go  over  the 
testimony.    Who  are  the  other  parties? 

Mr.  KYLE.     The  other  parties  are  members  of  the  commission. 

Mr.  JONES,  of  Arkansas.     Who  are  they? 

Mr.  KYLE.  I  do  not  know  that  I  can  offhand  name  the  men  who  per- 
form that  duty. 

Mr.  JONES,  of  Arkansas.     Who  is  it  that  performs  that  duty? 

Mr.  KYLE.     I  do  not  rememl)er  the  names. 

MR.  JONES,  of  Arkansas.     Is  it  a  roving  commission? 

Mr.  KYLE.     No;  it  is  not. 


GARBLED  TESTIMONY.  31 

Mr.  JONES,  of  Arkansas.  It  is  a  very  grave  charge  to  be  made,  that 
there  is  an  editing  committee  in  this  commission  who  take  up  the  testimony 
as  given  by  the  different  individuals  and  change  it.  The  statement  has  been 
made  here  once  or  twice  on  the  floor  that  material  changes  have  been  made 
in  the  testimony  of  witnesses,  and  that  has  been  denied.  I  understand  that 
these  statements  are  made.  As  I  stated  a  while  ago,  it  is  charged  that  there 
is  an  editing  committee  in  this  commission.  I  thought  that  was  a  most 
extraordinary  proceeding,  and  I  should  like  to  understand  it.  I  have  now 
the  positive  denial  of  the  Senator  from  South  Dakota,  the  chairman  of  the 
commission,  that  there  is  any  such  editing  committee.  Then  he  modifies  it 
by  saying  that  they  have  no  power  to  act. 

Mr.  KYLE.  No  power  to  act  without  the  advice  and  consent  of  the  whole 
commission. 

Mr.  JONES,  of  Arkansas.     Then  there  is  an  editing  committee? 

Mr.  KYLE.     That  is  the  whole  commission. 

Mr.  JONES,  of  Arkansas.  There  is  an  editing  committee;  but  it  has 
no  power  to  act? 

Mr.  KYLE.     It  has  no  power  to  act. 

Mr.  JONES,  of  Arkansas.  There  is  an  editing  committee  that  has  no 
power  to  act? 

Mr.  KYLE.  But  it  has  the  power  to  edit  in  the  sense  of  making  minor 
corrections.  Who  edits  our  debates  in  the  Senate,  I  ask  the  Senator  from 
Arkansas,  but  our  chief  stenographer? 

Mr.  JONES,  of  Arkansas.  I  am  not  talking  about  the  debates  in  the 
Senate,  but  I  am  trying  to  find  out  about  the  reports  of  the  commission. 

Mr.  KYLE.     I  want  to  draw  the  parallel  between  the  two. 

Mr.  JONES,  of  Arkansas.     Go  ahead. 

Mr.  KYLE.  We  pursue  the  same  course  in  the  commission  that  is  pur- 
sued in  this  body. 

Mr.  JONES,  of  Arkansas.     What  course  is  that,  I  should  like  to  know? 

Mr.  KYLE.     What  is  the  course  pursued  here? 

Mr.  JONES,  of  Arkansas.  I  do  not  know.  I  never  reported  a  day  in 
my  life. 

Mr.  KYLE.     I  think  the  Senator  does  understand  thoroughly. 

Mr.  JONES,  of  Arkansas.  I  do  not;  but  I  should  like  the  chairman  of 
the  commission  to  say  whether  there  is  an  editing  committee  appointed 
by  him? 

Mr.  KYLE.  None,  except  the  commission  itself,  which  only  has  the 
power  to  change  any  feature  of  the  testimony. 

Mr.  JONES,  of  Arkansas.  What  does  the  stenographer  do  and  what  do 
these  other  parties  do? 

Mr.  KYLE.  The  stenographer  has  power  to  change  certain  things;  that 
is,  to  correct  the  phraseology;  and  we  have  printed  instructions  as  to  that; 
to  correct  bad  grammar  and  things  like  that,  but  not  change  in  any  material 
sense  the  meaning  of  a  sentence  of  the  testimony  taken  before  the  com- 
mission. 

Mr.  HOAR.  May  I  ask  the  Sena'tor  from  South  Dakota,  has  anybody 
the  power  to  change  the  meaning  of  a  sentence? 

Mr.  KYLE.     No;  nobody  has  done  it,  and  nobody  has  any  power  to  do  it. 

Mr.  JONES,  of  Arkansas.  How  does  the  Senator  know  that  the  editing 
committee  does  not  change  the  meaning  of  sentences?  Does  the  Senator 
read  over  all  their  recommendations  and  all  the  testimony? 

Mr.  KYLE.  All  the  proof  is  gone  over  by  the  commission  as  a  whole, 
every  particle  of  it.  The  sub-committee  on  manufactures,  for  instance,  goes 
over  the  proof  of  all  the  testimony  taken  before  the  sub-committee  on  man- 
ufactures, and  the  sub-committee  on  agriculture  goes  over  entire  and  in 
detail  every  sentence  of  the  testimony  taken  by  the  sub-committee  on  agri- 
culture; and  after  seeing  that  the  typewritten  report  corresponds  to  the 
stenographic  notes,  if  there  are  any  material  changes  to  be  made,  such  as 
personalities  referred  to  awhile  ago,  then  the  whole  commission  take  action. 
That  is  all. 

Mr.  JONES,  of  Arkansas.  I  thought  it  was  a  9:rave  charge  that  there 
was  an  editing  committee  to  go  over  the  statements  made  by  persons  who 


32  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

should  appear  before  the  commission,  and  because  several  persons  who 
appeared  before  the  commission  have  told  me  that  their  testimony  was  out- 
rageously edited^ — which  I  was  slow  to  believe;  I  had  doubts  about  it,  was 
the  reason  I  asked  the  question.  The  Senator  from  South  Dakota  has  told 
us  that  there  was  no  such  committee,  and  then  that  "the  stenographer  and 
other  parties"  would  go  over  and  edit  it,  but  without  the  power  to  act.  I 
accept  the  statement  made  by  the  Senator  from  South  Dakota  as  true;  but 
if  the  statement  made  by  other  persons  turns  out  to  be  true,  that  their 
statements  have  been  materially  changed  and  modified  by  this  editing  com- 
mittee, it  is  a  very  serious  matter,  in  my  opinion. 

Mr.  KYLE.  I  will  set  the  Senator  right  upon  this  matter.  Just  as  I 
stated  a  moment  ago.  the  witnesses  are  called  before  the  whole  commission, 
if  in  Washington,  and  their  testimony  taken.  If  a  sub-committee,  for  in- 
stance, should  go  to  Boston  or  elsewhere  to  take  testimony,  the  witnesses 
appear  before  the  sub-committee,  give  their  testimony,  and  the  stenographic 
notes  are  brought  to  the  commission's  headquarters,  dictated  to  typewriters, 
and  written  out.  Then  the  evidence  is  read  over  and  the  chief  stenographer 
is  empowered,  under  the  printed  rules  of  the  commission,  to  make  minor 
changes  in  phraseology,  etc.,  but  in  no  case  to  change  the  meaning  of  any 
sentence. 

It  is  a  blessing,  let  me  say,  to  the  people  of  this  country  that  we  have 
a  chief  stenographer  who  edits  the  reports  of  what  goes  on  in  the  Senate  of 
the  United  States.  If  everything  was  published  just  as  it  is  taken  down 
and  not  changed  or  edited  by  the  chief  stenographer,  we  should  have  a 
queer  Record. 

Mr.  LODGE.     Will  the  Senator  allow  me  to  ask  him  a  question? 

Mr.  KYLE.     Certainly. 

Mr.  LODGE.  The  chief  stenographer  of  the  commission  simply  does 
ordinary  proof  reading. 

Mr.  KYLE.  The  chief  stenographer  of  the  commission  simply  does 
proof  reading,  that  is  all.  Then  the  copy  goes  into  the  hands  of  the  sub- 
committee to  which  the  work  is  assigned.  If  there  is  any  change  in  the 
phiaseology  or  any  cutting  out  of  the  testimony  that  makes  any  material 
change  with  regard  to  the  evidence,  the  whole  matter  is  brought  before  the 
commission  as  a  body. 

Mr.  PENROSE.  I  should  like  to  interrogate  the  Senator  from  Arkansas, 
if  he  will  permit  me? 

Mr.  JONES,  of  Arkansas.     Certainly. 

Mr.  PENROSE.  I  should  like  to  ask  the  Senator  whether  he  is  willing 
to  specify  what  is  the  particular  testimony  he  refers  to,  and  to  give  the 
names  of  the  witnesses  whose  testimony  has  been  altered,  changed  or 
garbled? 

Mr.  JONES,  of  Arkansas.  I  stated  a  while  ago,  but  I  suppose  the  Sen- 
ator was  not  present 

Mr.  PENROSE.     I  was  not  in  the  Chamber. 

Mr.  JONES,  of  Arkansas.  I  said  that  one  man,  who  stated  to  me  that 
his  testimony  has  been  materially  changed,  is  a  man  living  in  this  town,  by 
the  name  of  Sehulteis.  He  told  me  yesterday  that  every  material  statement 
made  by  him  had  been  taken  out  by  this  commission  and  that  his  statement 
was  not  printed  at  all  as  he  gave  it.  I  asked  him  if  he  had  the  testimony 
as  he  gave  it,  and  he  said  that  he  had.  I  then  asked  him  to  bring  it  to  me, 
so  I  could  take  the  statement  as  printed  by  the  commission  and  as  given 
by  him  before  the  commission  and  could  compare  the  one  with  the  other  for 
the  i)urpose  of  calling  to  the  attention  of  the  Sennte  and  of  the  chairman  of 
the  commission  that  fact,  but  he  has  not  brought  his  statement  to  me.  I 
know  nothing  more  about  it  than  what  he  has  said. 

The  Senator  from  South  Dakota  (Mr.  Pettigrew)  alluded  to  another 
case  of  which  I  had  heard,  but  wlilch  I  have  not  mentioned  at  all,  of  some 
man  whose  testimony  he  claimed  had  been  edited — that  of  Mr.  Lockwood,  I 
believe — but  outside  of  that  I  have  heard  of  another  statement  that  one  of 
the  Arbuckles  made  about  his  buying  sugar  lands  In  Cuba  and  the  reasons 
why  he  did  it,  and  that  every  word  of  the  statement  made  by  him,  which 
was  thought  by  some  gentlemen  to  be  very  material  and  important,  was  all 
stricken  out  of  the  report  of  the  commission.    Whether  these  things  are  true 


GARBLED  TESTIMONY.  33 

or  not  I  do  not  know.  I  simply  state  what  I  have  heard  on  the  outside;  and 
that  is  the  reason  I  have  asked  whether  the  statement  made  that  there  was 
an  editing  committee,  which  took  the  liberty  of  changing  a  man's  statement 
in  his  absence,  was  true  or  not  true. 

Mr.  PENROSE.  Mr.  President,  I  should  like  to  state,  as  a  member  of 
that  commission,  that  I  never  heard  a  suggestion  of  the  alteration  or  sup- 
pression of  testimony  before  the  commission.  Neither  have  I,  at  the  few 
meetings  which  I  have  been  able  to  attend,  ever  heard  a  single  partisan 
suggestion  infused  into  the  proceedings  of  the  commission.  It  has  been 
industrious,  painstaking,  conscientious,  and  careful,  in  my  judgment;  al- 
though I  must  say  as  a  member  of  it,  I  have  not  been  able  to  devote  that 
time  and  attention  to  it  which  my  interest  in  the  great  problems  confronting 
it  would  lead  me  to  do  had  I  the  time  and  the  opportunity. 

It  seems  to  me  that  these  charges  are  not  sufficiently  substantiated. 
They  are  groundless,  frivolous,  and  uncalled  for. 

Mr.  KYLE.     Will  the  Senator  allow  me  a  word  in  that  connection? 

Mr.  PENROSE.     Certainly. 

Mr.  KYLE.  The  original  stenographic  notes  of  the  testimony  taken 
before  the  commission  are  preserved  and  are  upon  the  files  of  the  commis- 
sion, so  that  a  comparison  can  be  made  by  anybody  at  any  time. 

I  will  state  that  I  corroborate  what  the  Senator  from  Pennsylvania  says. 
I  have  been  present  at  nearly  all  the  hearings  before  the  commission,  and 
I  have  not  known  it  to  be  the  case  that  alterations  of  substance  have  been 
made  in  the  testimony. 

Mr.  PENROSE.  As  to  the  appointments  of  these  commissioners  being 
based  upon  partisan  considerations,  1  believe  that  almost  every  member  of 
that  commission  has  been  appointed  by  reason  of  his  record  as  a  student 
or  as  an  expert  in  labor  and  industrial  matters,  or  by  reason  of  some  con- 
nection or  association  with  questions  of  that  character.  I  know  in  my  own 
case  my  desire  to  get  on  the  commission,  and  probably  the  reason  that  I 
was  appointed,  was  because  I  was  a  member  of  the  Committee  on  Education 
and  Labor,  and  have  always  in  my  public  career  taken  an  interest  in  labor 
organizations  and  in  labor  matters,  which  are  such  important  questions  in  the 
great  industrial  State  which  I  represent. 

I  believe  that  is  also  true  of  the  Presidential  appointees;  that  they  are 
men  skilled,  expert,  who  have  a  distinct  record  in  questions  of  this  charac- 
ter. There  has  never  been  a  suspicion  of  a  suggestion  of  partisanship  in 
any  hearing  or  any  proceeding  before  the  commission.  The  commission 
have  at  all  times  been  willing,  so  far  as  I  know,  to  hear  any  responsible 
person  who  was  willing  and  desirous  of  appearing  ])efore  them,  and  they 
have  heard  him  at  length,  carefully  and  considerately,  and  I  have  every 
reason  to  suppose  that  testimony  has  been  accurately  taken  down,  and  is 
preserved  in  the  archives  of  the  commission. 

*********** 

Mr.  KYLE.  Mr.  President,  just  one  word.  I  wish  to  say  in  regard  to 
Mr.  Lockwood's  testimony,  which  has  been  adverted  to  frequently  by  Sen- 
ators during  the  discussion  and  which  was  referred  to  by  the  Senator  from 
Florida  fMr.  Mallory)  only  a  few  moments  ago.  that  the  whole  matter  was 
taken  up  by  the  commission,  nineteen  members,  and  discussed.  The  com- 
mission were  unanimous  that  those  personal  attacks  should  be  expunged 
from  the  testimony.  By  a  subsequent  examination  of  the  whole  transac- 
tion the  Senator  from  Florida  became  convinced  that  it  should  be  stricken 
out. 

In  reference  to  the  two  men  who  have  made  the  criticisms,  Mr.  Martin 
and  Mr.  Schulteis,  I  will  state  that  they  were  very  strong  and  urgent  appli- 
cants for  positions  upon  the  commission.  Had  they  succeeded  Aery  likely 
the  commission  would  have  been  properly  constituted;  but  since  other  par- 
ties were  chosen  it  is  all  wrong. 

Mr.  CHANDLER.  I  beg  to  say  to  the  Senator  from  South  Dakota  that 
that  does  not  dispose  of  the  exact  issue  that  is  now  fairly  before  the  Senate, 
and  that  is,  whether  testimony  actually  given  by  witnesses  has  been  changed 
by  the  commission.  We  are  not  discussing  questions  of  grammar,  questions 
of  punctuation,  petty  changes  that  reporters  make  for  witnesses  or  speak- 


34  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

ers,  unless  the  witnesses  or  speakers  make  them  themselves  when  they 
revise  the  transcription  of  the  notes.  We  are  discussing  the  question  whether 
substantial  changes  have  been  made  in  the  testimony  actually  given  by 
witnesses  before  the  commission. 

Mr.  KYLE.  If  the  Senator  will  allow  me,  I  think  I  stated  while  the 
Senator  was  out  of  the  Chamber  that  no  witness'  testimony  had  been  modi- 
fied or  changed  in  any  material  point.  Where  a  witness  made  a  personal 
attack  on  individuals,  as  Mr.  Lockwood  did,  it  was  thought  not  wise  for  the 
commission  to  incorporate  that  in  the  printed  report. 

Mr.  CHANDLER.  I  have  not  been  out  of  the  chamber.  I  have  heard 
what  the  Senator  said;  and  with  his  permission  I  will  go  on  with  my 
remarks. 

Mr.  KYLE.  I  beg  the  Senator's  pardon.  I  thought  probably  he  had  not 
heard  what  I  said. 

Mr.  CHANDLER.     I  have  heard  it  twice  now. 

Mr.  KYLE.  The  commission  has  never  stricken  from  the  testimony 
anything,  even  of  this  character,  without  the  unanimous  consent  practically 
of  all  the  commissioners. 

Mr.  CHANDLER.  I  desire  to  say  that  the  power  which  the  Senator 
admits  that  the  commission  exercises  is  a  very  dangerous  power.  I  am 
speaking  now  of  the  substantial  changes  in  the  testimony  of  a  witness, 
whether  by  altering  expressions  or  by  omitting  substantial  statements  made 
by  a  witness.  I  want  to  say  that  which  I  would  have  said  before  this  time 
if  the  Senator  had  not  interrupted  me  to  repeat  the  statement  he  has  made. 
There  should  be  no  such  change  made  by  the  commission  unless  they  make  a 
memorandum  and  incorporate  it  in  their  record,  showing  exactly  what  they 
have  stricken  out  of  the  testimony  of  the  witness  and  the  reason  why  they 
have  stricken  it  out. 

There  have  been  sufficient  statements  made  here  to-day  on  the  floor  to 
lead  me  to  say  that  I  think  the  Senator  from  South  Dakota  ought  to  make  a 
more  careful  statement  to  the  Senate,  not  negatively  denying  that  anything 
has  been  stricken  out  except  a  few  personal  matters  which  the  commission 
thought  ought  to  go  out;  but  a  statement  affirmatively  showing  what  has 
been  stricken  out;  how  many  witnesses  have  had  sentences,  paragraphs, 
pages  eliminated  by  order  of  the  commission.  I  do  not  think  the  oral  state- 
ment made  by  the  Senator  from  South  Dakota  sufficiently  covers  the  ground. 
A  suspicion  has  been  aroused  in  connection  with  these  statements.  I  do 
not  assume  that  because  Mr.  Lockwood  wanted  to  be  a  member  of  this 
body,  if  he  ever  did,  and  was  not  appointed,  or  Mr.  Schulteis 

Mr.  PETTIGREW.  Mr.  Lockwood  never  wanted  to  be.  There  is  no 
such  charge. 

Mr.  GALLINGER.     Mr.  Schulteis  and  Mr.  Martin. 

Mr.  CHANDLER.  I  do  not  assume  that  because  Mr.  Lockwood  is  dis- 
satisfied with  what  the  commission  has  been  doing  therefore  he  makes  a 
false  charge.  I  do  not  believe  that  Mr.  Schulteis  or  Mr.  Martin,  because 
they  were  disappointed  in  not  being  made  members  of  the  commission,  if 
they  were  so  disappointed,  have  been  making  false  charges  against  the 
commission.  I  think  they  are  honest,  as  I  think  the  commission  have  in- 
tended to  do  exactly  right.  But  I  do  say  that  after  all  the  state- 
ments which  have  been  made  in  this  chamber  to-day  the  chairman  of  the 
commission  ought  to  prepare  and  submit  to  the  Senate  a  memorandum  tell- 
ing us  what  has  been  done  in  the  way  of  eliminating  testimony,  and  let  us 
know  how  far  the  commission  is  undertaking  to  eliminate  testimony  actually 
given  before  the  commission. 

Mr.  KYLE.  Will  the  Senator  from  New  Hampshire  allow  me?  I  think 
I  can  take  it  upon  myself  to  do  that.  We  have  the  original  notes  of  all  the 
testimony  taken  and  all  the  manuscript  presented  to  the  commission,  and  I 
think  I  can  give  him  exactly  the  information  he  desires. 

Mr.  CHANDLER.  Mr.  Schulteis  and  Mr.  Martin  may  be  disappointed 
men,  but  I  believe  they  are  honest,  and  the  statements  that  have  been  made 
in  this  Chamber  and  have  gone  out  to  the  world  to-day  will  create  an  un- 
pleasant impression,  which  I  believe  the  chairman  of  the  commission  can 
wholly  dissipate  if  to-morrow  he  will  make  and  submit  to  the  Senate  such  a 


GARBLED  TESTIMONY.  35 

statement  as  I  have  indicated.  I  do  not  desire  that  the  bill  shall  be  delayed 
for  the  purpose  of  having  the  explanation.  What  the  Senator  may  submit 
to  the  Senate  will  not  change  the  legislation,  and  I  hope  we  will  dispose  of 
this  paragraph  and  go  on  with  the  bill. 

But  I  further  hope  the  Senator  from  South  Dakota  will  make  a  memor- 
andum on  this  subject  that  can  be  submitted  to  the  Senate  and  that  we  can 
send  out  to  the  public  to  wholly  dissipate  the  impression  that  will  be  created 
by  this  day's  debate  if  he  does  not  deal  a  little  more  satisfactorily  with  the 
subject  than  he  has  by  the  general  statement  that  nothing  is  eliminated 
except  by  the  decision  of  the  commission. 

On  the  following  day,  May  29,  1900,  Mr.  Kyle  presented  from  the  Indus- 
trial Commission  an  explanation  concerning  the  changes  that  had  been 
made  in  the  testimony  of  Mr.  Lockwood.  This  explanation  was  concluded 
as  follows: 

It  may  be  said  generally  of  the  method  pursued  by  the  commission  in  the  treat- 
ment of  testimony  for  print  that  each  witness  is  given  the  fullest  opportunity  to 
have  his  remarks  appear  in  the  exact  shape  in  which  he  desires  them  to  appear.  To 
explain:  The  stenographer's  notes  of  testimony  are  placed  in  the  hands  of  the  chief 
stenographer.  It  becomes  his  function  to  get  the  copy  ready  for  the  printer.  In  doing 
this,  he  is  not  permitted  to  change  the  purport  of  the  witness'  testimony  or  to 
give  it  any  other  color  than  that  which  the  witness  himself  gave  to  it  when  on 
the  stand,  but  he  is  permitted  and  instructed  to  cut  out  matter  that  is  repeated  in 
ether  forms  elsewhere  in  that  witness'  testimony  and  to  correct  manifest  errors  of 
grammar.  When  he  is  in  doubt  as  to  the  propriety  of  striking  out  a  repetition  or 
clearing  up  an  obscure  phrase,  he  submits  the  point  to  the  commission  for  its  action. 
His  freedom  with  the  copy,  however,  is  carefully  circumscribed  by  the  following 
rules  adopted  by  the  commission  for  his  guidance. 

1.  Grammatical  errors  should  be  corrected  in  all  instances. 

2.  Repetitions  which  do  not  serve  to  emphasize  or  make  clearer  matter  under 
examination  shall  be  cut  out. 

3.  Personal  opinions  of  commissioners  must  be  eliminated. 

4.  The  name  of  the  witness,  when  used  in  a  question  addressed  to  him,  must  be 
cut  out. 

5.  Remarks  of  commissioners  immediately  preceding  questions,  which  do  not 
make  the  questions  clearer  to  the  witness,  must  be  omitted. 

6.  Ansv.ers  of  commissioners  to  questions  asked  of  witnesses  by  commissioners 
must  be  cut  out. 

7.  Opening  remarks  of  presiding  officer,  with  explanation  to  witness  of  mode  of 
examination,  shall  not  go  in  the  record.  Complimentary  remarks  of  presiding  offi- 
cer at  conclusion  of  testimony  are  to  be  omitted,  but  the  reply  of  witnesses  to  same, 
if  bearing  un  the  well-being  of  their  organizations  or  industries  or  to  the  work  of  the 
commission,  shall  be  printed. 

S.  Leading  features  (as  known  in  law)  of  a  question  should  be  avoided  as  much 
as  possible. 

9.  Where  the  meaning  of  a  question  or  answer  is  doubtful,  it  may  be  left  intact 
or  submitted  to  the  commissioner  asking  the  question. 

10.  When  partisan  politics  appears  in  question  or  testimony,  the  same  shall,  in 
accordance  with  the  rule  of  the  commission,  be  eliminated. 

11.  The  name  of  a  previously  examined  witness  shall  not  be  printed  in  questions 
tending  to  the  contradiction  of  his  testimony. 

12.  Witnesses  will  not  be  permitted,  without  the  consent  of  the  commission,  to 
eliminate  material  parts  of  their  testimony  or  change  the  form  of  questions. 

That  in  this  treatment  of  testimony  no  Injustice  may  be  done  to  any  witness,  the 
testimony  is  submitted  to  each  witness  in  type  proofs  after  the  chief  stenographer 
has  revised  it.  The  witness  is  permitted  to  m.ake  whatever  changes  in  the  type  he 
desires;  and  the  officers  of  the  commission  are  careful  to  see  that  the  pages  go  to 
press  in  the  exact  shape  in  which  the  witness  himself  prepares  them.  It  may  be 
worth  the  while  to  add  that  no  witness  has  ever  yet  complained,  after  an  inspection 
of  his  proof,  that  either  the  chief  stenographer  or  the  commission  has  garbled  his 
testimony  in  the  smallest  possible  way  or  changed  its  purport  or  tenor;  and  that, 
with  the  exception  of  Mr.  Lockwood,  none  has  yet  complained  to  the  commis- 
sion that  his  testimony  as  tinally  printed  has  misrepresented  him  in  the  least. 


36  REVIEW   OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

Another  complaint  concerning  an  alleged  change  made  in  the  report  of 
his  testimony  was  made  by  Mr.  Lockwood  in  the  following  letter,  which  was 
inserted  in  the  Congressional  Record  of  January  16,  1901: 

Zelienople,  Pa.,  January  14.  1901. 

Dear  Sir — You  will  remember  that  I  wrote  you  shortly  before  the  adjournment  of 
the  Senate  last  summer  calling  your  attention  to  the  fact  that  you  had  presented  to 
the  Senate  and  printed  in  Record,  which  appears  on  page  6736,  what  purported  to  be 
a  portion  of  my  testimony  before  the  Industrial  Commission,  in  which,  in  answer  to 
an  inquiry  as  to  what  I  knew  of  the  corruption  fund  in  New  York  State,  I  was  made 
to  say,  "No;  I  did  not  say  a  corruption  fund,  but  from  wliat  I  know  of  the  campaign 
I  am  satisfied  that  there  was  a  lot  of  money  used."  The  answer,  as  you  have  it  re- 
corded, makes  me  swear  that  I  did  not  say  what  I  had  just  said.  My  true  answer 
to  that  inquiry  was,  "Oh,  I  did  not  see  the  corruption  fund,  but  from  what  I  know  of 
the  campaign  I  am  satisfied  there  was  a  lot  of  money  used."  The  answer  as  re- 
corded in  the  Congressional  Record  substitutes  the  word  "No"  for  "Oh"  and  the 
words  "say  a"  for  the  words  "see  the,"  which  entirely  changes  the  meaning. 

Will  you  kindly  have  this  correction  entered  in  the  Record,  that  it  may  conform 
to  the  facts  and  undo,  as  far  as  possible,  the  wrong  that  has  been  done  me?  You 
will  remember  that  in  our  correspondence  over  the  matter  Professor  Jenks  ex- 
plained how  he  thought  the  mistake  might  have  been  made. 

Yours  most  truly, 

M.   L.   LOCKWOOD. 
Senator  Kyle,   Senate  Chamber,  Washington,  D.  C. 

According  to  the  stenographic  report  used  in  making  the  comparisons 
contained  in  this  volume,  Mr.  Lockwood  said  just  what  he  was  reported  as 
saying  by  the  commission's  stenographer.  The  question  and  answer  referred 
to  by  him,  according  to  this  report,  follows: 

Q.  Vice-Chairman  PHILLIPS.  You  are  not  willing  here  to  testify  that  he 
was  elected  by  a  coriuption  fund,  positively?  A.  No;  I  don't  say  a  corruption 
fund,  but  from  what  I  know  of  the  campaign  I  am  satisfied  there  was  a  lot 
of  money  used. 


CHAPTER  IV 

MISLEADING  STATEMENTS  IN  THE  COMMISSION'S 
REVIEW  AND  DIGEST  OF  EVIDENCE. 

The  Industrial  Commission  in  making  its  report  to  Congress  has  under- 
taken to  introduce  an  innovation  in  the  manner  of  presenting  the  testimony 
taken  by  it.  This  innovation  consists  of  a  "review  of  evidence"  and  a 
"digest  of  evidence,"  in  which  it  has  been  sought  to  present  in  condensed 
form  the  salient  features  of  the  testimony.  These  compilations  form  a  sort 
of  "royal  road  to  knowledge,"  a  means  by  which  a  busy  man  may  learn  by 
a  few  hours  of  reading  what  is  contained  in  hundreds  of  pages  of  testimony. 
As  a  means  of  securing  a  general  understanding  of  the  testimony  with  more 
or  less  accuracy  this  is  a  fairly  satisfactory  method,  but  if  it  should  be 
relied  upon  to  any  extent  by  Senators  and  Representatives  as  a  means  of 
securing  information  on  which  to  base  their  judgment  in  voting  upon  any 
recommendation  of  the  commission,  it  would  be  a  woefully  disappointing 
affair,  as  it  would  be  for  any  one  who  really  desires  to  know  the  facts  in 
the  case. 

The  "review"  and  "digest"  naturally  have  the  weakness  of  all  such 
efforts  of  men  to  see  things  through  the  eyes  of  some  one  else.  It  has  gen- 
erally been  considered  a  most  difficult  task  to  state  what  testimony  as  a 
whole  docs  show  when  there  are  various  qualifying  statements  which  often 
nullify  the  entire  force  of  the  statements  to  which  they  refer.  If  the  com- 
mission does  not  anticipate  that  their  review  and  digest  of  evidence  will  be 
taken  seriously  and  used  as  a  means  for  forming  an  intelligent  judgment 
of  what  the  testimony  shows,  it  cannot  be  severely  criticised,  but  if  it  Is 
seriously  offered  as  correctly  reflecting  the  essential  features  of  the  testi- 
mony it  can  not  be  defended. 


MISLEADING  STATEMENTS.  37 

The  fact  is,  instead  of  liaving  made  a  great  discovery  in  presenting  a 
""review  of  evidence"  and  a  "digest  of  evidence,"  the  Industrial  Commission 
merely  fell  into  a  snare  which  many  other  men  have  been  avoiding  in  the 
past.  There  are  numeious  publications  which  might  be  "digested"  in  a 
hundredth  part  of  the  space  they  occupy,  and  for  popular  information  it  has 
frequently  been  done.  The  elaborate  statistical  reports  of  the  Commis- 
sioner of  Labor  might  have  been  presented  so  that  their  meaning  could  be 
told  in  simple  and  brief  statements,  but  no  such  effort  has  ever  been  made 
officially,  beyond  explanations  of  the  statistics  themselves — summarizing  the 
statistics  by  giving  totals  and  other  simple  facts  that  can  not  be  disputed. 
The  Commissioner  of  Labor  has  not  n9glected  to  digest  his  statistics  because 
he  did  not  think  of  it  or  because  he  has  not  been  importuned  by  the  inex- 
perienced to  do  so  It  has  simply  been  because  he  has  realized  that  in  order 
that  a  man  may  form  a  reliable  judgment  on  certain  statements,  he  must 
see  the  statements  themselves  and  not  be  told  what  some  one  else  thinks 
they  show.  His  reports  have  been  reviewed  many  times  by  those  who  have 
cared  to  do  so,  and  they  are  subjects  for  innumerable  reviews  in  the  future, 
but  the  first  official  review  is  yet  to  appear. 

In  the  Industrial  Commission's  "review  of  evidence,"  submitted  on  the 
subject  of  trusts,  an  attempt  has  been  made  to  review  testimony  that  covers 
1,262  printed  pages  in  30  pages,  and  in  the  "digest  of  testimony"  214  pages 
are  devoted  to  a  more  extensive  summary  of  this  testimony.  In  other 
chapters  it  will  be  seen  that  the  report  of  testimony  on  which  these  sum- 
maries are  based  does  not  accord  with  the  stenographic  report.  If  the 
report  of  testimony  itself  is  not  a  reliable  reproduction  of  the  evidence  sub- 
mitted, any  review  or  digest  based  on  it  can  not  be  reliable,  however  closely 
its  statements  may  conform  to  the  text  of  the  report.  But  it  will  be  seen  by 
a  careful  comparison  of  the  statements  made  in  both  the  review  and  the 
digest  that  they  do  not  accurately  reflect  the  official  report  of  testimony. 
Statements  of  an  important  nature  are  made  in  the  summaries,  and  when  it 
is  sought  to  verify  them  it  is  shown  that  they  are  not  warranted  by  the 
replies  of  the  witnesses.  Either  the  witness  is  directly  misrepresented  or 
no  account  is  taken  of  qualifying  statements  made  by  him  in  connection 
with  his  first  remark. 

These  facts,  concerning  both  the  official  report  of  the  testimony  itself 
and  the  review  and  digest  based  on  it,  make  the  opening  sentence  of  the 
commission's  preliminary  report  on  trusts  somewhat  amusing.  After  citing 
the  act  of  Congress  creating  the  commission,  the  report  says: 

"As  the  subject  of  'trusts,'  or  industrial  combinations,  seemed  to  be  one 
upon  which  there  was  pressing  demand  for  trustworthy  information,  your 
commission  gave  it  early  attention." 

Another  evidence  of  the  tender  solicitude  with  which  Vice-Chairman 
Phillips'  trust,  the  Pure  Oil  Trust,  is  cared  for  in  the  report  of  the  commis- 
sion is  given  in  the  Review  of  Evidence  (p.  10).*  This  trust  is  referred  to 
in  the  following  language: 

"A  somewhat  similar  form  of  organization,  however. — the  voting  trust — 
is  found  at  times.  In  this  form  of  trust  the  holders  of  at  least  a  majority  of 
stock  of  a  single  corporation  put  their  stock  into  the  hands  of  trustees  for 
the  purpose  of  voting  it,  retaining  for  themselves  all  the  privileges  of  draw- 
ing dividends  and  making  transfers.  Such  a  voting  trust  has  been  formed, 
it  is  claimed,  in  the  case  of  the  Pure  Oil  Company — an  organization  of  the 
independent  oil  interests — for  the  sake  of  protecting  a  majority  of  the  stock 
against  purchase  by  the  Standard  Oil  Company.  The  Standard  had  bought 
large  blocks  of  stock  before  in  another  independent  company  with  the  prob- 
able purpose  of  securing  control.  It  will  be  observed  that  the  purpose  of 
such  a  trust  is  not  to  unite  various  corporations  under  one  management, 
but  to  secure  in  perpetuity  an  agreed-upon  policy  without  danger  of  inter- 
ference through  sales  of  individual  shareholders.  Some  profess  to  find 
danger  in  this  form  of  voting  trust,   while  others  think  it  decidedly  bene- 


*A11  references  to  pages,  on  which  quctations  appearing  in  this  chapter  are  to  be 
found,  refer  to  the  Industrial  Commission's  Report  on  Trusts,  unless  otherwise  indi- 
cated. 


38  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

ficial.  It  is,  however,  true  that  this  form  of  trust  may  put  the  direction  of  a 
company  into  the  hands  of  a  comparatively  few  members,  the  trustees,  who 
are  in  this  way  able  to  manage  the  affairs  of  the  company  and  to  secure  it 
a  permanent  policy  (whatever  later  wishes  of  stockholders  may  be)  such 
as  could  not  be  secured  under  the  ordinary  corporate  management  with  so 
great  certainty.  At  any  rate,  as  a  form  of  corporate  combination  for  the 
sake  of  securing  monopolistic  control,  the  voting  trust  does  not  seem  to  be 
now  in  vogue." 

The  reviewer  adopts  the  argument  of  the  competitors  of  the  Standard 
Oil  Company  that  the  purpose  of  their  voting  trust  was  "not  to  unite  various 
corporations  under  one  management,  but  to  secure  in  perpetuity  an  agreed- 
upon  policy  without  danger  of  interference  through  sales  of  individual  share- 
holders." The  logical  result  of  such  an  arrangement,  if  carried  out  to  its 
fullest  extent,  would  be  that  the  trustees  could  pursue  a  policy  for  their 
own  selfish  interests  and  bankrupt  the  company,  v»-hile  the  men  who  would 
suffer  financial  loss  by  their  action  could  in  no  way  control  them. 

It  is  also  asserted  that  such  a  trust  "may  put  the  direction  of  a  company 
into  the  hands  of  a  comparatively  few  members."  Anyone  who  has  read 
the  form  of  voting  trust  of  the  Pure  Oil  Trust  will  discover  that  not  only 
may  the  result  indicated  be  realized,  but  that  it  was  the  central  feature  of 
the  trust  and  if  it  was  not  formed  for  that  purpose  it  is  hard  to  discover  a 
reason  for  its  existence. 

In  the  review  (p.  17)  in  commenting  on  the  Standard's  operation  of  pipe 
lines,  it  is  asserted  that  "they"  (Standard  Oil  witnesses)  "also  conceded 
that  at  times  the  Standard  has  paid  premiums  for  the  sake  of  forcing  a 
competitor  out  of  the  business  and  that  under  similar  circumstances  it 
would  do  it  again." 

The  testimony  of  witnesses  connected  with  the  Standard  Oil  Company 
will  be  studied  in  vain  in  any  effort  to  find  a  justification  for  the  above 
statement.  The  review  refers  to  the  testimony  of  Mr.  Archbold  and  Mr. 
Rogers  as  if  it  formed  the  basis  of  the  statement.  The  part  of  the  testi- 
mony of  Mr.  Archbold,  which  comes  nearest  to  containing  the  assertion  that 
premiums  were  put  on  oil  "for  the  sake  of  forcing  a  competitor  out  of  the 
business,"  etc.,  follows   (p.  576): 

"Q.  In  the  producing  districts?  A.  The  premiums  are  usually  the  re- 
sult of  the  question  of  value  in  the  different  parts  of  the  district.  I  will  not 
say  that  in  some  cases  they  have  not  been  lower  somewhat,  caused  by  com- 
petition; where  we  have  had  private  facilities  in  certain  districts  to  take 
care  of  the  oil,  and  other  people  have  come  in  and  tried  to  take  it  away 
from  us,  in  some  cases  we  may  have  paid  more  than  we  would  like  to  pay. 
I  cannot  say;  perhaps  that  is  so;  but,  as  a  rule,  in  the  special  case  of  the 
Franklin  oil  and  the  case  of  the  Lima  oil  and  Scio  oil,  that  is  not  it.  It 
centers  entirely  on  the  question  of  value. 

\'Q.  I  infer  from  what  you  say  that  at  times,  in  order  to  dispose  of 
competitors,  the  premiums  have  been  kept  on  till  the  competitors  have  been 
bought  out  and  have  been  dropped  afterwards?  A.  As  I  said,  when  our 
bu.siness  has  been  attacked  we  have  endeavor?d  to  protect  it. 

"Q.  (By  Vice-Chairman  PHILLIPS.)  I  am  somewhat  familiar  with  the 
pipe  line  business  in  the  oil  fields.  Take  our  district,  where  an  independent 
line  went  in  a  short  distance  from  Oil  City;  a  premium  was  put  on  that  oil, 
and  no  one  claimed  that  that  oil  was  more  valuable  than  Oil  Creek  oil  or 
other  oil.  It  was  not  put  on  there  on  account  of  the  value  of  the  oil. 
A.  As  I  have  already  said,  that  may  be  a  case  in  point;  where  we  have 
found,  after  providing  these  special  facilities,  which  have  no  value  for  any 
other  purpose,  that  our  business  was  attacked  by  a  newcomer  we  have,  of 
course,  endeavored  to  protect  it." 

It  will  be  seen  that  the  references  to  forcing  a  competitor  are  limited  to 
the  questions  that  were  asked  Mr.  Archbold.  It  is  presumed  that  this 
Review  of  Evidence  is  a  review  of  the  evidence  of  witnesses  who  were  on 
the  stand  and  not  of  the  "evidence"  contained  or  implied  in  the  questions 
asked  the  witnesses  by  the  vice-chairman  of  the  commission,  one  of  his 
competitors,  or  any  other  questioner.  If  it  can  be  admitted  that  the  Standard 
Oil  Company  is  to  be  judged  by  the  questions  of  hostile  competitors,  or  any 


MISLEADING  STATEMENTS.  39 

one  else,  there  would  be  no  limit  to  the  findings  of  the  commission.  There 
is  a  vast  difference  between  paying  a  premium  to  secure  raw  material  needed 
by  a  manufacturer  in  competition  with  others  and  paying  it  to  force  the 
competitor  out  of  business.  It  is  difficult  to  imagine  how  the  Standard  Oil 
Company  could  secure  crude  oil  without  bidding  for  it  against  its  com- 
petitors. 

Here  is  another  remarkable  statement  which  appears  in  the  review 
(p.  17): 

"Owing  to  this  control  (which  seems  to  be  in  the  main  conceded  by  the 
witnesses  on  behalf  of  the  Standard  Oil  Company)  some  of  the  witnesses 
assert  that  the  tables  and  charts  of  prices  of  crude  and  export  refined  oil, 
which  show  also  the  ratios  or  margins  between  them,  misrepresent  in  many 
cases  the  real  state  of  the  business.  If  the  prices  of  crude  oil  are  fixed  arbi- 
trarily for  the  purposes  of  buying  up  oil  territory,  of  buying  out  competing 
pipe  lines,  or  of  raising  the  cost  to  independent  refiners,  or  if  losses  on 
refined  export  oil  are  recouped  by  raising  the  price  of  American  refined, 
such  figures  can  hardly  be  an  indication  of  the  real  condition  of  the  busi- 
ness. On  the  other  hand,  the  testimony  of  Mr.  Lee  in  explaining  the  course 
of  prices  of  crude  oil  over  a  series  of  years  seems  to  show  that  he  also  be- 
lieves that  the  amount  of  the  output  has,  in  spite  of  many  arbitrary  acts  of 
the  Standard,  in  the  long  run  and  on  the  whole  been  certainly  a  very  im- 
portant if  not  the  chief  cause  in  determining  its  variations  in  price." 

The  above  is  an  interesting  collection  of  "ifs"  and  the  conclusion  of 
the  reviewer  based  on  them.  The  review  might  have  been  made  still  more 
interesting  if  the  subjunctive  mood  had  been  resorted  to  still  farther.  The 
reviewer  might  have  declared  that  if  the  Standard  Oil  Company  fixes  the 
prices  at  which  it  buys  crude  and  sells  refined  oil  it  might  fix  for  the  crude 
a  still  smaller  price  than  that  which  prevails,  while  it  might  sell  refined 
oil  at  $1  a  gallon,  and  if  the  public  should  continue  to  buy  refined  oil  at  that 
price  the  Standard  would  probably  make  500  times  the  profit  it  receives,  in 
which  case  the  profit  would  be  extortionate  and  the  American  public  would 
be  treated  outrageously.  Only  the  imagination  of  Jules  Verne  would  be 
capable  of  properly  developing  the  possibilities  of  "if."  Colonel  Sellers  made 
a  masterful  use  of  "if,"  but  strangely  enough  every  inhabitant  of  the  earth 
didn't  have  sore  eyes  and  didn't  buy  his  eye  water.  Then  again,  if  some- 
thing had  really  turned  up  Micawber  would  have  had  a  full  larder,  but  as  he 
was  only  able  to  pay  his  bills  in  the  subjunctive  mood  he  had  a  hard  time 
with  his  creditors. 

The  review  divulges  another  business  principle  in  commenting  on  ways 
of  controlling  prices  (p.  18): 

"A  manufacturer  who  controls  so  large  a  proportion  of  the  product  as 
do  some  of  these  combinations  can,  beyond  question,  to  a  considerable  de- 
gree control  the  price.  Throwing  into  the  market  a  large  amount  of  goods 
at  one  time  tends  to  lower  the  price.  Likewise,  one  who  controls  plants 
enough  to  supply  the  entire  normal  demand  of  the  country  can,  evidently, 
by  closing  some  of  these  plants,  readily  raise  the  price." 

This  is  another  and  a  new  form  of  asserting  the  law  of  supply  and 
demand.  Manufacturers  of  the  country  should  be  prompt  in  adopting  this 
method  of  increasing  the  price  of  their  products. 

"One  who  controls  plants  enough  to  supply  the  entire  normal  demand 
of  the  country  can,  evidently,  by  closing  some  of  these  plants,  readily  raise 
the  price."  Of  course  while  it  was  curtailing  its  output  no  one  else  would 
supply  the  demand.  According  to  this  declaration  of  a  new  principle  it  is 
not  necessary  for  a  manufacturer  to  have  a  monopoly  of  a  product  in  order 
to  control  its  price.  If  he  has  plants  enough  to  supply  the  normal  demand 
he  can  close  some  of  them  and  raise  the  price. 

Still  another  remarkable  statement  in  the  review  follows   (p.  1<S): 

"The  pustom  has  regularly  been  for  some  years  for  the  Standard  Oil 
Company  to  announce  from  day  to  day  the  price  which  it  would  pay  for 
crude  petroleum  and  the  price  at  which  it  would  sell  refined  petroleum. 
This  price  is  generally  accepted  as  the  market  price,  and  competitors  follow." 

It  would  be  difficult  to  find  anyone  who  does  not  "announce"  the  price 
he  will  pay  and  at  which  he  will  sell  whatever  he  has.     The  bidders  at  an 


40  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

auction  sale  announce  the  price  they  will  pay  every  time  they  offer  a  bid. 
Vice-Chairman  Phillips  announced,  when  he  appeared  as  a  witness  before 
the  commission,  that  he  would  not  take  100  per  cent,  profit  for  his  stock 
in  the  pipe  lines  of  the  Pure  Oil  Trust  combination,  but  he  didn't  startle  the 
stock  market  by  this  "fixing"  of  a  price.  The  mere  fact  that  the  Standard 
Oil  Company  -'announces"  daily  the  price  it  will  pay  and  the  price  at  which 
it  will  sell  proves  that  it  is  complying  with  the  laws  of  trade — proves  that 
it  is  bargaining  every  day  under  the  influence  of  the  markets  of  the  world. 
Otherwise  there  would  be  no  reason  to  "announce"  its  price  daily.  It  could 
simply  "announce"  its  price  for  all  time. 

Referring  to  the  charges  that  the  railroads  purchase  lubricating  oils 
from  the  Standard  Oil  Company  at  high  rates,  and  in  that  way  give  the 
Standard  Oil  Company  what  is  equivalent  to  a  rebate  in  freight,  the  review 
states  that  Mr.  Howard  Page  asserted  "that  in  every  case  it  (the  Standard 
Oil  Company)  guaranteed  to  the  railroads  as  low  cost  per  train  mile  as  could 
or  would  be  furnished  by  any  of  its  opponents." 

The  fact  is,  Mr.  Page  stated  (p.  756-757)  that  the  Galena  Oil  Company 
always  guarantees  that  the  cost  of  lubricating  a  railroad  shall  not  exceed 
the  cost  of  oils  that  the  railroad  has  used  before  and  generally  guarantees  a 
reduction.  Mr.  Page's  testimony  is  very  plain  in  indicating  that  Galena  oils, 
considering  the  work  they  accomplish,  are  cheaper  than  those  of  com- 
petitors, as  will  be  seen  by  the  following  extract  from  his  testimony  (p.  757) : 
"This  guarantee  is  in  the  form  of  a  certain  cost  per  train  mile  for  the 
different  equipments  which  the  railroad  runs  over  its  rails.  That  is,  the  cost 
per  train  mile  of  engines,  freight  cars,  and  passenger  cars  is  found  from  the 
railroad's  own  books,  and  then  the  Galena  Oil  Company  guarantees  that 
railroad,  after  finding  the  cost  of  the  use  of  the  other  oils,  that  the  cost  of 
using  Galena  oils  will  be  less,  and  never  more,  than  by  using  the  other  oils. 
"Q.  (By  Mr.  CLARKE.)  You  refer  to  lubricating  oils  entirely?  A. 
Lubricating  oils  entirely,   and  signal  oils. 

"Q.  Signal  oils?  A.  The  result  of  this  has  been  that  there  has  been  a 
great  saving  in  the  cost  of  the  lubrication  of  railroads,  and  a  growing  trade 
to  the  Galena  Oil  Company.  This  saving  is  produced  by  the  fact  that  the 
Galena  oil  will  do  more  work  for  the  same  money  than  any  other  oils,  and 
experience  has  shown  that  that  result  has  been  obtained,  and  the  guarantee 
is  made  good.  And  as  regards  the  amount  of  money  that  the  railroads  pay 
to  the  Galena  Oil  Company  for  the  use  of  its  oils  as  compared  with  the  cost 
of  the  ordinary  oils  on  the  market,  it  is  shown  to  be  less." 
The  review  says   (p.  27) : 

"Witnesses,  however,  either  admitted  or  refused  to  deny  specifically 
that  the  Standard  Oil  Company  sometimes,  perhaps  regularly,  have  cars 
billed  at  24,000  pounds  over  the  Boston  &  Albany  road  when  the  shipments 
are  entirely  within  the  State  of  Massachusetts." 

Mr.  Page's  testimony  is  referred  to  to  substantiate  this  statement. 
What  Mr.  Page  did  say  was  that  the  Boston  &  Albany  railroad  had  a 
switching  charge  per  car  from  East  Boston  to  Boston,  where  the  cars  are 
delivered  to  the  New  Haven  road,  and  that  in  making  this  charge  it  was 
customary  to  bill  cars  over  the  road  for  that  purpose  at  24.000  pounds  per 
car,  and  that  that  was  the  rate  given  to  all  shippers.  The  Boston  & 
Albany  road,  wishing  to  show  its  tonnage,  simply  put  in  24,000  pounds  as 
the  weight.  Testimony  on  this  subject  offered  by  competitors  and  oppo- 
nents of  the  Standard  Oil  Company  was  to  show  that  there  was  a  discrimi- 
nating rate  in  favor  of  the  Standard.  For  that  reason  the  facts  that  the 
rate  was  per  car  and  one  that  was  charged  all  shippers  were  the  really 
salient  facts  of  the  testimony  denying  any  discrimination  in  favor  of  the 
Standard,  and  yet  the  billing  of  cars  at  24,000  pounds  is  stated,  but  the 
review  is  silent  on  the  subject  of  Mr.  Page's  clear  statement  that  it  was  a 
shipping  charge  per  car  that  it  was  customary  for  the  road  to  charge  all 
shippers.  Mr.  Page  also  stated  very  plainly  that  it  was  not  unusual  for  the 
Boston  &  Albany  road  to  have  such  a  switching  charge  as  other  railroads 
have  the  same  custom — not  for  the  Standard  especially  but  for  all  shippers. 
Here  is  another  of  the  numerous  remarkable  statements  contained  in 
the  review  (p.  27  and  28): 


MISLEADING  STATEMENTS.  41 

"It  seems  to  have  been  established  by  the  testimonj'  of  Mr.  Gall  that 
in  Canada  special  local  discriminations  between  Canadian  and  American 
oil  over  the  same  routes  have  been  made  within  the  last  year  or  two.  Mr. 
Gall  claims  that  this  is  in  favor  of  the  Standard  Oil  Company,  inasmuch  as 
that  company  has  bought  up  the  Canadian  refineries  and  thus  gets  an  ad- 
vantage from  supplying  the  Canadian  market  with  Canadian  oil  instead  of 
American  oil.  Mr.  Archbold  and  Mr.  Page  did  not  deny  that  these  dis- 
criminating rates  were  made,  nor  did  they  make  clear  the  extent  of  the 
control  which  the  Standard  Oil  Company  has  of  the  refining  interests  in 
Canada,  nor  the  relation  of  the  Standard  Oil  Company  to  the  railroads. 
These  conspicuous  local  discriminations  have  been  ordered  discontinued  by 
the  Canadian  government.  It  is  shown  also  by  several  witnesses  that  the 
freight  rates  on  oil  exported  from  the  United  States  into  Canada  have  been 
very  decidedly  increased  within  the  last  year.  Mr.  Gall  claims  that  this  is 
in  the  interest  of  the  Standard  Oil  Company  for  the  reasons  before  given." 

In  this  brief  paragraph  the  reviewer  makes  three  distinct  statements 
concerning  the  testimony  of  Mr.  Archbold  and  Mr.  Page. 

First — He  says  they  did  not  deny  that  discriminating  rates  were  made 
on  Canadian  railroads  against  American  oil.  Nothing  could  be  more  explicit 
than  their  statements  on  this  subject.  Mr.  Archbold,  in  his  testimony, 
says  (p.  573) : 

"The  advance  in  rates  on  American  oil  from  Buffalo  and  Detroit  was 
made  by  the  Canadian  roads  in  their  own  interests  and  is  in  no  way  dis- 
criminatory in  favor  of  the  Standard  Oil  Company,  but  rather  to  the  con- 
trary, for  that  company  pays  these  advanced  rates  in  full  and  ships  over 
75  per  cent,  of  the  American  oil  consumed  in  Canada." 

Mr.  Page  said   (p.  788) : 

"I  can  say  that  I  know  there  was  an  advance  in  freight  rates  from 
Detroit  and  Toledo  and  Buffalo  and  other  frontier  points  on  oil  from  the 
United  States  into  Canada.  I  can  further  add  that  we  pay  those  advanced 
rates,  and  that  we  ship  80  per  cent,  of  the  oil  that  is  exported  from  the 
United  States  into  Canada.  We  therefore  pay  four  times  as  much  as  all  the 
balance  of  the  oil  shippers  together." 

Second — The  review  says:  "Nor  did  th^y  make  clear  the  extent  of  the 
control  which  the  Standard  Oil  Company  has  of  the  refining  interests  in 
Canada." 

In  the  testimony  of  Mr.  Archbold  the  following  question  and  answer 
occur: 

"Q.  (By  Professor  JENKS.)  How  large  a  proportion  of  the  Canadian 
refining  interest  do  you  control?  A.  I  think  about  75  per  cent.;  about  7.^ 
per  cent." 

Third — The  review  says  they  did  not  make  clear  "the  relations  of  the 
Standard  Oil  Company  to  the  railroads." 

Neither  Mr.  Archbold  nor  Mr.  Page  was  asked  concerning  "the  relation 
of  the  Standard  Oil  Company  to  the  railroads"  (of  Canada),  and  therefore 
they  did  not,  as  the  review  says,  make  that  clear.  The  same  intelligent 
comment  might  have  been  made  by  the  reviewer  concerning  various  subjects 
which  the  witnesses  were  not  asked  about  and  which  probably  neither  they 
nor  any  member  of  the  commission  thought  about  at  that  or  any  other 
time. 

But  the  testimony  of  both  Mr.  Archbold  (p.  572-573)  and  Mr.  Page 
(p.  788)  clearly  indicates  that  this  discriminatory  rate  on  American  oil  was 
in  no  way  in  favor  of  the  Standard  Oil  Company. 

The  Digest  of  Evidence  will  be  found  quite  as  delusive  as  the  Review 
of  Evidence  by  anyone  who  wishes  to  learn  what  the  testimony  actually 
developed.  The  part  relating  to  the  oil  industry  is  entitled  "Standard  Oil 
Combinations."  although  the  "Pure  Oil  Combinations"  were  quite  as  inter- 
esting a  feature  of  the  testimony  as  any  other  part  of  it. 

In  the  Digest  of  Evidence  it  is  declared,  in  language  that  indicates  an 
indirect  quotation  of  Mr.  Boyle,  that  he  knew  of  a  single  instance  where 
the  Standard  Oil  Company  secured  a  right  of  way  in  order  to  prevent 
another  pipe  line  from  being  built.     The  fact  is,   Mr.   Boyle  did  not  make 


42  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

such  a  statement,  although  Mr.  Phillips'  questions  indicated  that  he  was 
endeavoring  to  secure  such  answers  from  him.  This  declaration  is  made 
in  the  digest  in  the  following  language   (p.  103): 

"Mr.  Boyle  knows  of  no  direct  opposition  of  the  Standard  Oil  Company 
to  the  passage  of  the  free  pipe  line  law  in  Pennsylvania  or  to  the  laying  of 
independent  pipe  lines,  although  he  knows  of  a  single  instance  where  the 
Standard  Oil  Company  secured  a  right  of  way  in  order  to  prevent  another 
pipe  line  from  being  built." 

On  page  474  of  the  official  report  Mr.  Boyle  testified  in  very  distinct 
language  to  the  effect  that  he  never  knew  of  the  Standard  Oil  Company 
placing  obstructions  in  the  way  of  the  construction  of  any  pipe  line,  although 
he  had  known  of  individuals  obstructing  the  Standard  Oil  Company's  opera- 
tions. This  testimony,  from  which  the  statement  in  the  digest  was  manu- 
factured and  which  in  no  way  supports  it,  follows: 

Q.  (By  Vice-Chairman  PHILLIPS.)  Was  there  not  a  great  effort  made 
in  Pennsylvania  to  get  the  right  of  eminent  domain,  and  did  not  the  Standard 
Oil  people  or  the  National  Transit  Company,  which  you  say  is  controlled  by 
the  Standard,  or  is  a  part  of  their  system,  oppose  the  giving  of  the  right 
of  eminent  domain?  Had  they  not  secured  the  right  of  Avay  by  purchase 
through  the  State  and  across  railroads,  and  when  other  companies  under- 
took to  do  that,  did  they  not  lease  and  purchase  ground  in  front  of  their 
right  of  way,  and  did  not  the  railroads  oppose  the  other  companies  passing 
under  or  over  their  ground?  Was  it  not  impossible  for  a  number  of  years 
for  other  people  to  get  to  the  seaboard  after  the  Standard  or  the  National 
Transit  Company  had  secured  their  right  of  way?  A.  I  do  not  so  under- 
stand it.  I  never  knew  of  but  one  instance  of  the  right  of  way  being 
secured. 

Q.  (By  Representative  LIVINGSTON.)  May  I  ask  what  this  testimony 
about  the  pipe  lines  is  leading  up  to,  simply  a  history  of  well-digging?  A. 
It  is  to  show  the  manner  in  which  it  is  done,  and  the  uselessness  of  the 
opposition  attempted  by  the  Pure  Oil  Trust — its  uselessness  and  inability 
to  do  any  business  where  it  was  required. 

Q.  You  want  to  show  then  that  the  oil  company  could  not  do  any 
business  on  account  of  their  being  hampered  by  the  pipe  company?  A.  No; 
they  were  not  hampered  by  the  pipe  company.  They  were  not  able  to  do 
anything  after  they  had  taken  it,  and  then  bought  a  charter  and  were  not 
obliged  to  do  anything  that  they  wanted.  It  was  a  limited  concern;  it  was 
not  organized  under  the  pipe  line  laws  of  the  State;  it  was  a  private  com- 
pany. Its  purpose  was.  in  other  words,  to  establish  the  later  movement  of 
the  Petroleum  Producers'  Association,  and  was  a  dog-in-the-manger  policy — a 
goini:  into  business  for  the  purpose  of  annoyance,  without  rendering  any 
useful  service  to  the  State. 

Q.  (By  Vice-Chairman  PHILLIPS.)  I  wanted  to  get  at  the  reason  why 
there  were  not  other  large  companies  in  opposition?  A.  I  never  knew  of 
the  Standard  Oil  Company  placing  obstructions  in  the  way  of  the  construc- 
tion of  any  pipe  line.  I  have  known  of  individuals  obstructing  the  Standard 
Oil  Company's  operations.     I  have  known  of  that. 

The  stenographic  report  shows  still  more  clearly  that  Mr.  Phillips  was 
making  a  strenuous  effort  to  have  Mr.  Boyle  state  just  what  the  Digest  of 
Evidence  says  he  did  state.  In  the  above  quotation  from  the  official  report 
it  appears  that  Mr.  Phillips  was  asking  a  series  of  questions,  while  the 
stenographic  report  shows  that  he  was  making  a  series  of  declarations  o.* 
alleged  facts.  In  other  words,  he  was  himself  giving  testimony  or  making 
an  argument  before  the  commission.  It  will  be  further  seen  that  Mr.  Smyth 
protested  against  the  course  pursued  by  the  vice-chairman,  and  that  Mr. 
Farquhar  told  Mr.  Phillips  he  thought  he  could  see  that  he  had  actually 
made  statements  in  the  character  of  an  argument.  Mr.  Kennedy  called  at- 
tention to  the  fact  that  the  rules  of  the  commission  would  not  permit  the 
asking  of  leading  questions.  This  discussion  among  members  of  the  com- 
mission was  eliminated  from  the  official  report,  but  it  is  seen  that  in  the 
Digest  of  Evidence  statements  made  by  Mr.  Phillips  are  presented  as  the 
views  of  the  witness,  Mr.  Boyle. 


MISLEADING  STATEMENTS.  43 

The  testimony  bearing  on  this  subject,  which  is  quoted  above  from 
the  official  report,  appears  in  the  stenographic  report  in  the  following  form 
(The  portions  of  questions  and  answers  in  black  face  type  are  not  given  in 
the  official  report) : 

Q.  (By  Vice-chairman  PHILLIPS.)  Was  there  not  a  great  effort  made 
in  Pennsylvania  to  get  the  right  of  eminent  domain?    A.  Yes,  sir. 

Q.  (By  Vice-chairman  PHILLIPS.)  The  Standard  Oil  people  or  the 
National  Transit  Company,  which  you  say  is  controlled  by  the  Standard 
Oil  Company,  or  is  a  part  of  their  system,  opposed  the  giving  of  the  right 
of  eminent  domain.  They  had  secured  the  right  of  way  by  purchase  through 
the  State;  they  had  secured  the  right  of  way  across  railroads;  and  when 
other  companies  undertook  to  do  that,  did  they  not  lease  and  purchase 
ground  in  front  of  their  right  of  way.  and  did  not  the  railroads  oppose  other 
companies  passing  under  or  over  their  ground?  It  was  impossible,  was  it 
not,  for  a  number  of  years  for  other  people  to  get  to  the  seaboard,  after 
the  Standard  Oil  Company  or  the  National  Transit  Company  had  secured 
their  right  of  way?  A.  I  did  not  so  understand  it,  Mr.  Chairman.  I  never 
knew  of  but  one  instance  of  a  right  of  way  being  secured  for  obstructive 
purposes. 

*Mr.  SMYTH.  I  would  submit  very  respectfully  that  the  witness  ought 
not  to  be  interrupted  so  frequently.  I  think  if  you  want  to  rebut  his  testi- 
mony that  the  proper  time  will  come  after  his  evidence  is  closed.  If  you 
have  witnesses  to  contradict  what  he  is  saying,  they  can  be  produced  then, 
but  it  seems  to  me  that  you  are  giving  testimony,  Mr.  Chairman,  without 
being  a  witness. 

Vice-Chairman  PHILLIPS.  No,  I  was  simply  asking  whether  these  were 
or  were  not  facts   in  the  case. 

Mr.  SMYTH.  I  understand  that  question  as  stating  facts  and  appealing 
to   him   to   confirm   them. 

Vice-Chairman  PHILLIPS.  I  asked  him  whether  they  were  or  were  not 
true;   that  is  all. 

Mr.  FARQUHAR.  I  think  the  chairman  will  see  that  he  has  made  state- 
ments in  the  character  of  an  argument. 

Vice-Chairman  PHILLIPS.  I  asked  him  whether  it  was  or  was  not  the 
case,  and  I  think  that  Major  Farquhar  put  the  question  about  by-products  on 
a  stronger  ground  to   Mr.   Boyle  yesterday. 

Mr.  FARQUHAR.  The  question  as  to  by-products  was  in  what  way  they 
were  manufactured. 

Mr.  KENNEDY.  I  submit  that  our  rules  will  not  permit  the  asking  of 
leading  questions,  and  a  great  deal  of  time  has  been  consumed  since  this 
witness  has  been  on  the  stand  in  asking  leading  questions.  I  think  our  ques- 
tions should  be  simple  and  direct,  and  have  no  leading  features  about  them. 

Vice-Chairman  PHILLIPS.  The  chair  will  just  make  this  further  re- 
mark. There  have  been  objections  made  to  having  long  papers  read,  and  it 
is  impossible  for  the  commission  to  remember  them,  and  they  passed  a 
rule — I  think  Major  Smyth  was  not  here  at  that  time — requiring  that  testi- 
mony be  furnished  the  commission  two  or  three  days  in  advance  when 
written.  Now,  this  is  not  for  publication,  of  course.  I  am  just  making  this 
explanation  so  that  at  any  given  point  any  commissioner  may  ask  a  ques- 
tion, as  that  rule  has  not  been  followed  very  strictly,  and  in  this  case.  I  do 
not  think  the  testimony  has  been  furnished,  and  I  have  been  following  that 
idea   with    Mr.   Boyle. 

Q.  (By  Representative  LIVINGSTON.)  May  I  ask  what  this  testimony 
about  the  pipe  lines  is  leading  up  to?  Is  this  simply  a  history  of  how  the 
oil  business  or  the  pipe  line  business  is  conducted?  A.  It  is  to  show  the 
manner  in  which  it  is  done — the  manner  in  which  the  business  is  conducted 
and  the  uselessness  of  the  opposition  attempted  by  the  Pure  Oil  Trust — 
their  uselessness  and  inability  to  do  any  business  where  it  was  required. 

Q.  You  want  to  show  that  the  oil  company  could  not  do  any  busi- 
ness?   *A.  They  could  not  do  any  business. 


*BIack  faced  type  indicates  matter  omitted,    in    the  course   of  editing,    from    the 
official  report. 


44  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

Q.  On  account  of  being  hampered  by  the  pipe  company?  A.  No;  they 
were  not  hampered  by  the  pipe  company;  *they  were  hampered  by  their  own 
inability.  They  were  not  able  to  do  anything  after  they  bought  their  char- 
ter— they  were  not  able  to  do  anything  that  they  wanted.  It  was  a  limited 
concern,  not  organized  under  the  pipe  line  laws  of  the  State,  but  it  was  a 
private  company.  Its  purpose  was,  in  other  words,  to  establish  the  later 
movement  of  the  Petroleum  Producers'  Association,  but  it  was  a  dog-in- 
the-manger  policy;  going  into  business  for  the  purpose  of  annoyance,  with- 
out rendering  any  u.?eful  service  to  the  State.  *l  regret  exceedingly  that 
that  question  was  withdrawn,  because  I  would  have  liked  to  have  answered 
it,  Mr.  Phillips. 

Mr.  FARQUHAR.     I  do  not  regard  that  it  was  withdrawn. 

Q.  (By  Vice  Chairman  PHILLIPS.)  No,  I  will  explain  furthermore 
that  I  was  trying  to  get  at  the  reason  why  there  were  not  other  large  com- 
panies on  account  of  this  opposition;  *whether  he  did  or  did  not  know  that 
to  be  the  fact?  A.  I  never  knew  of  the  Standard  Oil  Company  opposing  the 
construction  of  any  pipe  line  by  placing  obstructions  in  their  way.  I  have 
known  of  individuals  obsti'ucting  the  Standard  Oil  Company's  operations.  I 
have  known  of  that. 

On  page  104  the  following  appears  in  the  Digest  of  Evidence: 

"Mr.  Boyle  Is  inclined  to  believe  that  the  methods  used  by  the  Standard 
Oil  Company  in  opposing  the  laying  of  pipe  lines  by  the  Independent  oil 
men  are  entirely  justifiable.  It  is  just  as  fair  to  purchase  land  In  front  of  a 
pipe  line  to  prevent  its  passage  as  to  purchase  land  desired  by  a  competitor 
for  any  other  purpose,  by  offering  a  higher  price  than  the  competitor  can 
afford  to  pay.  The  duplication  of  pipe  lines  generally  is  wasteful  and  in- 
expedient." 

The  above  is  another  Instance  in  which  Mr.  Phillips'  argument  that  the 
Standard  Oil  Company  was  opposing  the  laying  of  pipe  lines  by  the  so- 
called  independents  was  adopted  in  the  Digest  of  Evidence  when  there  was 
no  warrant  for  such  a  statement  in  the  testimony  of  the  witness.  Mr.  Boyle 
had  clearly  indicated  that  he  knew  of  no  instance  in  which  the  Standard 
Oil  Company  had  opposed  the  laying  of  pipe  lines  by  other  companies 
through  the  purchase  of  land  in  order  to  obstruct  them.  The  following  Is 
the  testimony  (p.  44.5)  referred  to  in  the  Digest  of  Evidence  as  the  basis  for 
this  statement: 

Q.  (By  Vice-Chairman  PHILLIPS.)  Would  not  these  companies  have 
gained  a  good  deal  more  If  they  had  not  been  opposed  by  combinations  in 
New  Jersey  and  could  have  gotten  through  to  New  York?  Would  not  then- 
profits  have  been  much  larger  if  they  had  had  free  pipage  through  to  New 
York  as  the  Standard  Oil  Company  had?  A.  If  there  was  only  the  one 
proposition,  a  person  might  answer  that. 

Q.  Have  others  the  same  risht  to  go  through  to  New  York  that  the 
Standard  Oil  Company  has?     A.  Undoubtedly  they  have  the  right. 

Q.  And  is  it  fair  or  just  that  they  should  be  prohibited  from  exercising 
that  privilege  of  equality?  A.  Let  me  answer  that  by  comparison  in  this 
way:  I  think  it  would  be  just  as  fair  as  for  one  of  two  producers  bidding 
for  land  to  outbid  the  other  and  take  the  land  away  from  him.  If  it  is  unfair 
to  prevent  a  pipe  line  from  going  into  a  market  already  occupied,  it  is 
unfair  for  one  producer  to  compete  for  land  and  take  it  from  another  if  he 
has,  with  his  neighbor,  superior  wealth  and  ability  to  control  it. 

The  comment  by  Mr.  Boyle  on  the  general  proposition  involving  the 
right  of  one  person  to  prevent  another  entering  a  market  already  occupied 
was  made  in  reply  to  a  hypothetical  question  asked  by  Mr.  Phillips.  As  Mr. 
Boyle  had  testified  that  he  knew  of  no  instance  in  which  the  Standard  Oil 
Company  had  obstructed  the  laying  of  pipe  lines  by  others,  but  that  he  did 
know  of  one  case  in  which  the  so-called  "independents"  had  sought  to 
obstruct  the  Standard  in  such  an  undertaking,  his  reference  to  that  subject 
would  most  naturally  have  been  interpreted  as  relating  to  the  one  instance 
he  said  he  knew  about,  if  it  referred  to  any  particular  case.     The  only  place 


♦Black  facpti  type  indicates  matter  omitted,    in    the   course    of   editing,    from    the 
official  report. 


MISLEADING  STATEMENTS.  45 

from  which  the  writer  of  the  digest  could  have  got  the  idea  that  the  witness 
referred  to  the  Standard  Oil  Company  was  in  the  arguments  of  Mr.  Phillips 
himself.  This  fact  is  shown  still  more  clearly  by  the  portions  of  Mr.  Boyle's 
testimony  eliminated  from  the  official  report  and  by  Mr.  Phillips'  arguments, 
which  were  changed  from  positive  statements  to  the  form  of  questions 
before  being  published  in  the  official  report.  The  portions  of  the  stenogra- 
phic report  corresponding  to  the  questions  and  answers  quoted  above  from 
the  official  report  follow:  (The  portions  of  the  stenographic  report  which 
are  in  black  face  type  do  not  appear  in  the  official  report.) 

Q.  (By  Vice-Chairman  PHILLIPS.)  Would  or  would  not  these  compan- 
ies have  paid  a  great  deal  more  if  they  could  have  gotten  through  to  New- 
York,  and  not  have  been  opposed  by  combinations  in  New  Jersey,  *and  pre- 
vented from  getting  to  the  seaboard;  would  not  their  profits  have  been  much 
larger  if  they  had  free  pipage  to  New  York  as  the  Standard  has  to-day? 
A.  The  only  way  I  can  answer  that  is  this  (there  are  so  many  provisos  in 
it):  If  Boodles  had  a  baby  and  the  baby  grew  up  to  be  a  young  woman, 
and  she  fell  in  the  fire,  it  would  be  a  terrible  affliction.  If  there  was  only 
the  one  proposition  a  person  might  answer  that. 

Q.  (By  Vice-Chairman  PHILLIPS.)  I  have  naturally  the  same  right  and 
they  have  the  same  right  to  go  through  to  New  York  City,  if  possible,  free 
from  the  Standard  Oil  Company;  from  any  possible  combination  with  the 
Standard  Oil  Company.     A.  Undoubtedly  you  have  that  right. 

Q.  (By  Vice-Chairman  PHILLIPS.)  And  is  it  fair  that  I  should  be  pro- 
hibited from  exercising  that  privilege  cf  equality  and  justice?  A.  Let  me 
answer  that  by  comparison  ir  this  way:  If  it  is  fair  and  right  for  one  pro- 
ducer to  take  land  from  any  other  producer;  if  there  are  two  bidding  for 
that  land,  and  one  outbids  the  other  and  takes  the  land  from  him.  I  think 
that  would  be  just  as  fair  as  the  other.  If  it  is  unfair  to  prevent  a  pipe  line 
from  going  into  a  market  already  occupied,  it  is  unfair  for  one  producer  to 
compete  with  his  neighbor  and  take  the  land  from  his  grasp,  if  he  has  the 
superior  ability  and  wealth  to  control  it. 

In  the  Digest  of  Evidence,  Mr.  Lee,  Mr.  Phillips,  Mr.  Emery  and  Mr. 
Rice  are  all  referred  to  as  testifying  to  the  cost  of  pipage  of  oil.  Mr.  Lee. 
when  questioned  in  regard  to  local  pipage,  said  the  cost  was  from  seven  to 
eight  cents  a  barrel.  Both  Mr.  Phillips  and  Mr.  Emery  said  that  local  pipage 
of  oil  costs  from  three  to  five  cents  a  barrel.  Mr.  Lee's  estimate  of  the  cost 
of  pipage  was  higher  than  that  of  any  of  the  other  competitors  of  the 
Standard  Oil  Company,  yet  he  acknowledged  that  his  estimate  did  not 
include  interest  on  the  capital  invested.  This  admission,  which  modified  his 
former  statement  to  such  an  extent  as  to  render  it  worthless  as  data  for 
ascertaining  the  price  at  which  oil  can  be  piped,  was  eliminated  from  the 
official  report.  The  other  witnesses  were  not  asked  whether  their  estimates 
included  interest  on  capital  invested.  (The  testimony  of  Mr.  Lee  bearing  on 
this  subject,  with  portions  eliminated  indicated  by  black  face  type,  follows:) 

Q.  (By  Professor  JENKS.)  You  said  the  price  of  piping  is  still  20 
cents?    A.  Yes,  sir;  local  pipage. 

Q.  Could  you  give  an  estimate  as  to  what  you  think  the  cost  of  pipage 
is,  now  that  the  pipe  is  so  low?  How  would  you  estimate  it?  A.  I  think  the 
cost  of  pipage  would  be  between  seven  and  eight  cents  a  barrel. 

Q.  *That  includes  interest  on  capital  invested?  A.  No,  sir;  that  would 
simply  be  the  cost  of  pipage;   all  of  the  entire  cost. 

Q.    (By   Mr.   FARQUHAR.)      That  does   not  carry  fixed  charges,   does   it? 

Professor  JENKS.     No,  sir;   no  fixed  charges. 

Mr.  FARQUHAR.     That  is  what  I  want  to  get  at. 

Of  course  the  elimination  of  the  fact  that  the  estimate  of  the  cost  of 
pipage  did  not  include  interest  on  the  capital  invested  causes  the  statement 
in  the  Digest  of  Evidence  to  be  as  misleading  as  is  the  official  report  of  the 
testimony  in  that  respect. 


*Black  faced  type  indicates  m.-itter  omitted,    in    the  course   of   editing,    from    the 
official  report. 


46  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

The  following  is  from  the  Digest  of  Evidence  (p.  110) : 
"Mr.  Rogers  confirms  the  testimony  of  Mr.  Archbold  generally  on  this 
subject,  although  he  is  uncertain  as  to  the  proportion  of  the  stock  of  the 
Producers'  Oil  Company  held  by  the  Standard  and  by  Mr.  Carter.  He  does 
not  know  whether  Mr.  Carter  was  furnished  the  money  to  buy  this  stock 
by  a  trust  company  in  New  York  to  which  he  was  introduced  by  the  Standard 
Oil  Company,  although  it  is  possible." 

The  above  is  another  instance  of  the  careless  way  in  which  witnesses 
are  indirectly  quoted,  in  the  Digest  of  Evidence.  This  statement  indicates 
that  Mr.  Rogers  said  that  Mr.  Carter  was  introduced  to  a  trust  company  in 
New  York  to  borrow  money  to  purchase  the  stock  indicated.  The  following 
is  the  only  testimony  by  Mr.  Rogers  on  which  the  above  statement  could 
have  been  based,  and  it  will  be  clearly  seen  that  he  did  not  testify  as  repre- 
sented (page  584) : 

Q.  (By  Vice-Chairman  PHILLIPS.)  Was  not  Mr.  Carter  furnished  the 
money  to  buy  that  stock  by  a  trust  company  in  New  York?  A.  That  I  do 
not  know;  I  think  not. 

Q.  And  he  was  introduced  to  that  company  by  a  member  of  the  Standard 
Oil  Company?    A.  What  was  the  name  of  the  company? 

Q.  I  do  not  remember  the  name.  A.  He  may  have  been  introduced  to 
the  company;  I  could  not  answer  for  the  moment.  I  suppose  if  Mr.  Carter 
or  Mr.  Phillips  came  to  me  I  would  feel  perfectly  free  to  introduce  them. 

Here  again  it  will  be  seen  that  the  only  basis  for  the  statement  in  the 
digest  that  Mr.  Carter  was  introduced  by  the  Standard  Oil  Company  to  a 
trust  company  for  the  purpose  indicated,  is  to  be  found  in  the  question  by 
Mr.  Phillips. 

It  is  also  stated  in  the  digest  that  Mr.  Archbold  gave  certain  testimony 
regarding  approaches  of  Mr.  Lee,  Mr.  Phillips,  Mr.  King  and  others  to  the 
Standard  Oil  Company  with  propositions  tending  toward  a  combination  of 
interest.  A  summary  of  Mr.  Phillips'  reply  to  these  charges  is  given  as  fol- 
lows (p.  Ill): 

"Mr.  Phillips  replies  to  these  statements  of  Mr.  Archbold  that  it  is  true 
that  three  or  four  years  ago  he  himself  and  certain  others  did  call  upon  the 
officers  of  the  Standard  Oil  Company.  This  was  after  the  Standard  had 
bought  up  a  number  of  the  independent  refineries  connected  with  the  inde- 
pendent pipe  lines,  and  also  large  amounts  of  the  stock  of  the  independ- 
ent pipe  lines.  The  Standard  also  was  making  every  possible  effort  to 
prevent  the  independents  from  marketing  oil  in  Germany,  and  had  bought 
out  Mr.  Poth,  who  had  been  acting  for  the  independents  there.  The  inde- 
pendents sought  simply  to  obtain  cessation  of  hostilities.  In  lieu  thereof, 
the  Standard  Oil  Company  proposed  to  buy  the  pipe  line  system  and  when 
this  was  refused,  one  of  its  officers  proposed  to  buy  the  producing  territory 
of  these  independents,  which  was  also  refused.  There  have  been  no  recent 
overtures  by  the  independents  to  the  Standard  Oil  Company." 

According  to  the  statement  of  Mr.  Archbold's  testimony  and  of  Mr. 
Phillips'  reply,  this  approach  of  Mr.  Phillips  and  others  to  the  Standard 
Oil  Company  for  the  purpose  of  seeking  a  combination  might  have  occurred 
several  years  previous  to  the  taking  of  the  testimony  relating  to  it.  No 
reference  is  made  to  Mr.  Archbold's  statement  that  such  approaches  oc- 
curred within  the  period  of  the  investigation  which  was  being  led  by  Mr. 
Phillips,  yet  Mr.  Archbold  testified  in  part  as  follows  (p.  530) : 

"I  am  making  the  broadest  possible  denial  to  Mr.  Lee's  statement  that 
we  have  gone  after  them  with  reference  to  their  purchase  or  combination; 
and  I  am  making  in  return  a  statement  that  they  have  up  to  this  very  day, 
within  the  period  of  your  sitting  here,  approached  us  on  this  question. 

"Q.  (By  Vice-Chairman  PHILLIPS.)  Do  you  mean  to  include  all  of 
them?  A.  I  mean  to  include  the  gentlemen  I  have  named  and  others  that  I 
have  not  named." 

The  statement  that  these  approaches  were  made  up  to  the  time  of  the 
meetings  of  the  Industrial  Commission  would  appear  to  be  the  most  important 
feature  of  Mr.  Archbold's  allegation  and  one  on  which  he  should  have  been 
most  carefully  questioned,  and  yet  he  was  not  questioned  in  regard  to  it, 
and  the  fact  that  he  made  the  statement  does  not  even  appear  in  the  digest. 


MISLEADING  STATEMENTS.  47 

In  his  testimony  Mr.  Boyle  stated  that  the  United  States  Pipe  Line  had 
never  paid  a  dollar  to  its  stockholders  excepting  a  5  per  cent,  dividend  paid  at 
a  time  when  it  was  paying  nothing  on  its  fixed  indebtedness.  In  the  digest  he 
is  indirectly  quoted  as  saying  that  that  pipe  line  had  not  paid  dividends 
except  a  single  dividend  of  5  per  cent,  when  "it  had  no  fixed  charges  for 
indebtedness."  This  statement  as  given  in  the  digest  and  Mr.  Boyle's  testi- 
mony on  which  it  is  based,  follow: 

DIGEST  OF  EVIDENCE  (p.  112).  This  beneficial  effect  is  denied  by  Mr. 
Boyle.  He  believes,  on  the  whole,  that  these  independent  lines  have  been 
wasteful.  They  have  not  paid  dividends,  save  a  single  dividend  of  5  per 
cent,  by  the  United  States  Pipe  Line  at  a  time  when  it  had  no  fixed  charges 
for  indebtedness;  so  that  the  capital  invested  in  them  has  been  to  that 
extent  a  burden  on  the  oil  industry. 

MR.  BOYLE'S  TESTIMONY  (p.  443).  Q.  Was  there  another  line  built 
after  the  second  one  to  which  you  refer?  A.  The  United  States  Pipe  Line 
was  built  to  the  seaboard. 

Q.  By  whom?  A.  By  the  same  association.  A  million  dollars  were 
embarked  in  that.  Other  capital  was  added  to  that,  probably  four  or  five 
hundred  thousand  dollars,  making  upwards  of  $3,000,000  invested  in  trans- 
portation as  a  result  of  that  movement,  and  upon  which  the  stockholders 
have  never  received  a  dollar  excepting  a  5  per  cent,  dividend  paid  by  the 
United  States  Pipe  Line  at  a  time  when  it  was  paying  nothing  on  its  fixed 
indebtedness. 

"Mr.  Boyle,"  it  is  stated  in  the  digest,  "does  not  consider  that  the  trans- 
portation of  refined  oil  by  means  of  a  pipe  line  is  an  achievement  of  any  par- 
ticular significance." 

The  most  important  statement  made  by  Mr.  Boyle  in  connection  with 
the  piping  of  refined  oil  was  that  Warren  had  piped  refined  oil  a  distance  of 
three  miles  in  1865,  which  proved  conclusively  that  the  process  adopted  by 
the  so-called  independent  was  a  well-known  one. 

The  mental  bias  of  the  writer  of  the  digest  is  clearly  evidenced  in  the 
headlines  with  which  he  has  sub-divided  his  work.  On  page  112  a  digest  of 
the  "evidence  of  opponents  of  combination"  is  given  in  relation  to  certain 
alleged  competitive  methods  practiced  by  the  Standard  Oil  Company.  The 
"opponents  of  combination"  on  whose  testimony  the  statements  in  the  para- 
graph are  based,  are,  according  to  the  reference  given,  Mr.  Lee,  Mr.  Lock- 
wood  and  Mr.  Monnett.  It  is  difficult  to  understand  how  Mr.  Lee  could  be 
classed  as  an  opponent  to  combination,  being  president  of  the  Pure  Oil 
Trust  and  arranging  at  the  time  he  appeared  before  the  commission,  accord- 
ing to  his  own  evidence  and  the  evidence  of  his  associates  in  business,  a 
combination  of  several  corporations  by  means  of  a  charter  he  was  seeking 
to  obtain  in  New  Jersey.  The  indirect  quotation  from  the  evidence  of  these 
witnesses  should  have  been  classed  under  a  heading  of  "evidence  of  oppo- 
nents of  the  Standard  Oil  Company."  They  were  opponents  of  the  Standard, 
and  to  class  them  as  opponents  of  combination  was  only  another  evidence 
that  the  writer  of  the  digest  had  adopted  as  his  own  the  expression  so  com- 
monly used  by  the  business  competitors  of  the  Standard  Oil  Company.  This 
heading  "opponents  of  combination"  is  frequently  used  in  the  digest  to  indi- 
cate members  of  the  Pure  Oil  Trust  combination  and  others. 

The  establishment  of  a  grocery  store  by  Chess,  Carley  &  Co.,  at  Colum- 
bus, Miss.,  to  sell  oil  is  referred  to  in  the  digest  (p.  115)  in  which  it  is  stated 
that  this  arrangement  was  made  "before  the  Standard  Oil  Company  pos- 
sessed complete  control  of  the  Chess-Carley  Company."*  This  statement 
was  made  in  the  form  of  an  indirect  quotation  from  the  testimony  of  Mr. 
Page.  The  fact  was,  Mr.  Page  testified  that  the  establishment  of  this  gro- 
cery store  was  before  the  Standard  Oil  Company  had  any  control  or  direction 
in  Chess,  Carley  &  Co.'s  business. 

Again  on  page  157  the  writer  of  the  digest  refers  to  certain  acts  alleged 
uy  Mr.  George  Rice,  and  in  indirectly  quoting  Mr.  Howard  Page  in  reply 
thereto,  he  refers  to  the  latter's  statement,  saying:  "He  states  that  Chess, 
Carley  &  Co.  were  not  then  directly  controlled  by  the  Standard  Oil  Trust, 


*The  firm  was  first  known  as  Chess,  Carley    &    Co.,    and    later    as   Chess-Carley 
Company. 


48  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

although  the  Standard  Oil  Company  of  Ohio  had  an  interest  in  the  business. 
Mr.  Carley  was  manager,  with  complete  control,"  etc.  Mr.  Page  had  cleai'ly 
stated:  "The  Standard  Oil  Company  of  Ohio  had  an  interest  in  the  Chess- 
Carley  business,  but  absolutely  no  control  or  direction  of  that  company's 
affairs."  If  the  writer  of  the  digest  had  clearly  stated  that  he  suspected 
that  the  Standard  did  have  an  indirect  control  of  the  business  of  these  firms 
it  the  time  complained  of,  which  would  have  been  in  accord  with  the  charge 
of  Mr.  Rice,  he  at  least  would  not  have  been  guilty  of  misrepresentation. 
But  to  have  credited  Mr.  Page  with  this  statement  when  in  fact  he  testified 
in  direct  opposition  to  it,  seems  wholly  inexcusable,  especially  as  it  was  the 
aim  of  Mr.  Rice  to  show  that  the  acts  complained  of  were  the  acts  of  the 
Standard  Oil  Company. 

In  referring  to  the  letter  of  Chess,  Carley  &  Co.,  the  writer  of  the  digest 
says:  "Mr.  Rice  submitted  a  letter  from  Chess,  Carley  &  Co.,  a  representa- 
tive of  the  Standard  Oil  Company,  to  Mr.  Culp,  general  freight  agent  of  the 
Louisville  &  Nashville  Railroad."  This  is  one  of  many  instances  that  occur 
in  the  Digest  of  Evidence  in  which  it  is  difficult  for  the  reader  to  understand 
whether  the  writer  is  making  a  statement  of  an  undisputed  fact,  or  whether 
he  is  presenting  one  side  of  the  case.  From  this  language  and  the  further 
statements  that  follow,  it  v/ould  naturally  be  supposed  that  it  had  been 
established  that  Chess.  Carley  &  Co.  were  the  representatives  of  the  Stand- 
ard Oil  Company,  which,  it  will  be  seen  by  the  testimony,  was  merely 
charged  by  one  witness  and  denied  by  another  who  at  the  time  of  the  occur- 
rences referred  to  was  in  a  position  to  know  the  facts  in  the  case. 

The  indiiect  quotations  from  the  testimony  of  Mr.  Page  referred  to 
above  and  the  testimony  of  the  latter  on  which  they  were  based  follows: 

DIGEST  OF  EVIDENCE  (p.  115).  Regarding  the  above  testimony  of 
Mr.  Rice,  Mr.  Page  states  that  the  Chess-Carley  Company  did  actually 
establish  one  such  grocery  store  at  Columbus,  Miss.,  but  no  other.  This  was 
before  the  Standard  Oil  Company  possessed  complete  control  of  the  Chess- 
Carley  Company,  and  the  witness  believes  that  the  Standard  itself  has 
never  made  any  such  threats  or  actually  established  competing  stores. 

DIGEST  OF  EVIDENCE  (p.  157)  2;  Louisville  &  Nashville  Railroad. 
Mr.  Rice  submitted  a  letter  from  Chess,  Carley  &  Co.,  a  representative  of 
the  Standard  Oil  Company,  to  Mr.  Culp,  general  freight  agent  of  the  Louis- 
ville &  Nashville  Railroad: 

Chess,    Carley   &   Co.,   Louisville. 
J.   M.  Culp,  Esq.,  G.  F.  A. : 

Dear  Sir— Wilkinson  &  Co.,  Nashville,  received  car  of  oil  Monday,  13th,  70  bbls., 
which  we  suspect  slipped  thro'  on  the  USUAL  5th  class  rate — "in  fact,  we 
might  say,"  we  Itnow  it  did— paying  only  $41.50  freight  from  here.  ChargLs  $57.40. 
Please  turn  another  screw. 

Yours  truly, 
June  IG,  ISSl.  CHESS,   CARLEY   &    CO 

Wilkin.son  &  Co.  were  Mr.  Rice's  agents  at  Nashville.  Mr.  Rice  declares 
that  within  five  days  the  rates  to  Nashville  were  raised  50  per  cent.  He 
does  not  know  whether  the  Standard  Oil  Company  paid  this  full  rate  or  not, 
but  thinks  it  fair  to  presume  from  general  experience  that  it  did  not.  He 
admits  lliat  it  is  an  extremely  difficult  thing  to  prove  that  rebates  have  been 
received. 

Mr.  Page  refers  to  the  alleged  discriminations  against  Mr.  Rice  in  con- 
nection with  the  above  letter.  He  states  that  Chess,  Carley  &  Co.  were  not 
then  directly  controlled  by  the  Standard  Oil  Trust,  although  the  Standard  Oil 
Company  of  Ohio  had  an  interest  in  the  business.  Mr.  Carley  was  manager, 
with  complete  control.  The  letter  quoted  was  written  by  Mr.  Hathaway 
without  the  knowledge  of  Mr.  Carley.  Mr.  Hathaway  had  formerly  been  in 
the  employ  of  the  Louisville  &  Nashville  Railroad,  and  it  was  a  common 
expression  in  the  office  of  the  railroad  at  that  time  that  the  machinery  was 
loose  and  that  it  should  be  tightened  by  turning  a  screw.  The  expression, 
therefore,  naturally  crept  into  the  letter.  The  shipment  of  oil  by  Mr.  Rice 
to  Nashville  had  been  billed  at  less  than  the  regular  tariff  rate  which  other 
shippers  were  paying,  less  than  Mr.  Carley  himself  was  paying,  and  Mr. 
Hathaway  calls  attention  to  it  as  being  an  error  to  be  corrected. 


MISLEADING  STATEMENTS.  49 

TESTIMONY  OF  MR.  PAGE  (p.  764).  Mr.  Rice  alleges  that  the  Stand- 
ard Oil  Company  established  grocery  stores  in  the  South.  This  was  before 
the  Standard  Oil  Company  had  any  control  or  direction  in  Chess,  Carley 
&  Co.'s  business,  as  that  business  was  entirely  under  the  control  of  Mr.  F. 
D.  Carley.  And  the  establishment  of  that  grocery  store,  as  referred  to  by 
Mr.  Rice,  was  during  the  time  of  Chess,  Carley  &  Co. 

TESTIMONY  OF  MR.  PAGE  (p.  763).  Regarding  the  letter  from  Chess, 
Carley  &  Co.  to  J.  M.  Culp,  general  freight  agent  of  the  Louisville  &  Nash- 
ville Railroad  June  16.  1881,  in  which  the  expression  was  used,  "Please  turn 
another  screw."  The  firm  of  Chess,  Carley  &  Co.  was  a  partnership  in  which 
the  Standard  Oil  Company  of  Cleveland  had  an  interest.  This  was  before 
the  formation  of  the  Standard  Oil  Trust,  which  was  formed  in  1882,  and  the 
firm  of  Chess,  Carley  &  Co.,  as  I  have  testified,  was  a  partnership  in  which 
Mr.  F.  D.  Carley  was  the  resident  partner  and  manager.  The  Standard  Oil 
Company  of  Ohio  had  an  interest  in  the  Chess-Carley  business,  but  abso- 
lutely no  control  or  direction  of  that  company's  affairs.  I  was  in  the  office, 
and  the  only  boss  we  knew  was  Mr.  F.  D.  Carley.  I  should  like  to  refer  in 
regard  to  Mr.  Carley's  control  of  that  business,  to  his  testimony  taken  before 
the  Bacon  Committee  in  1888.  On  page  526  of  that  committee's  report,  Mr. 
Carley  testified  as  follows: 

"Q.  Were  you  a  member  of  the  firm  of  Chess,  Carley  &  Co.?   A.  Yes.  sir. 

"Q.  At  what  time?    A.  Through  its  whole  history. 

"Q.  Over  what  years  does  that  extend?  A.  I  do  not  remember  exactly, 
but  I  think  somewhere  about  1869  or  1870  we  formed  that  firm. 

"Q.  When  did  you  terminate  it?  A.  When  we  formed  the  Chess-Carley 
Company. 

"Q.  When  was  that?  A.  Four  or  five  years  ago.  I  was  president  of  it 
until  its  dissolution. 

"Q.  State  whether  or  not  it  was  dissolved  when  it  sold  its  property  to 
the  Standard  Oil  Company?    A.  Yes,  sir. 

"Q.  Are  you  connected  with  the  Standard  Oil  Company?    A.  No,  sir. 

"Q.  You  occupy  no  position  under  it?    A.  No,  sir. 

"Q.  Where  did  you  reside  during  the  time  you  were  a  member  of  the 
firm  of  Chess,  Carley  &  Co.  and  the  Chess-Carley  Company?  A.  Louis- 
ville, Ky. 

"Q.  Had  you  charge  of  that  business?  A.  Yes.  sir;  I  was  sole  and  exclu- 
sive manager  of  the  Chess,  Carley  &  Co.  and  of  the  Chess-Carley  Company." 

Something  of  the  prejudice  of  the  writer  of  the  digest  is  shown  in  the 
following  sentence,  which  appears  on  page  142: 

"Mr.  Boyle  also  admits  that  during  the  earlier  period  of  the  oil  business 
such  smaller  refineries  controlled  by  producers  were  handicapped  by  rail- 
road discrimination  in  favor  of  large  refiners." 

The  use  of  this  language  in  speaking  of  the  testimony  of  a  witness,  who 
was  being  questioned  on  general  conditions  in  the  oil  country  from  the 
time  of  the  development  of  the  industry,  seems  out  of  place.  The  above 
statement  was  based  on  Mr.  Boyle's  answer  to  a  question  which  in  no  way 
could  properly  be  referred  to  as  an  "admission."  The  use  of  such  language 
indicates  the  bias  in  the  mind  of  the  writer  of  the  digest.  Mr.  Boyle's 
answer  on  which  this  statement  is  apparently  based,  follows: 

TESTIMONY  OF  MR.  BOYLE  (p.  4.53):  Q.  (By  Representative  LIV- 
INGSTON.) Would  the  railroads  stand  in  the  way  of  their  organization? 
Is  that  one  of  the  impediments?  A.  I  agree  with  what  has  been  said  about 
the  early  conditions  in  the  oil  business.  The  refiners  being  able  to  offer 
inducements  to  the  railroads  in  the  way  of  very  large  shipments,  obtained 
some  concessions  which  enabled  them  to  tide  over  a  time  when  they  needed 
assistance  very  much. 

There  are  a  number  of  unsatisfactory  features  of  the  digest  which  have 
not  been  referred  to  here,  and  which  perhaps  are  of  little  consequence.  The 
writer  of  the  digest  frpquently  refers  to  matters  which  he  says  were  testi- 
fied to  by  witnesses  without  giving  either  the  names  or  the  number  of  these 
witnesses  in  order  to  convey  to  the  reader  some  idea  concerning  the  proba- 
ble reliabilitv  of  the  statements.  This  indefinite  manner  of  telling  what 
has  been  testified  to  will  doubtless  prove  to  be  unsatisfactory  to  anyone  who 
desires  to  secure  definite  ideas  from  the  reading  of  the  summarv. 


50  REVIEW   OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

The  discrepancies  indicated  above  between  the  statements  made  in  the 
Review  and  Digest  of  Evidence  and  the  official  report  of  testimony,  on 
which  they  are  based,  are  sufficient  to  show  that  these  easy  methods  for 
ascertaining  the  salient  features  of  the  testimony  are  wholly  unreliable.  No 
effort  has  been  made  to  point  out  every  inaccuracy  contained  in  these  sum- 
maries, but  merely  to  indicate  a  few  of  the  misrepresentations  that  are 
readily  detected  by  anyone  who  is  somewhat  familiar  with  the  testimony. 
It  is  not  intended  to  charge  in  this  connection,  that  these  inaccuracies  in 
summarizing  the  testimony  are  the  result  of  any  deliberate  intention  to 
misrepresent  the  case.  It  is  believed  they  rather  indicate  that  the  summar- 
izing of  testimony  in  the  form  in  which  it  has  been  attempted  in  the  official 
report  is  a  very  difficult  undertaking,  if  accuracy  is  to  be  regarded  as  its 
chief  feature  to  commend  it  to  the  reader.  Of  course  the  nr.erit,  as  well  as 
the  most  difficult  thing  to  attain,  in  a  summary  of  testimony,  is  its  compre- 
hensive nature  and  absolute  reliability  of  statement.  These  inaccuracies 
may  indicate  an  unconscious  bias  of  mind  on  the  part  of  the  writer  of  the 
Review  and  Digest.  In  fact,  the  entire  handling  of  the  testimony  seems  to 
indicate  that  some  hypnotic  influence  made  itself  generaly  felt.  Who  the 
powerful  Svengali  was  may  be  an  interesting  subject  for  speculation  and 
investigation. 

It  is  believed  that  enough  has  been  shown  in  this  chapter  to  prove  to 
the  satisfaction  of  anyone  that  in  order  to  ascertain  the  contents  of  the 
official  report  it  will  be  necessary  to  read  that  report  from  beginning  to 
end.  In  other  chapters  it  is  as  conclusively  shown  that  the  official  report 
contains  a  multitude  of  important  differences  when  compared  to  the  steno- 
graphic report  which  has  been  tised  in  compiling  this  volume.  Therefore,  it 
is  believed  that  any  fair  idea  of  what  took  place  during  the  sessions  of  the 
Industrial  Commission  at  which  testimony  bearing  on  the  oil  industry  was 
taken  can  only  be  secured  after  a  careful  study  of  the  contents  of  this 
volume. 


CHAPTER  V. 
THE  PURE  OIL  TRUST. 


The  interests  of  the  Pure  Oil  Trust  were  so  intimately  connected  with 
the  investigation  of  the  Standard  Oil  Company  before  the  Industrial  Com- 
mission that  the  history  of  the  growth  of  that  Trust  and  its  form  of  organi- 
sation cannot  fail  to  interest  those  who  study  this  testimony.  It  will  be 
seen  that  those  who  were  called  to  testify  against  the  Standard  Oil  Company 
were,  in  nearly  every  instance,  interested  in  the  Pure  Oil  Trust.  These  wit- 
nesses were  Mr.  J.  W.  Lee,  of  Pittsburg,  Pa.,  president  of  the  Pure  Oil  Trust; 
Vice-Chairman  Thomas  W.  Phillips,  who  has  a  large  interest  in  the  Pure  Oil 
Trust;  Mr.  T.  B.  Westgate,  of  Titusville,  Pa.,  a  director  in  the  Pure  Oil 
Trust,  and  manager  of  the  Producers  &  Refiners'  Oil  Company;  Mr.  Lewis 
Emery,  .Jr..  of  Bradford,  Pa.,  a  stockholder  in  the  Pure  Oil  Trust,  the 
United  States  Pipe  Line  Company,  and  the  Producers'  Oil  Company;  Mr. 
T.  F.  Davis,  oil  refiner,  of  Marietta,  Ohio;  Mr.  M.  L.  Lockwood,  of  Zelieno- 
ple.  Pa.;  Mr.  George  Rice,  producer  and  refiner  of  oil.  of  Marietta.  Ohio, 
also  appeared  against  the  Standard  Oil  Company,  together  with  Mr.  W.  H. 
Clark,  of  Newark,  Ohio,  who,  it  was  testified,  was  discharged  from  the 
Standard  Oil  Company  because  he  was  short  in  his  accounts,  and  Mr.  F.  S. 
Monnett,  Attorney-General  of  Ohio.  Other  witnesses  were  questioned  inci- 
dentally regarding  the  oil  industry. 

It  should  be  remembered  that  the  Pure  Oil  Company,  the  Producers' 
Oil  Company,  Limited;  the  Producers  &  Refiners'  Oil  Company,  Limited, 
and  the  United  States  Pipe  Line  Company  are,  in  the  words  of  Mr.  I^ee,  "all 
practically  owned  by  the  same  persons  and  operated  together." 


THE  PURE  OIL  TRUST.  51 

The  Pure  Oil  Trust  and  its  development  makes  a  imique  chapter  in  the 
history  of  trusts  of  this  country.  It  will  always  be  regarded  as  one  of  the 
monuments  that  mark  the  period  of  industrial  development  when  combina- 
tions were  the  order  of  the  day.  Like  many  other  evolutions,  the  Pure  Oil 
Trust  took  form  while  those  who  organized  it  were  clamoring  against  the 
iniquity  of  trusts  and  were  contending  for  independent  action  in  the  oil 
industiy.  Apparently  those  who  organized  the  trust  did  not  realize  that  they 
were  forming  a  real,  live  trust,  more  full  of  iniquity  and  monopolistic  and 
oxclusi'"e  features  than  anything  that  had  gone  before  it.  This,  at  any  rate, 
is  the  most  charitable  view  to  take  of  the  development  of  this  great  trust, 
because,  if  it  was  not  formed  In  this  manner,  the  men  who  organized  it  must 
have  been  hypocrites  beside  whom  Pecksniff  was  the  embodiment  of  candor 
and  honesty. 

The  builders  of  the  Pure  Oil  Trust  started  their  work  with  the  idea  that 
they  would  "get  together."  They  abhorred  everything  that  had  the  least 
resemblance  to  a  trust  and  went  to  work  to  form  a  combination  that  would 
accomplish  everything  and  more  than  any  trust  had  accomplished  up  to  that 
date,  while  in  fact  it  would  not  be  a  trust.  It  was  an  "untrustlike  trust," 
intended  to  combine  the  refining,  transportation  and  production  branches 
of  the  oil  industry  under  an  iron-clad  compact  which  would  allow  them  to 
be  wielded  with  the  force  of  a  single  corporation,  while  the  men  who  formed 
this  unique  combination  were  to  lose  none  of  their  independence.  These  men 
had  all  gloried  in  being  called  "independent"  oil  refiners  and  producers,  and 
when  they  finally  came  before  the  Industrial  Commission,  they  designated 
themselves,  and  Vice-Chairman  Phillips  constantly  designated  them,  as  the 
"independents." 

The  formation  of  this  unique  trust  was  indeed  a  mammoth  undertak- 
ing and  there  is  little  wonder  that  a  general  row  was  precipitated  when  the 
trust  was  completed  and  the  men  who  had  formed  it  saw  the  real  character 
of  their  creation.  It  was  another  Frankenstein,  the  making  of  which  was 
apparently  an  innocent  pastime  until  the  soulless,  conscienceless,  and  abom- 
inable creature,  devoid  of  all  human  sentiment,  arose  in  its  strength  to 
frighten  its  creators.  As  Frankenstein  stalked  through  the  land,  threatening 
the  destruction  of  mankind  generally,  so  this  trust,  never  before  equalled  in 
its  autocratic  powers,  stood  erect  and  began  its  career.  It  is  in  its  youth, 
and  its  end  cannot  yet  be  seen.  By  the  terms  of  its  organization,  it  disfran- 
chised hundreds  of  the  men  who  had  formed  it,  making  its  stockholders 
powerless  to  influence  its  destiny.  All  of  its  awful  power  was  lodged  in  a 
few  men  and  their  successors  in  perpetuity.  It  contained  all  the  features 
embodied  in  ordinary  trusts,  with  the  addition  of  an  iron-clad  voting 
trust.  It  contemplated  the  autocratic  rule  in  the  production,  the  transporta- 
tion and  the  refining  of  oil.     It  contemplated  an  ideal  monopoly. 

The  builder  of  this  trust  was  David  Kirk,  who  had  no  sooner  completed 
his  work,  in  conjunction  with  others,  than  he  cried  out  in  alarm,  seeking 
protection  from  the  law  against  his  own  creation. 

On  January  24,  189.5,  about  300  oil  producers  and  refiners  of  Pennsyl- 
vania, New  York  and  West  Virginia  held  a  meeting  at  Butler,  Pa.,  at  the 
request  of  the  Producers'  Oil  Company  and  certain  stockholders  of  the 
United  States  Pipe  Line  Company.  The  movement  took  tangible  form  in  a 
decision  to  organize  a  new  company  with  a  capital  stock  of  $1,000,000  to  pro- 
tect and  assist  the  interests  of  the  "independent"  refiners.  Former  State 
Senator  J.  W.  Lee,  of  the  Producers'  Oil  Company,  called  the  meeting  to 
order.  He  claimed  that  his  company  had  restored  the  price  of  oil  from  50 
cents  to  $1  per  barrel. 

"The  law  should  be  such."  said  Mr.  Lee,  "that  every  man  that  has  cap- 
ital energy,  and  integrity  should  have  the  right  to  go  into  business  without 
the  use  of  extraordinary  capital.  Nature  is  doing  more  for  us  than  we  are 
doing  for  ourselves,  as  we  now  receive  more  for  the  80,000  barrels  produced 
per  day  than  we  did  for  the  product  when  it  was  130,000  barrels  a  day.  In 
this  movement  we  bear  no  malice  and  no  enmity." 

Mr.  Lee  hinted  at  the  magnificent  opportunity  that  seemed  to  await  the 
"independent"  oil  producers  to  get  a  corner  on  oil  and  advance  its  price  as 
the  result  of  an  oil  famine.     He  ?aid: 


52  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

"It  is  your  strength  that  to-day  you  own,  that  you  produce,  a  majority 
of  all  the  oil  known  as  Pennsylvania  oil.  It  is  your  strength  that  to-day 
they  are  drawing  upon  their  stocks  at  the  rate  of  800,000  barrels  a  month. 
If  this  drain  continues  for  six  months  longer,  there  will  not  be  enough  Penn- 
sylvania oil  left  to  fill  the  pipe  lines  and  cover  the  bottoms  of  the  tanks." 

He  said  that  the  German  market  was  then  open  to  the  producers,  with 
a  decreasing  production  and  a  large  demand. 

"Your  producing  industry,"  he  continued,  "by  reason  of  the  situation 
itself,  is  absolutely  safe.  There  is  no  question  about  that.  Nature  is  doing 
for  us  more  than  we  could  do  for  ourselves  or  the  government  is  willing  to 
do  for  us.  With  80,000  barrels  production  a  day  you  are  receiving  $6,000,000 
more  for  it  a  year  than  when  you  were  producing  120,000  barrels  a  day. 
That  is  an  encouraging  fact  and  we  have  to  thank  Mother  Nature  for  reduc- 
ng  these  stocks  and  this  output  until  the  world  could  take  it  and  compel  the 
advance  in  the  crude  market." 

Mr.  David  Kirk,  on  the  same  occasion,  said  he  thought  producers  ought 
to  be  getting  from  $2  to  $5  a  barrel  for  oil  and  be  cocks  of  the  walk.  He 
made  no  reference  to  the  hardship  that  such  an  enormous  price  as  $.5  a 
barrel  for  oil  would  entail  upon  the  thousands  of  poor  people  who  are  forced 
to  use  oil  for  lighting,  cooking,  and  heating  purposes. 

Mr.  Hugh  King,  president  of  the  Columbia  Oil  Company,  of  New  York, 
said  it  was  immaterial  to  the  refiner  v/hether  he  paid  $1  or  $5  for  oil,  pro- 
vided he  secured  a  profit.  In  making  this  statement,  he  vmconsciously  con- 
tradicted the  time-worn  argument  of  his  colleagues  in  the  oil  business,  who 
so  long  contended  that  the  Standard  Oil  Company  had  forced  down  the 
price  of  oil  in  order  to  increase  its  profits. 

Mr.  C.  V.  Culver  said  that  oil  producers  were  at  that  time  getting  30 
cents  a  barrel  more  for  their  crude  oil  than  they  formerly  were  and  that  if 
they  kept  up  the  fight  they  would,  after  a  while,  be  the  magnates  in  place 
of  the  other  fellows. 

Mr.  A.  D.  Wood,  of  Warren,  Pa.,  of  the  Producers'  Oil  Company,  had 
written  a  letter  on  the  subject  of  the  movement  under  consideration  and  it 
was  read  at  the  meeting,  Mr.  Wood  evidently  fully  recognized  and  appre- 
ciated the  power  in  the  hands  of  the  oil  producers  to  corner  oil  and  to  fix 
its  pi-ice.  He  thought  the  "independents"  should  be  content  with  nothing 
less  than  a  "knock-out"  policy  in  their  relation  to  the  Standard  Oil  Company. 
He  said  in  part: 

"We  producers  of  Pennsylvania,  New  York  and  West  Virginia  hold  to- 
day the  destinies  of  the  oil  business  of  these  States  in  the  hollow  of  our 
hands.  We  own  nearly  three-fourths  of  the  production.  In  this  ownership 
we  possess  the  power  of  controlling  every  part  of  the  business.  We  can 
wrest  the  scepter  of  monopoly  from  the  Standard's  erasp  and  confine  it  to 
the  handling  of  oils  of  its  own  product,  if  we  will.  The  reduction  of  stock 
affords  the  golden  opportunity. 

"It  is  within  our  power  to  retire  the  oil,  withhold  sales  to  a  certain 
extent  from  the  Standard  or  sell  only  to  our  independent  lines,  the  effect  of 
which  would  be  to  rapidly  advance  the  price  of  crude,  and  put  it  easily 
within  our  means  to  finish  our  seaboard  pipe  line,  assist  refiners  or  build 
our  own  refineries,  if  necessary,  and  secure  our  business  at  every  point  and 
establish  it  on  a  solid,  impregnable  footing.  Let  us  stand  together,  shoulder 
to  shoulder,  pledging  mutual  fidelity  and  support,  and  vowing  to  steadfastly 
keep  on  to  the  end.  Let  us  shut  our  ears  to  any  siren  song  of  settlement. 
Lot  theie  be  no  patched  up  truce,  no  dishonoring  compromise.  Let  us 
accept  no'hing  but  the  full  fruits  of  complete  victory;  the  free,  unobstructed 
privilege  to  do  business  in  a  free  country." 

While  advocating  a  consolidation  of  enormous  extent,  Mr.  Lewis  Emery, 
Jr.,  showed  his  al)horrence  for  consolidation  during  his  speech,  in  support 
of  a  resolution  placed  before  the  meeting  by  him,  in  the  following  language: 

"I  have  been  a  lawmaker  for  12  years  of  my  life,  and  because  I  would 
not  stand  up  for  what  was  not  right  I  have  had  black  balls  thrown  at  me. 
Here  is  a  gentleman  who  has  met  me  right  in  a  battle  and  had  his  coat 
torn  off  one  nisrht  because  I  got  into  a  fight.  He  sat  with  me  for  eight  years 
in  the  Senate  and  two  in  the  House.  He  knows  the  situation.  We  call  upon 
the  Governor  of  this  State  to  defend  the  act  of  1883,*  and  if  it  comes  before 


►Mar.shall  Pipe  Line  Bill. 


THE  PURE   OIL  TRUST.  53 

him,  we  ask  him  to  send  that  bill  back  without  his  signature.  They  will 
undoubtedly  pass  it  and  will  repeal  the  act  which  prohibits  the  consolidation 
of  competing  pipe  lines.  This  was  a  law  passed  at  the  same  time  that  the 
law  was  passed  prohibiting  the  consolidation  of  railroads  and  telegraph 
lines.  I  say  again,  if  the  Legislature  of  Pennsylvania  passes  that  law,  which 
I  believe  they  will,  because  I  believe  them  to  be  under  the  corporate  powers 
of  the  country,  we  ask  Governor  Hastings  to  send  that  bill  back  without  his 
signature." 

The  following  resolution,  relative  to  the  refining  interests  and  the  pro- 
posed new  company  had  been  proposed  by  Mr.  Emery,  upon  beginning  his 
speech,  and  it  was  adopted: 

"Resolved,  That  it  is  the  sense  of  this  meeting  that  the  oil  producers 
should  sustain  financially  all  the  independent  oil  interests  with  which  they 
have,  or  may  become  identified  in  producing,  transporting  and  refining,  and 
in  which  in  connection  with  others,  they  have  invested  their  means,  and  to 
this  end  that  a  subscription  be  made  to  the  capital  stock  of  a  company  to 
be  organized,  and  that  a  paper  for  this  purpose  be  immediately  circulated  and 
signatures  obtained  thereto." 

This  seemed  a  little  vague  and  indefinite,  but  it  went  all  right  and  the 
subscription  list  was  soon  opened. 

The  three  millionaires  of  the  organization,  Peter  McDonell,  E.  H.  Jen- 
nings, M.  Murphy,  and  former  millionaire  C.  V.  Culver,  each  subscribed 
$5,000.  The  following  subscribed  $1,000  each:  James  S.  McKelvey,  John 
Galloway,  M.  L.  Lockwood,  James  Patterson,  N.  D.  Jones,  J.  W.  Lee.  Jacob 
Leidecker,  W.  H.  Odell.  D.  Bradner,  Ferd.  Reiber,  C.  P.  Collins,  H.  Grayson, 
W.  Meuhlbronner,  P.  Slagle,  W.  H.  Roessell,  John  A.  Irwin,  V.  K.  Phillips, 
Joseph  Hartman,  and  H.  C.  Litzinger.  T.  J.  Vandergrift  put  down  $2,000. 
S.  B.  Hughes,  D.  Younkins,  G.  F.  Gahaghan,  Paul  Troutman,  Macken  & 
Breckenridge,  W.  A.  Dennison.  C.  Underwood,  O.  W.  Aikens,  Dr.  J.  M. 
Bolard,  J.  M.  Aikens,  and  A.  D.  Aikens  each  gave  $500.  J.  D.  Marshall  and 
J.  C.  Hespenheide  put  down  $200  each. 

The  result  of  this  meeting  of  January  24,  1895,  was  the  formation  of  the 
Pure  Oil  Trust,  the  prospectus  of  which  follows: 

"This  company  has  been  organized,  a  charter  obtained,  and  the  follow- 
ing officers  and  directors  elected  to  serve  until  the  first  annual  meeting,  to 
be  held  on  the  fourth  Wednesday  of  January,  1896: 

President   David  Kirk 

Vice-President   James  W.  Lee 

Secretary  and  Treasurer Charles  H.  Duncan 

Directors. 

David  Kirk,  Pittsburg,  Pa.  Charles  H.  Duncan,  Oil  City,  Pa. 

James  W.  Lee,  Pittsburg,  Pa  Theo.  B.  Westgate,  Titusvilie,  Pa. 

Jerome  B.  Akin,  Washington,  Pa.  W.  L.  Curtis,  Bradford,   Pa. 

W.  A.  Dennison,  Chicora,  Pa.  M.  Murphy,  Philadelphia,  Pa. 

D.  B.  Byles,  Oil  City,  Pa. 

Trustees  Under  the  Permanent  Trust. 

Thomas  W.  Phillips,  A.  D.  Wood,  Lewis  Emery,  Jr., 

Clarence  Walker,  Louis  Walz. 

"The  special  object  of  this  company  is  to  establish  and  maintain  the 
superiority  of  what  is  commonly  known  as  White  Sand  or  Pennsylvania  oil; 
to  have  manufactured,  under  its  direction,  a  pure  article,  and  see  that  it  is 
furnished  to  the  consumer  without  adulteration.  For  this  purpose  to  estab- 
lish agencies  in  the  markets  of  the  world,  and  through  such  agencies  to 
deliver  directly  to  the  merchants  or  retailers.  The  entire  product  will  be 
inspected  and  vouched  for  by  the  Pure  Oil  Company. 

"To  maintain  and  uphold  the  inherent  right  to  do  business,  the  right 
to  transport  and  market  the  producers'  own  product,  and  his  right  to  the 
just  reward  of  his  labor  and  capital  invested. 

"To  prevent  any  interference  of  that  monopoly  which  has  obtained 
control  of  the  oil  business,  the  voting  power  of  one-half  of  the  stock  of  the 
Pure  Oil  Company  is  placed  by  the  owners  in  the  hands  of  five  champions 


54  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

of  this  right  of  independence,  who  are  bound  by  the  terms  of  a  permanent 
trust  bond,  to  vote  only  for  such  men  and  measures  as  shall  forever  make 
this  company  independent,  so  that  no  sales  of  interest  will  carry  with  them 
any  power  to  jeopardize  the  policy  or  existence  of  the  company  or  the  invest- 
ments of  its  remaining  members. 

"The  authorized  capital  is  one  million  dollars,  divided  into  two  hundred 
thousand  (200.000)  shares  of  five  dollars  ($5.00)  each,  but  it  need  not  be 
confined  to  this  sum,  as  more  or  less  can  be  profitably  used. 

"Its  plants  and  business  will  be  limited  to  its  capital;  no  debts  will  be 
incurred  for  plant  to  be  paid  out  of  its  earnings,  but  the  earnings  will  be 
paid  in  dividends. 

"The  terms  of  payment  for  this  stock  are  made  easy,  viz.,  one-fifth  cash, 
balance  in  four  equal  payments,  two  months  apart.  Those  paying  cash  or 
advance  payments,  will  be  paid  interest  for  the  extra  time  their  money  is 
paid  in.  This  interest  will  be  added  to  the  first  dividend  of  those  entitled 
thereto. 

"As  there  is  very  little  plant  to  construct,  no  long  line  to  build,  its  cap- 
ital in  cash  or  mercantile  goods,  its  earnings  will  commence  at  once. 

"This  company  is  really  to  furnish  capital  to  handle  the  products  of 
plants  already  in  operation.  It  will  not  engage  in  ruinous  competition  with 
its  powerful  competitor;  its  contest  will  be  on  quality,  not  on  price. 

"The  first  business  will  be  to  find  markets. for  the  output  of  the  Inde- 
pendent Pipe  Lines,  and  thus  not  only  make  them  more  profitable  to  their 
owners,  but  through  them  it  can  reach  great  markets  cheaper  than  its  com- 
petitors, viz.,  the  cities  of  Eastern  Pennsylvania  New  Jersey,  New  York  and 
New  England — a  people  that  will  appreciate  and  pay  for  pure  goods. 

"The  subscription  lists  to  the  stock  of  this  company  are  open  to  all  who 
desire  to  invest  in  the  same. 

"All  producers  of  Sandstone  oil  should  take  stock,  as  it  will  add  to  their 
income,  and  to  the  value  of  their  possessions. 

"All  stockholders  in  the  present  independent  pipe  lines  should  take 
stock  in  the  Pure  Oil  Company  to  make  their  present  holdings  more  re- 
munerative. 

"All  persons  who  took  stock  in  the  pipe  lines,  and  who  were  compelled 
by  necessity  or  otherwise  to  sell,  should,  now  that  prosperity  has  returned, 
take  stock  and  thus  testify  their  loyalty  to  their  leaders  and  fellow  pro- 
ducers. 

"All  persons  who  desire  a  good,  safe  and  profitable  investment  cannot 
fail  to  find  it  in  this. 

"It  is  a  matter  of  congratulation  that  the  three  pipe  lines  organized  and 
constructed  by  the  independent  producers  and  refiners  have  been  successful 
and  are  now  on  a  good  paying  basis.  The  trunk  line  of  these  companies  is 
now  being  rapidly  pushed  to  the  sea,  in  spite  of  the  desperate  efforts  of  the 
great  monopoly  to  prevent  it. 

"Subscription  papers  to  the  stock  of  the  Pure  Oil  Company  will  be  found 
in  the  hands  of  the  following  persons,  or  those  whom  they  appoint: 

"Columbia  National  Bank,  Pittsburg,  Pa. 
"David  Kirk,  Pittsburg,  Pa. 
"Clarence  Walker,  Butler,  Pa. 
"W.  A.  Dennison,  Chicora.  Pa. 
"P.   Burke,   Karns   City,   Pa. 
"S.  H.  Manifold,  Parker,  Pa. 
"W.  L.  Curtis.  Bradford,  Pa. 
"A.  D.  Wood,  Warren,  Pa. 
"Chas.    H.   Duncan,    Oil   City,   Pa. 
"Jerome  B.  Akin,  Washington.  Pa. 
"M.  L.  Lockwood.  Zelienople,  Pa. 
"F.  W.   Sprague,  Duke  Centre,  Pa. 
"Peter  Connelly,   Rew  City,   Pa. 
"Col.  Rufus  Scott.  Wellsville,  N.  Y. 
"W.  C.   Kelly.  Shannopin.  Pa. 
"Riley   Allen,   Allentown,   N.   Y. 


THE  PURE   OIL  TRUST.  55 

"George  H.  Torrey,  Oil  City,  Pa. 
"Theo.    B.    Westgate,    Titusville,    Pa. 
"T.   J.    Vandergrift,   Jamestown,    N.    Y. 
"M.   Murphy,   Pliiladelphia,    Pa. 

"Checks  and  notes  for  payment  of  stock  will  be  made  to  the  order  of 
Chas.  H.  Duncan,  treasurer  of  the  Pure  Oil  Company. 
"By  order  of  the  Board  of  Directors, 

"DAVID    KIRK,    President. 
"CHAS.   H.   DUNCAN,   Secretary." 

The  trust-smashers  had  become  trust-builders. 

It  will  be  noticed  that  in  the  prospectus  of  the  Pure  Oil  Trust  there 
was  no  intention  to  enter  into  a  competitive  business  with  anybody.  The 
idea  of  these  trust-builders  was  not  to  furnish  oil  at  a  lower  price  than  that 
which  prevailed,  although  Mr.  Phillips,  in  his  testimony  before  the  Industrial 
Commission  during  the  summer  and  fall  of  1899,  frequently  expressed  his 
feeling  of  horror  because  of  the  enormous  profits  that  he  claimed  were  being 
received  by  the  Standard  Oil  Company  for  refining  oil.  He  declared,  on 
numerous  occasions,  that  that  company  received  for  every  barrel  of  oil  it 
refined  a  profit  greater  than  the  price  they  paid  the  producer  for  the  crude 
oil.  The  plan  of  the  Pure  Oil  Trust  is  shown  by  the  following  language  of 
their  prospectus: 

"It  (The  Pure  Oil  Company)  will  not  engage  in  ruinous  competition  with 
its  powerful  competitor;  its  contest  will  be  on  quality,  not  on  price." 

The  iron-clad  trust  agreement  of  the  Pure  Oil   Trust   follows: 

"This  agreement,  made  and  entered  into  by  the  Pure  Oil  Company,  a 
corporation  organized  and  existing  under  the  laws  of  the  State  of  New 
Jersey:  David  Kirk,  Jerome  B.  Akin,  Marcus  L.  Lockwood,  Walter  A.  Den- 
nison.  Charles  H.  Duncan,  Theodore  B.  Westgate,  William  L.  Curtis,  James 
W.  Lee,  and  David  Kirk,  trustee  for  the  McCalmont  Oil  Company,  severally 
subscribers  to  and  owners  of  the  capital  stock  of  the  said  Pure  Oil  Company, 
and  Thomas  W.  Phillips,  Lewis  Emery.  Jr.,  Rufus  Scott,  Clarence  Walker, 
Louis  Walz,  James  W.  Lee,  David  Kirk,  Marcus  L.  Lockwood,  Jerome  B. 
Akin,  Charles  H.  Duncan,  Hugh  King,  Michael  Murphy,  Adolphus  A.  Hoch, 
Ferdinand  Reiber,  and  Walter  A.  Dennison.  parties  mutually  agreed  upon 
to  exercise  the  trusts  created  hereunder. 

"Witnesseth,  that  whereas,  the  Pure  Oil  Company  is  formed  for  the  pur- 
pose of  engaging  in  directly  and  of  aiding  other  companies  and  parties  en- 
gaged in  the  production,  transportation,  storage,  manufacture,  and  sale  of 
crude  petroleum  and  its  products,  and  in  any  business  incident  thereto,  and 
It  is  desired  to  enlist  therein  the  co-operation  of  other  parties,  and  to  pro- 
cure capital  to  be  invested  in  the  shares  of  its  capital  stock,  and  in  such 
other  ways  as  may  be  desirable,  which  investments  are  to  be  solicited  from 
parties  not  now  interested  in  the  company,  and 

"Whereas,  it  is  advisable,  equitable,  essential,  and  intended  for  the 
safety  and  advantage  of  all  interests  that  the  control  of  the  said  Pure  Oil 
Company  shall  be  secured  permanently,  as  to  prevent  and  render  impos- 
sible at  all  times  the  diversion  of  its  resources  and  business  from  their  in- 
tended use  and  course,  in  opposition  to  monopoly  in  the  business,  and  to  per- 
manently protect  and  maintain  what  are  known  as  the  'independent  in- 
terests' in  the  petroleum  industry,  and  to  maintain  the  policy  agreed  on  for 
conducting  the  business  of  the  company  in  the  interest  and  for  the  pro- 
tection of  all  rights  in  the  company,  created  by  mutual  agreement  of  share- 
holders, or  by  operation  of  law;  therefore  the  said  parties  hereto,  in  con- 
sideration of  the  sum  of  one  dollar  by  each  to  each  of  the  others  paid,  the 
receipt  of  which  is  hereby  acknowledged  by  each,  and  in  further  considera- 
tion of  the  mutual  benefits  received,  to  be  received,  or  expected  from  the 
agreements,  covenants  and  trusts  hereinafter  contained,  and  from  the  un- 
dertakings and  business  to  be  promoted,  do  hereby  agree  and  consent  to  the 
various  acts  and  things  hereinafter  set  forth;  provided,  however,  that  no 
party  hereto  shall  be  bound  to  do  any  act  or  thing,  or  be  responsible  for  the 
results  or  consequences  of  any  act  or  thing  done  or  omitted  to  be  done, 
except  so  far  as  relates  to  such  act  or  thing  as  he  himself  expressly  under- 
takes to  do  and  perform;   and  do  further  agree  as  follows; 


56  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

"First — The  capital  stock  of  the  Pure  Oil  Company,  as  authorized  in 
its  certificate  of  organization  is  to  be  one  million  ($1,000,000)  dollars,  repre- 
sented by  two  hundred  thousand  (200,000)  shares,  of  the  legal  value  of  five 
($5.00)  dollars  each,  divided  into  classes  and  to  be  issued,  held  and  trans- 
ferred, subject  and  according  to  law  and  the  by-laws,  rules  and  regulations 
adopted  and  approved  by  all  the  shareholders  of  the  company,  a  copy  of 
which  is  hereto  attached  and  referred  to. 

"Second — The  said  David  Kirk,  Jerome  B.  Akin,  Marcus  L.  Lockwood, 
Walter  A.  Dennison,  Charles  H.  Duncan,  Theodore  B.  Westgate,  William 
L.  Curtis,  James  W.  Lee,  and  David  Kirk,  trustee  of  the  McCalmont  Oil 
Company,  are  the  owners  of  all  the  shares  of  the  capital  stock  now  sub- 
scribed, amounting  to  three  thousand  (3,000)  shares,  of  which  they  hereby 
transfer  to  the  said  Thomas  W.  Phillips,  Lewis  Emery,  Jr.,  Rufus  Scott, 
Clarence  Walker,  Louis  Walz,  James  W.  Lee,  David  Kirk,  Marcus  L.  Lock- 
wood.  Jerome  B.  Akin.  Charles  H.  Duncan,  Hugh  King,  Michael  Murphy, 
Adolphus  A.  Hoch.  Ferdinand  Reiber,  and  Walter  A.  Dennison  sixteen  hun- 
dred (1,600)  shares,  being  more  than  a  majority  of  the  shares  of  the  com- 
pany now  subscribed,  and  agree  that  one-half  of  all  the  shares  hereafter 
subscribed  and  issued  shall  be  transferred  in  like  manner  to  the  said  parties 
and  their  associate  trustees,  as  any  may  be  appointed,  to  be  by  them  held 
in  trust  for  the  uses  and  purposes  herein  proposed,  and  subject  to  the  terms 
and  conditions  as  follows: 

"1.  The  equitable  ownership  of  the  trust  shares  and  all  interests 
therein  shall  be  subject  to  the  terms  of  this  trust  agreement,  such  owner- 
ship of  the  shares  or  interests  therein  may  be  sold  at  the  will  of  the  holder, 
but  no  sale,  transfer,  or  conveyance  of  such  ownership  or  interests  shall 
give  to  the  purchaser  any  rights  other  than  are  provided  for  in  the  by-laws, 
rules  and  regulations  of  the  company,  and  in  accordance  with  this  trust. 
The  trustees  hereunder  shall  at  all  times  be  recognized  as  the  legal  owners 
and  holders  of  the  trust  shares  to  carry  into  effect  the  purposes  of  this 
trust,  and  all  equitable  owners  of  the  trust  shares  or  interests  therein  shall 
specifically  agree,  in  writing,  to  the  terms  of  this  trust,  and  no  transfer  of 
any  such  shares  or  interest  shall  be  made,  or  be  effective  if  made,  until  the 
transferee  of  such  equitable  ownership  or  interest  shall  have  agreed  in 
writing  to  receive  and  hold  the  same  subject  to  the  provisions  of  this  trust. 

"2.  At  all  meetings  of  the  company  for  the  election  of  directors,  or 
for  any  other  purpose,  to  cast  the  entire  number  of  votes  which,  as  holders 
of  the  said  shares,  they  would  be  entitled  to  cast. 

"3.  Each  trustee  at  such  meeting  shall  be  entitled  to  cast  an  equal 
number  of  all  the  votes  which  all  of  the  trustees  would  be  entitled  to  cast 
in  the  aggregate,  if  present,  except  as  hereinafter  provided. 

"4.  In  case  of  differences  of  opinion  among  the  trustees  present  at  any 
such  meetings  as  to  how  such  votes  shall  be  cast  in  regard  to  any  matter 
or  thing  to  be  voted  on.  they  shall  be  cast  as  the  representatives  of  four- 
fifths  of  all  the  shares  held  under  this  trust  may  direct  in  writing  if  so  de- 
manded in  writing  by  any  of  the  trustees. 

"5.  Any  trustee  unable  to  attend  any  meeting  of  shareholders  and  to 
personally  cast  the  votes  he  would  be  entitled  to  cast,  if  present,  may  au- 
thorize any  other  trustee  to  cast  the  vote  which  he  would  be  entitled  to 
cast  if  personally  present,  which  authority  shall  be  in  writing,  approved  by 
three-fifths  of  the  trustees  other  than  himself. 

"6.  When  none  of  the  trustees  can  be  present  at  any  meeting  of  the 
stockholders,  legally  held,  they  may  be  represented  in  proxy  by  an  attorney 
appointed  in  writing,  executed  by  three-fifths  of  the  trustees. 

"7.  The  trustees  may  execute  such  consents  in  writing  as  in  their 
opinion  it  may  be  right  and  proper  for  them  to  do  in  the  interest  of  the 
Pure  Oil  Company,  and  of  the  owners  of  the  shares  held  by  them  in  trust, 
provided  that  no  such  consents  shall  be  executed  against  the  objection  of 
the  equitable  owner  of  10  per  cent,  of  the  shares  held  by  them  in  trust, 
unless  after  the  question  of  executing  such  consent  shall  have  been  sub- 
mitted in  person,  or  by  writing,  properly  addressed  to  the  several  equitable 
owners  of  the  shares  held  in  trust  and  approved  in  writing  by  such  owners 
of  three-fifths  of  such  shares. 


THE  PURE  OIL  TRUST.  57 

"8.  The  number  of  trustees  may  be  increased  or  diminished  at  any 
time;  or  any  trustee  may  be  removed,  without  assignment  of  cause  or  rea- 
son therefor,  by  three-fifths  of  the  trustees  and  the  written  consent  of  the 
equitable  owners  of  three-fifths  of  the  shares  held  in  trust  hereunder;  and 
upon  such  removal,  or  on  filing  of  such  written  consent  with  the  secretary 
of  the  company  and  on  notice  in  writing  delivered  to  the  party  so  removed, 
or  sent  by  registered  letter  to  his  proper  address,  the  rights,  duties,  and 
obligations   of  such   party,   as  trustee,   shall  immediately  cease. 

"9.  In  case  of  death,  resignation,  or  removal  of  any  of  the  trustees 
the  trust  shall  be  exercised  by  the  remaining  trustees  until  the  vacancy  be 
filled  by  the  appointment  of  new  trustees  for  that  purpose,  on  the  nomina- 
tion of  the  equitable  owners  of  a  majority  of  the  shares  previously  repre- 
sented by  the  trustee  whose  place  is  vacated  with  the  consent,  in  writing, 
of  the  equitable  owners  of  three-fifths  of  the  shares  held  under  this  trust, 
and  the  approval  of  the  three-fifths  of  the  trustees. 

"10.  No  trustee  has  any  such  beneficial  interest  in  this  trust,  per- 
sonally, as  to  entitle  him  to  maintain  any  action  at  law  or  in  equity,  to 
enjoin  delay,  hinder,  or  prevent  his  removal  from  the  trusteeship;  or  to 
recover  any  damages  on  account  thereof  from  the  company  or  the  trustees, 
or  from  the  individual  stockholders  by  whose  action  he  may  have  been 
removed. 

"11.  The  trustees  shall  appoint  a  chairman  and  secretary  and  shall 
keep  regular  accounts  showing  the  ownership  and  residence  of  the  various 
equitable  owners  of  the  shares  held  by  them  in  trust,  and  shall  execute  and 
deliver  to  such  several  owners  certificates  in  due  form,  approved  by  the 
directors  of  the  company,  evidencing  the  number  of  shares  held  by  them  in 
trust  for  each  of  such  several  owners,  and  shall  make  such  transfers  of 
any  of  the  shares  as  they  may  be  requested  to  do  by  such  several  owners, 
on  the  surrender  of  such  certificates  representing  such  shares,  properly 
endorsed  assigned  for  transfer  subject  to  the  terms  of  this  Permanent  Trust, 
any  of  the  shares  thereby  represented  in  the  manner  prescribed  for  making 
such  transfer. 

"12.  The  trustees  shall  immediately  advise  the  company,  by  writing, 
addressed  to  the  secretary,  of  any  transfer  of  ownership  of  any  of  the  shares 
held  by  them;  and  shall,  on  written  request  of  the  treasurer  of  the  com- 
pany, certify  to  him  the  names  and  residences  of  all  equitable  owners  of 
shares  held  by  them  in  trust;  and  shall  sign  warrants  for  the  payment  to 
such  owners,  severally,  of  any  dividends  to  which  he  may  be  entitled  on 
the  share  so  held  in  trust. 

"Third — This  agreement  may  be  changed  at  any  time  only  with  the 
consent,  in  writing,  of  the  Pure  Oil  Company,  three-fifths  of  the  persons  at 
the  time  acting  as  trustees  hereunder,  and  of  the  equitable  owners  of  three- 
fifths  of  the  shares  held  in  trust  thereunder. 

"Fourth — This  agreement  may  be  cancelled,  and  the  trust  hereby  created 
dissolved,  only  by  the  winding  up  of  the  Pure  Oil  Company,  or  by  the  con- 
sent, in  writing,  duly  executed,  of  the  equitable  owners  of  four-fifths  of  the 
shares  held  in  trust  hereunder,  and  of  four-fifths  of  all  the  other  shares  of 
the  company,  AFTER  PROVIDING  IN  FULL  FOR  THE  REDEMPTION  OR 
PURCHASE,  AT  ONE  HUNDRED  AND  TEN  DOLLARS  PER  SHARE,  IN 
CASH,  of  all  the  preferred  and  common  shares  of  the  company  at  the  time 
outstanding. 

"Fifth — The  said  Thomas  W.  Phillips,  Lewis  Emery.  Jr..  Rufus  Scott, 
Clarence  Walker,  Louis  Walz,  James  W.  Lee,  David  Kirk,  Marcus  L.  Lock- 
wood.  James  B.  Akin,  Charles  H.  Duncan,  Hugh  King.  Michael  Murphy, 
Adolphus  A.  Hoch,  Ferdinand  Reiber,  and  Walter  A.  Dennison  hereby  accept 
the  trust  herein  conferred  and  imposed  on  them. 

"In  witness  whereof  the  parties  hereto  have  severally  signed  this  agree- 
ment as  of  the  6th  day  of  November,  A.  D.  eighteen  hundred  and  ninety-five. 

"PURE    OIL   COMPANY, 

"DAVID   KIRK,   President. 
"C.  H.  DUNCAN,   Treasurer. 


58  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

"Incorporators — David  Kirk,  Jerome  B.  Akin,  Marcus  L.  Lockwood, 
Walter  A.  Dennison,  C.  H.  Duncan,  Theodore  B.  Westgate,  James  W.  Lee, 
David  Kirk,  trustee  for  McCalmont  Oil  Company;  W.  L.  Curtis,  Thomas  W. 
Phillips,  David  Kirk,  Marcus  L.  Lockwood,  Clarence  Walker,  James  W.  Lee. 

"Trustees — Walter  A.  Dennison,  Jerome  B.  Akin,  C.  H.  Duncan,  Adolphus 
A.  Hoch,  Ferd.  Reiber,  Louis  Walz,  Rufus  Scott,  Lewis  Emery,  Jr.,  M. 
Murphy,  H.  King."* 


*A  later  and  modified  form  of  this  trust  agreement,  involving  many  verbal 
changes   was   furnished   to    the   commission  by  Mr.  J.  W.  Lee,  and  is  as  follows: 

"Ihis  agreement  made  and  entered  into  by  the  Pure  Oil  Company,  a  corporation 
organized  and  existing  under  the  laws  of  the  State  of  New  Jersey,  David  Kirk, 
Jerome  B.  Akin,  Marcus  L.  Lockwood,  Walter  A.  Dennison,  Charles  H.  Duncan, 
Theodore  B.  Westgate,  William  L.  Curtis,  James  W.  Lee,  and  David  Kirk,  trustee 
for  the  McCalmont  Oil  Company,  and  Thomas  W.  Phillips,  Lewis  Emery,  Jr.,  Rufus 
Scott,  Clarence  Walker,  Louis  Walz,  James  W.  Lee,  David  Kirk,  Marcus  L.  Lock- 
wood,  Jerome  B.  Akm,  Charles  H.  Duncan,  Hugh  King,  Michael  Murphy,  Adolphus 
Hoch,  Ferdinand  Reiber,  and  Walter  A.  Dennison,  parties  mutually  agreed  upon  to 
exercise  the  trusts  created  hereunder: 

"Witnesseth,  That  whereas  the  said  Pure  Oil  Company  is  formed  for  the  pur- 
pose of  engaging  in  directly,  and  of  aiding  other  companies  and  parties  engaged  in 
the  production,  transportation,  storage,  manufacture,  and  sale  of  crude  petroleum 
raid  its  products  and  in  any  business  incident  thereto;  and  it  is  desired  to  enlist 
therein  the  co-operation  of  other  parties,  and  to  procure  capital  to  be  invested  in  tht 
shares  of  its  capital  stock,  and  in  such  other  ways  as  may  be  desirable,  which  in- 
vestments are   to   be   solicited   from   part'es  not  now  interested  in  the  company,  and, 

"Whereas,  It  is  advisable,  equitable,  essential,  and  intended  for  the  safety  and 
advantage  of  all  interests  that  the  control  of  the  said  Pure  Oil  Company  shall  be  so 
created  as  to  prevent  and  render  impossible  at  all  times  the  diversion  of  its  resources 
and  business  from  their  intended  use  and  course,  in  opposition  to  monopoly  in  the 
business,  and  to  protect  and  maintain  what  are  known  as  'the  independent  interests* 
in  tne  petroleum  industry,  and  to  maintain  the  policy  agreed  on  for  conducting  the 
business  of  the  company,  created  by  mutual  agreement  of  shareholders  or  by  opera- 
tion of  law: 

"Therefore,  the  said  parties  hereto,  in  consideration  of  the  sum  of  one  dollar  by 
eacl;  to  each  of  the  others  paid,  the  rece'pt  of  which  is  hereby  acknowledged  by  each, 
and  in  further  consideration  of  the  mutual  benefits  received,  to  be  received,  or 
expected,  from  the  agreements,  covenants  and  trusts  hereinafter  contained,  and 
from  the  undertakings  and  business  to  be  promoted,  do  hereby  agree  and  consent  to 
the  various  acts  and  things  hereinafter  set  forth;  provided,  however,  that  no  party 
hereto  shall  be  bound  to  do  any  act  or  thing  or  be  responsible  for  the  results  or 
consequences  of  any  act  or  thing  done  or  omitted  to  be  done,  except  so  far  as 
relates  to  such  act  or  things  as  he  himself  expressly  undertakes  to  do  and  per- 
form; and  do  further  agree  as  follows: 

"J-nst — The  capital  stock  of  the  Pure  Oil  Company,  as  authorized  in  its  certifi- 
cate of  organization,  is  to  be  one  million  ($1,000.0110)  dollars,  represented  by  two  hun- 
dred thousand  (200,000)  shares,  of  the  legal  par  value  of  five  ($5.00)  dollars  each, 
divided  into  classes,  and  to  be  issued,  held  and  transferred,  subject  and  according 
to  law  and  the  by-laws,  rules  and  regulations  adopted  and  approved  by  all  the 
shareliolders  of  the  company,  a  copy  of  which  is  hereto  attached  and  referred  to. 

"Second— The  said  David  Kirk,  Jerome  B.  Akin,  Marcus  L.  Lockwood,  Walter 
A.  Dennison,  Charles  H.  Duncan,  Theodoie  B.  Westgate,  William  L.  Curtis,  James 
W.  Lee,  and  David  Kirk,  trustee  for  the  McCalmont  Oil  Company,  are  the  owners 
of  all  the  shares  of  the  capital  stock  now  subscribed,  amounting  to  three  thousand 
(3,000)  shares,  of  which  they  hereby  transfer  to  the  said  Thomas  W.  Phillips,  Lewis 
I'^mery,  Jr.,  Rufus  Scott,  Clarence  Walker,  Louis  Walz,  James  W.  Lee,  David  Kirk, 
Marcus  L.  Lockwood,  Jerome  B.  Akin,  Charles  H.  Duncan,  Hugh  King,  Michael 
Murphy,  Adolphus  A.  Hoch,  Ferdinand  Reiber  and  Walter  A.  Dennison,  sixteen 
hundred  (1,600)  shares,  being  more  than  a  majority  of  the  shares  of  the  company 
iKjw  subscribed,  and  agree  that  one-half  of  all  the  shares  hereafter  subscribed  and 
issued  shall  be  transferred  in  like  manner  to  the  said  parties  and  their  associate 
trustees,  as  any  may  be  appointed,  to  be  by  them  held  in  trust  for  20  years  from 
oragnization  of  the  company,  for  the  uses  and  purposes  herein  proposed,  and  sub- 
ject to  the  terms  and  conditions  as  follows: 

"1.  The  equitable  ownership  of  the  trust  shares  and  all  interests  therein  shall 
be  subject  to  the  ti-rm.s  of  this  trii.st  agr;-ement.  Such  ownership  of  the  shares  or 
interests  therein  may  be  sold  at  the  will  of  the  holder,  but  no  sale,  transfer,  or  con- 
veyance of  such  ownership  or  interests  shall  give  to  the  purchaser  any  rights  other 
than  are  provided  for  in  the  by-laws,  rules  and  regulations  of  the  company  and  in 
accordance  with  this  trust.  The  trustees  hereunder  shall  at  all  times  be  recog- 
nized as  the  legal  owners  and  holders  of  the  trust  sl.ares,  to  carry  into  effect  the 
purposes  of  this  trust,  and  all  equitable  owners    of    the    trust    shares    or    interests 


THE  PURE  OIL  TRUST.  59 

therein  shall  specifically  agree  in  writing  lo  the  terms  of  this  trust;  and  no  trans- 
fer of  any  such  shares  or  interests  shall  be  made,  or  be  effected,  if  made,  until  the 
transferee  of  any  such  equitable  ownership  or  interest  shall  have  agreed  in  writing 
to  receive  and  hold  the  same  subject  to  the  provisions  of  this  trust. 

"2.  At  all  meetings  of  the  company  for  the  election  of  directors,  or  for  any  other 
purposes,  to  cast  the  entire  number  of  votes  which,  as  holders  of  the  said  shares, 
they  would  be  entitled  to  cast. 

"3.  Each  trustee  at  such  meetings  shall  be  entitled  to  cast  an  equal  number  of 
all  the  votes  which  all  of  the  trustees  would  be  entitled  to  cast  in  the  aggregate,  if 
present,  except  as  hereinafter  provided. 

"4.  In  case  of  differences  of  opinion  among  the  trustees  present  at  any  such 
meetings  as  to  how  such  votes  shall  be  cast  in  regard  to  any  matter  or  thing  to  be 
voted  on,  they  shall  be  cast  as  the  representatives  of  four-fifths  of  all  the  shares 
held  under  this  trust  may  direct  in  writing,  if  so  demanded  in  writing  by  any  of  the 
trustees. 

"5.  Any  trustee  unable  to  attend  any  meeting  of  shareholders  and  to  personally 
cast  the  votes  he  would  be  entitled  to  cast  if  present,  may  authorize  any  other 
trustee  to  cast  the  votes  which  he  would  be  entitled  to  cast  if  personally  present, 
which  authority  shall  be  in  writing,  approved  by  three-fifthg  of  the  trustees  other 
than  himself. 

"6.  When  none  of  the  trustees  can  be  present  at  any  meeting  of  the  stockhold- 
ers, legally  held,  they  may  be  represented  in  proxy  by  an  attorney  appointed  in 
writing,   executed  by  three-fifths  of  the  trustees. 

"7.  The  trustees  may  exercise  such  consent  in  writing  as  in  their  opinion  it  may 
be  right  and  proper  for  them  to  do  in  the  interests  of  the  Pure  Oil  Company,  and  of 
the  owners  of  the  shares  held  by  them  in  trust;  provided  that  no  such  consents 
shall  be  executed  against  the  objection  of  the  equitable  owners  of  10  per  cent,  of  the 
shares  held  by  them  in  trust,  unless  after  the  question  of  executing  such  consent 
shall  have  been  submitted  in  person,  or  by  writing  properly  addressed,  to  the 
several  equitable  owners  of  the  shares  held  in  trust,  and  approved  in  writing 
by  such  owners  of  three-fifths  of  such  shares. 

"8.  The  number  of  trustees  may  be  increased  or  diminished  at  any  time,  and 
one-third  of  the  trustees  shall  retire  each  year  and  their  successors  in  the  trust 
elected  at  each  annual  meeting  of  the  company.  Those  of  the  trustees  whose 
names  first  occur  in  alphabetical  order  shall  retire  at  the  next  annual  meeting,  and 
so  on,  and  their  successors  shall  be  elected  in  the  same  manner  as  directors  are 
elected,  but  nothing,  herein  shall  render  any  trustee  ineligible  to  re-election.  Any 
trustee  may  be  removed,  without  assignment  of  cause  or  reason  therefor,  by  three- 
fifths  of  the  trustees  and  the  written  consent  of  the  equitable  owners  of  three-fifths 
of  the  shares  held  in  trust  hereunder;  and  upon  such  removal,  or  on  the  filing  of 
such  written  consent  with  the  secretary  of  the  company,  and  on  the  notice  in  writ- 
ing delivered  to  the  party  so  remov^ed,  or  sent  by  registered  letter  to  his  proper  ad- 
dress, the  rights,  duties,  and  obligations  of  such  party  as  trustee  shall  immedi- 
ately cease. 

"9.  In  case  of  the  death,  resignation,  or  removal  of  any  of  the  trustees,  the 
trust  shall  be  exercised  by  the  remaining  trustees  until  the  vacancy  be  filled 
by  the  appointment  of  new  trustees  for  that  purpose  on  the  nomination  of  the 
equitable  owners  of  a  majority  of  the  shares  previously  represented  by  the  trustee 
whose  place  is  vacated,  with  the  consent  in  writing  of  the  equitable  owners  of  three- 
fifchs  of  the  shares  held  under  this  trust  and  the  approval  of  three-fifths  of  the 
trustees. 

"10.  No  trustee  has  any  such  beneficial  interest  in  this  trust  personally  as  to 
entitle  him  to  maintain  any  action  at  law  or  in  equity  to  enjoin,  delay,  hinder,  or 
prevent  his  removal  from  the  trusteeship,  or  to  recover  any  damages  on  account 
thereof  from  the  company  or  the  trustees,  or  from  the  individual  stockholders  by 
whose  action  he  may  have  been  removed. 

"11.  The  trustees  shall  appoint  a  chairman  and  secretary  who  shall  hold  these 
offices  for  one  year,  and  until  their  successors  shall  be  qualified;  and  shall  keep 
regular  accounts,  showing  the  ownership  and  residences  of  the  various  equit- 
able owners  of  the  shares  held  by  them  in  trust;  and  shall  execute  and  deliver  to 
such  several  owners  certificates  in  due  form,  approved  by  the  directors  of  the  com- 
pany, evidencing  the  number  of  shares  held  by  them  in  trust  for  each  of  the  several 
owners;  and  shall  make  such  transfers  of  any  of  the  shares  as  they  may  be  request- 
ed to  do  by  such  several  owners,  on  the  surrender  of  such  certificates  representing 
such  shares,  properly  endorsed,  assigning  for  transfer,  subject  to  the  terms  of  this 
trust,  any  of  the  shares  thereby  represented,  in  the  manner  prescribed  for  making 
such  transfers. 

"12.  The  trustees  shall  immediately  advise  the  company  by  writing,  addressed  Lo 
the  secretary,  of  any  transfer  of  ownership  of  any  of  the  shares  held  by  them;  and 
shall,  on  written  request  of  the  treasurer  of  the  company,  certify  to  him  the  names 
and  residences  of  all  equitable  owners  of  shares  held  by  them  in  trust;  and  shall  sign 
warrants  for  the  payment  to  such  owners,  severally,  of  any  dividends  to  which  they 
may  be  entitled  on  the  shares  so  held  In  trust. 


60  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

"Third— This  agreement  may  be  chang'ed  at  any  time  only  with  the  consent  in 
writing  of  the  Pure  Oil  Company,  three-fifths  of  the  persons  acting  at  the  time  as 
trustees  hereunder,  and  of  the  equitable  owners  of  three-fifths  of  the  shares  held  in 
trust  hereunder. 

"Fourth— This  agreement  may  be  cancelled,  and  the  trust  hereby  created  dis- 
solved, only  by  the  winding  up  of  the  Pure  Oil  Company,  or  by  the  consent  in  writ- 
ing, duly  executed  of  the  equitable  owners  of  three-flfths  of  the  shares  held  in  trust 
hereunder  and  of  three-flfths  of  all  the  other  shares  of  the  company,  after  provid- 
ing in  full  for  the  redemption  or  puchase  at  one  hundred  and  ten  dollars  per  share  in 
cash,  of  all  the  preferred  shares  of  the  company  at  the  time  outstanding. 

"Fifth— The  said  Thomas  W.  Phillips,  Lewis  Emery,  Jr.,  Rufus  Scott,  Clarence 
Walker,  Louis  Walz,  James  W.  Lee,  David  Kirk,  Marcus  L.  Lockwood,  Jerome  B. 
Akin,  Charles  H.  Duncan,  Hugh  King,  Michael  Murphy,  Adolphus  A.  Hoch,  Ferdi- 
nand Reiber  and  Walter  A.  Dennison,  hereby  accept  the  trust  herein  conferred  and 
imposed  on  them. 

"In  witness  whereof  the  parties  hereto  have  severally  signed  this  agreement  as 
of  the   day  of   A.  D.  189.." 

The  by-laws  and  rules  and  regulations  of  the  Pure  Oil  Trust  are  of 
special  interest  to  the  shareholders  in  that  trust,  as  they  accentuate  their 
helplessness.  In  some  details  these  regulations  were  eventually  changed, 
according  to  Mr.   Lee's  testimony. 

The  shareholders  were  given  power  to  secure  special  meetings  of  share- 
holders W'hen  one-third  of  them  joined  in  a  request  for  such  special  meeting, 
"provided  the  board  of  directors  or  the  president  desires  to  call  such  a 
meeting."  This  very  generous  concession  to  the  shareholders  was  made  in 
Section  II  of  Article  I,  in  the  following  language: 

"Special  meetings  of  shareholders  may  be  called  whenever  it  shall  be 
deemed  advisable  by  the  board  of  directors  or  by  the  president,  upon  re- 
quest, in  writing,  signed  by  the  shareholders  holding  collectively  not  less 
than  one-third  of  the  shares  of  the  company." 

The  wide  scope  of  business  to  be  carried  on  by  the  Pure  Oil  Trust  is 
shown  by  paragraph  1  of  its  rules  and  regulations. 

"I.  The  business  of  the  company  shall  be  the  producing,  purchasing, 
transporting,  storing,  and  selling  of  crude  petroleum  and  its  products,  and 
aiding  other  companies  and  parties  in  the  production,  transportation,  stor- 
age, manufacturing,  and  sale  of  the  same.  The  corporation  may  acquire,  hold, 
manage,  and  dispose  of  any  stocks,  shares,  bonds,  and  other  interests,  in 
or  issued  by  any  corporation,  joint  stock  company  or  limited  partnership 
association  engaged  in,  or  aiding  or  promoting  the  producing,  transporting, 
storing,  refining,  and  selling  of  crude  petroleum  or  its  products,  or  in  any 
business  incident  thereto.  And  in  addition  to  the  pow-ers  hereinbefore  pro- 
vided for,  it  may  also  purchase,  hold,  manage,  and  sell  on  commission  or 
otherwise  such  investment  securities  and  other  property,  real,  personal,  and 
mixed  as  the  corporation  may  be  generally  or  specifically  authorized  in 
writing  from  time  to  time  by  the  owners  and  holders  of  a  majority  in  num- 
ber of  the  shares  of  the  capital  stock  of  the  company,  to  purchase,  hold, 
and  sell. 

"And  the  company  may  exercise  such  trusts  and  do  such  other  things, 
not  inconsistent  with  its  charter,  as  it  may  from  time  to  time  be  authorized 
in   like   manner  to  do." 

Paragraphs  3  and  4  of  the  rules  and  regulations  make  it  appear  that 
stockholders  really  choose  directors  who  will  conduct  the  affairs  of  the 
company,  but  paragraph  6,  providing  for  the  permanent  voting  trust,  com- 
pletely disfranchises  the  stockholders.     These   paragraphs  follow: 

"3.  The  shareholders  shall  make  rules  and  regulations  and  by-laws 
for  the  government  of  the  company  and  the  management  of  its  business 
affairs,  as  in  their  discretion  they  may  deem  advisable;  which  may  be 
amended  at  any  time  by  the  consent  of  the  owners  and  holders  of  three- 
fifths  in  number  of  the  shares  of  the  company,  given  in  writing,  filed  with 
the  secretary,  and  recorded  in  the  minutes  of  the  proceedings  both  of  the 
shareholders  and  directors  of  the  company. 

"4.  The  affairs  of  the  company  shall  be  managed  by  a  board  of  direc- 
tors, consisting  of  nine  members,  to  be  elected  annually  by  the  shareholders 
at  their  annual  meeting,  at  which  each  shareholder  shall  be  entitled  to  cast, 
personally  or  by  proxy,  one  vote  for  each  share  of  stock  in  the  company 


■     THE  PURE  OIL  TRUST.  61 

held  by  such  shareholder.  The  directors  shall  choose  annually  from  their 
own  number  a  president  and  vice-president  to  serve  until  their  successors 
are  chosen;  shall  appoint  all  other  officers,  managers,  agents  or  employes 
of  the  company,  prescribe  the  duties  and  fix  the  compensation  of  each,  and 
may  suspend  or  remove  any  of  them  at  discretion,  and  they  may  make  such 
additional  by-laws  as  may  be  deemed  by  them  advisable — all  subject  to  the 
by-laws  and  rules  and  regulations  adopted  by  the  shareholders  for  the  gov- 
ernment of  the  company. 

"6.  A  majority  of  all  the  shares  of  the  company  shall  be  held  in  a  per- 
manent trust  approved  by  all  the  shareholders  to  secure  the  control  of  the 
company  and  the  faithful  maintenance  of  the  policy  agreed  on  for  conduct- 
ing the  business  of  the  company  in  the  interest  and  for  the  protection  of 
all  concerned  in  its  affairs.  The  shares  so  held  shall  be  designated  as  trust 
shares." 

When  the  Pure  Oil  Trust  had  been  started  on  its  course  of  dominion, 
trouble  developed  among  the  trust-builders,  and  Mr.  David  Kirk,  president 
of  the  Pure  Oil  Company  of  New  .Jersey  proceeded  to  file  a  bill  in  equity  at 
Pittsburg  on  March  4,  1897,  for  the  purpose  of  having  the  annual  election 
of  officers  of  that  company  held  on  February  22,  of  the  same  year,  declared 
null  and  void.  The  court  granted  a  preliminary  injunction  restraining  the 
new  officers  from  taking  possession  of  the  books  of  the  concei'n,  fixing  a 
time  on  the  following  Monday  for  a  hearing  of  the  case.  All  this  came 
about  after  Mr.  James  W.  Lee  had  been  elected  president  of  the  Pure  Oil 
Trust,  at  a  salary  of  $10,000  a  year,  after  Mr.  David  Kirk  had  served  in  that 
capacity  for  a  year  without  compensation.  Mr.  Kirk's  complaint  indicated 
that  he  had  awakened  to  the  horror  of  the  trust  that  he  had  helped  to  build. 
The  full  text  of  Mr.  Kirk's  complaint  follows: 

"In  the  Court  of  Common  Pleas  No.  1,  of  Allegheny  County. 

"DAVID   KIRK, 
"Plaintiff, 

"vs. 
"THE  PURE  OIL  COMPANY, 
"J.  W.  LEE, 
"M.  MURPHY, 
"THEO.   B.   WESTGATE, 

"PETER  THEOBOLD,  }     "No.  19,  June  T.,  1897. 

"J.  C.  ANDERSON, 
"HUGH  KING. 
"LEWIS   EMERY,   JR., 
"C.   P.  COLI  INS, 
"E.  H.  JENNINGS,  and 
"VICTOR  K.  PHILLIPS. 

"Defendants.     In  Equity. 

"BILL  IN  EQUITY. 

"'To  the  Honorable  the  Judges  of  Said  Court: 

"Your  orator,  David  Kirk,  humbly  complaining,  showeth  unto  your 
honors  this,  his  said  bill  of  complaint  against  the  above  named  defendants, 
and  says: 

"First — The  said  Pure  Oil  Company  is  a  corporation  organized  under 
the  laws  of  the  State  of  New  Jersey,  with  its  principal  offices  nominally  in 
the  City  of  Jersey  City,  New  Jersey,  but  really  without  any  principal  or 
other  office  in  the  State  of  New  Jersey,  the  meetins;s  of  said  company  once 
a  year  for  the  election  of  directors  being  held  at  Taylor's  Hotel  in  Jersey 
City  aforesaid,  which  place,  in  pretended  compliance  with  the  laws  of  New 
Jersey,  has  been  designated  'Principal  Office;'  the  business  of  said  corpora- 
tion is  tran-^acted  at  Pittsburg,  in  the  County  of  Allegheny.  Pennsylvania, 
and  at  Oil  City,  in  the  County  of  Venango,  Pennsylvania,  at  each  of  which 
places  it  maintained  regular  business  offices  and  conducted  all  of  its  affairs. 


62  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

its  officers  being  at  one  or  the  other  of  said  cities  and  there  resident;  said 
company  was  organized  in  the  State  of  New  Jersey,  not  to  do  business  in 
said  State,  and  without  the  expectation  of  even  transacting  any  business 
in  said  State,  and  has  no  officers  or  agents  therein. 

"Second — Said  J.  W.  Lee,  M.  Murphy,  Theodore  B.  Westgate,  Peter 
Theobold,  J.  C.  Anderson,  Hugh  King,  Lewis  Emery,  Jr.,  C.  P.  Collins,  E.  H. 
Jennings  and  Victor  K.  Phillips  are  persons  pretenders  to  the  offices  of 
directors  of  said  company,  claiming  to  have  been  elected  at  a  meeting  and 
in  the  manner  hereinafter  detailed,  but  not  yet  inducted  into  office  or  in 
possession  of  the  books,  papers  and  business  of  said  company,  or  in  the 
control  of  its  affairs. 

"Third — The  officers  of  said  company  are  your  orator,  David  Kirk,  pres- 
ident; James  W.  Lee,  vice-president;  Charles  H.  Duncan,  treasurer,  and 
William  B.  Duncan,  secretary;  said  president  and  vice-president  residing  at 
Pittsburg,  and  said  treasurer  and  secretary  residing  at  Oil  City. 

"Fourth — Said  company  adopted  by-laws  and  rules  and  regulations,  true 
and  correct  copies  whereof  are  hereto  attached,  marked  Exhibit  'A,'  and 
reference  thereto  is  hereby  made  for  a  full,  complete  and  exact  statement 
thereof,  the  same  being  hereby  made  a  part  of  this  bill  of  complaint,  and 
said  company  likewise  entered  into  a  trust  agreement,  a  true  and  correct 
copy  whereof  is  hereto  attached,  marked  Exhibit  'B,'  and  reference  thereto 
is  hereby  made  for  a  full,  complete  and  exact  statement  thereof,  the  same 
being  hereby  made  a  part  of  this  bill  of  complaint. 

"Fifth — The  amount  of  capital  of  said  company  authorized  is  $l,00'^.'i">0, 
the  amount  subscribed  is  $2.50,000,  the  amount  paid  in  is  $2.35,000,  the  amount 
owned  by  your  orator  individually  and  as  trustee  for  the  McCalmont  Oil 
Company  is  $15,000,  the  capital  of  said  company  is  divided  into  shares  of 
$5  each,  the  number  of  shares  held  in  trust  under  said  agreement.  Exhibit 
'B,'  are  19,785  shares. 

"Sixth — Notwithstanding  the  trust  agreement  aforesaid  and  that  some 
of  said  parties  are  the  trustees  named  therein  and  executed  the  same  as 
such  trustees  and  accepted  the  trust,  yet  they  have  refused  to  comply 
therewith  by  delivering  their  stock  in  trust,  as  they  had  agreed;  among  said 
parties  are  Lewis  Emery,  Jr..  Michael  Murphy,  E.  H.  Jennings.  Thomas  W. 
Phillips  and  others  following  their  example.  As  soon  as  stock  is  paid  up 
one-half  thereof  is  delivered  to  the  trustees  and  the  other  half  to  the  sub- 
scribers, together  with  a  trust  certificate  for  the  amount  delivered  to  the 
trustees,  but  a  large  number  of  said  trust  certificates  have  been  refused  by 
the  subscribers,  who  have  refused  to  recognize  the  trust;  and  while  there 
is  in  the  hands  of  the  trustees  19,785  shares,  your  orator  is  informed  that 
less  than  one-half  of  said  shares  are  there  deposited  with  the  consent  of  the 
subscribers  and  owners,  and  the  trustees  have  no  power  to  vote  the 
remainder. 

"Seventh — The  annual  meeting  of  said  company  for  1897  was  adjourned 
from  the  charter  day  to  February  18,  1897,  and  again  adjourned  to  Monday, 
February  22.  1897,  at  which  time  there  assembled  at  Taylor's  Hotel,  in  Jersey 
City,  a  number  of  shareholders,  including  your  orator,  and  at  that  time 
certain  amendments  to  the  by-laws  were  proposed,  to-wit:  An  amendment 
to  Section  8,  Article  1,  whereby  the  same  should  be  changed  so  that  the 
term  of  office  of  directors  should  commence  immediately  after  their  election, 
instead  of  at  noon  on  the  first  Wednesday  after  their  election.  An  amend- 
ment to  Section  4,  Article  2,  so  that  the  salary  of  president  and  vice-presi- 
dent should  be  fixed  by  the  directors  instead  of  by  the  stockholders.  An 
amendment  to  Section  1,  Article  3,  so  that  the  president  should  not  be 
required  to  sign  warrants  for  the  payment  of  money  ordered  l)y  the  board 
of  directors.  An  amendment  to  Section  2,  Article  3,  so  that  the  secretary 
should  not  be  required  to  countersign  all  warrants  on  the  treasury  for  the 
payment  of  money  which  shall  have  been  previously  signed  by  the  presi- 
dent, as  authorized  by  the  board.  An  amendment  to  Section  1,  rules  and 
regulations,  so  as  to  include  the  power  to  manufacture  crude  oil  and  its 
products,  as  well  as  to  produce,  purchase,  transport,  and  sell  the  same,  and 
so  as  to  change  the  power  to  hold,  manage,  and  sell  personal  and  real  prop- 
erty as  authorized  in  writing  from  time  to  time  by  a  majority  of  the  stock- 


THE  PURE  OIL  TRUST.  63 

holders,  so  that  such  holding,  managing,  and  selling  may  be  at  the  will  of 
the  board  of  directors.  An  amendment  to  Section  2  of  said  rules  and  regu- 
lations so  that  branch  offices  may  be  established  by  the  board,  instead  of 
the  stockholders.  An  amendment  to  Section  3,  which  required  that  amend- 
ments to  the  by-laws  and  rules  and  regulations  should  be  only  by  the  con- 
sent of  three-fifths  of  the  owners  and  holders  of  the  shares  of  the  company, 
given  in  writing,  filed  with  the  secretary  and  recorded  in  the  minutes  of 
the  proceedings  of  both  the  shareholders  and  directors  of  the  company,  so 
that  said  amendment  should  be  adopted  by  a  three-fifths  vote  of  the  shares 
of  the  company,  provided  a  copy  of  such  amendment  had  been  filed  with 
the  secretary  20  days  before  the  meeting  and  the  secretary  should  have 
notified  the  stockholders  of  said  proposed  change.  An  amendment  to  Sec- 
tion 4  of  the  rules  and  regulations  changing  the  number  of  directors  from 
nine  to  eleven;  but  your  orator  says  that  said  amendments  were  not  pro- 
posed in  accordance  with  Section  3  of  the  rules  and  regulations  regulating 
amendments,  and  especially  the  change  in  the  number  of  directors,  and 
that  the  requisite  consent  in  writing,  as  required,  was  not  obtained,  filed, 
and  recorded,  and  the  action  of  said  meeting  in  adopting  said  amendments 
was  illegal,  null,  and  of  no  effect. 

"Eighth — That  all  of  said  amendments  tended  to  change  the  purpose 
and  policy  of  the  company  from  a  corporation  managed  and  controlled  by 
its  stockholders,  to  a  corporation  managed  and  controlled  wholly  by  its 
directors,  and  that  the  parties  defendants  sought  by  this  means  to  seize 
the  property  of  the  company  and  divert  it  from  its  original  purpose  to  their 
own  ends  without  the  restraining  power  of  shareholders'  consent,  as  pro- 
vided in  the  whole  scheme  of  the  by-laws  and  rules  and  regulations  of  the 
company,  as  primarily  adopted. 

"Ninth — That  at  said  annual  meeting  said  trustees  attempted  to  vote 
and  did  vote  said  19,785  shares,  and  said  amendments  were  declared  adopted, 
notwithstanding  the  failure  as  above  set  forth  to  adopt  the  same  according 
to  the  law  of  the  corporation,  and  an  election  was  then  held  for  directors, 
but  of  the  parties  so  voted  for  a  number  were  ineligible  under  the  laws 
of  the  State  of  New  Jersey  and  the  by-laws  and  rules  and  regtxlations  of 
the  company,  in  that  they  were  not  stockholders  of  said  company,  to-wit: 
Peter  Theobold,  J.  C.  Anderson,  Hugh  King,  Lewis  Emery,  Jr.,  E.  H. 
Jennings,  and  Victor  K.  Phillips.  Your  orator  is  uninformed  as  to  C.  P. 
Collins,  as  to  whether  he  is  a  member  of  the  company  or  not.  Some  of  said 
parties  sought  to  qualify  themselves  by  the  delivery  of  $10  to  the  secretary, 
but  the  secretary  had  no  power  or  authority  to  receive  said  money  and  issue 
stock  therefor,  and  did  not  pretend  so  to  do,  and  the  trustees  aforesaid 
cast  19,785  votes  for  said  parties,  although  not  authorized  so  to  do. 

"Tenth — Said  election  was  in  progress  at  6  o'clock  p.  m.,  and  your 
orator  refused  to  vote,  and  left  the  polls,  leaving  his  address  with  the  parties 
in  charge  of  the  meeting  and  with  the  secretary,  and  your  orator  has  since 
been  informed  that  the  defendants  above  named,  together  with  your  orator, 
were  subsequently  declared  elected,  and  some  time  during  the  night,  but 
without  notice  to  your  orator,  the  alleged  board  convened  and  elected  J.  W. 
Lee  president  of  the  company,  fixed  his  salary  at  $10,000  per  annum,  and 
elected  Hugh  King  as  treasurer,  and  then  dispersed.  Your  orator,  as 
president  of  said  company,  had  served  two  years  without  any  compensation. 

"Eleventh — Your  orator  notified  said  parties,  defendants,  that  their 
alleged  election  was  nugatory  and  of  no  effect,  was  contrary  to  the  law  of 
the  corporation,  that  their  organization  as  a  board  was  irregular  and  void, 
and  refused  to  surrender  the  books,  papers,  and  property  of  the  company 
into  their  hands,  and  the  treasurer  has  likewise  so  refused,  and  your  orator 
insisted  that  the  old  board  and  officers  were  still  in  office  and  entitled  to 
administer  the  affairs  of  the  company;  that  said  old  board  are  J.  B.  Akin, 
W.  A.  Dennison,  Charles  H.  Duncan,  James  W.  Lee,  M.  Murphy,  Daniel 
E.  Byles,  Theodore  B.  Westgate,  W.  L.  Curtis,  and  David  Kirk. 

"Twelfth — Said  new  board  have  four  refiners  thereon,  namely.  Lewis 
Emery,  Jr.,  Hugh  King,  Peter  Theobold,  and  Theodore  Westgate,  and  said 
board  has  sisnified  its  intention  of  making  certain  contracts  with  refiners 
of  crude  oil,  including  said  members  of  the  board,  whereby  said  refiners  will 


64  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

obtain  from  the  company  for  their  product  a  price  much  in  excess  of  the 
market  price,  to  the  loss,  detriment,  and  disadvantage  of  the  stockholders 
of  the  company,  and  your  orator  is  informed  and  believes  that  said  new 
board  proposes  and  purposes  conducting  the  business  of  said  company, 
not  in  the  interest  of  its  stockholders,  but  in  furtherance  of  a  scheme  to 
promote  and  further  the  interest  of  other  affiliated  companies  or  associa- 
tions, in  which  said  parties  are  interested,  viz:  The  Producers'  Oil  Com- 
pany, Limited;  The  Producers  &  Refiners'  Oil  Company,  Limited,  and 
The  United  States  Pipe  Line  Company  and  certain  refiners,  to  the  loss, 
detriment,  and  disadvantage  of  the  stockholders  in  said  Pure  Oil  Company. 

"Thirteenth — Said  new  board  has  selected  from  their  number  an  execu- 
tive committee,  in  which  has  been  vested  practically  all  the  power  of  the 
board,  and  your  orator  is  not  one  thereof  because  he  was  known  to  be 
hostile  to  the  improper  purpose  aforesaid,  and  therefore  your  orator,  though 
a  member  of  said  new  board,  would  be  powerless  to  prevent  the  consum- 
mation of  said  illegal  and  improper  purposes. 

"Fourteenth — Said  new  board  has  already  sought  to  obtain  possession 
of  the  funds,  money,  and  property  of  the  company,  and  has  ordered  the 
cash  balance  to  be  forwarded  to  Hugh  King,  at  New  York  City,  and  unless 
restrained  by  order  of  court  will  possess  itself  of  the  property,  money,  books, 
and  papers  of  said  company,  and  will  enter  upon  the  consummation  of  its 
illegal  purposes;  and  if  your  orator  and  the  treasurer  of  the  company,  acting 
under  the  orders  of  your  orator,  refuse  to  deliver  over  said  money,  books, 
and  papers,  force  will  likely  be  resorted  to  and  an  unseemly  confiict  result, 
and  if  delivered  over,  large  amounts  will  be  paid  out  in  salaries  and  on  con- 
tracts, as  aforesaid,  and  pending  the  contest  for  possession,  and  the  de- 
termination of  the  right  to  the  office,  the  business  of  the  company  and  con- 
tracts now  existing  will  not  receive  the  requisite  attention  and  great  loss 
will  accrue  to  the  stockholders.     Therefore,  your  orator  prays, 

"First — That  an  injunction,  preliminary  until  hearing,  thereafter  to  be 
made  perpetual,  be  granted  inhibiting  and  enjoining  said  J.  W.  Lee,  M. 
Murphy,  Theodore  B.  Westgate.  Peter  Theobold,  J.  C.  Anderson.  Hugh  King, 
Lewis  Emery,  Jr.,  C.  P.  Collins.  E.  H.  Jennings,  and  Victor  K.  Phillips  from 
attempting  to  act  as  a  board  of  directors  of  the  Pure  Oil  Company,  and 
J.  W.  Lee  and  Hugh  King  from  attempting  to  act  as  president  and  treasurer, 
respectively,  of  said  company,  and  as  such  directors  and  officers  from 
taking  possession  of  or  attempting  to  take  possession  of  the  money,  books, 
papers,  property,  business,  and  effects  of  said  company,  or  in  any  manner 
interfering   therewith. 

"Second — That  said  election,  on  February  22,  1897,  of  said  J.  W.  Lee, 
M.  Murphy.  Theodore  B.  Westgate.  Peter  Theobold,  J.  C.  Anderson.  Hugh 
Kine.  Lewis  Emery.  Jr.,  C.  P.  Collins.  E.  H.  Jennings,  and  Victor  K.  Phillips 
as  directors,  and  said  J.  W.  Lee  as  president  and  said  Hugh  King  as  treas- 
urer, be  declared  null  and  and  void. 

"Third — That  a  receiver  may  be  appointed  with  the  usual  powers  of 
receivers  in  such  cases,  to  manage,  conduct,  and  preserve  the  business  of 
said  company  and  its  property  and  effects,  and  protect  its  creditors  and 
stockholders. 

"Fourth — For  such  other  and  further  relief  as  to  your  honors  may  seem 
just,  necessary,  and  proper. 

"WEIL   &    THORP, 

"Solicitors  for  Complainants. 

"Allegheny   County,   ss. 

"David  Kirk,  being  duly  sworn  according  to  law,  doth  denose  and  say 
that  the  facts  stated  in  the  foregoing  bill  of  his  own  knowledge  are  true, 
and  those  stated  upon  information  and  belief  he  believes  to  be  true;  and 
further   saith   not. 

"DAVID  KIRK. 

"Sworn  to  and  subscribed  before  me  this  4th  day  of  March.  A.  D.  1897. 

"OSCAR   H.    ROSENBAUM, 

"Notary  Public." 


JOHN  D.  ROCKEFELLER  AND  S.  C.  T.  DODD.  65 

CHAPTER  VL 

TESTIMONY  OF  MR.  JOHN  D.  ROCKEFELLER,  AND  MR. 

S.  C  T.  DODD,  SOLICITOR,  OF  THE  STANDARD 

OIL  COMPANY  OF  NEW  JERSEY. 

Mr.  John  D.  Rockefeller,  president  of  the  Standard  Oil  Company,  was 
furnished  by  the  Industrial  Commission  with  a  series  of  questions  concern- 
ing vital  phases  of  the  investigation  into  the  subject  of  trusts  and  industrial 
combinations,  especially  as  they  related  to  the  oil  industry.  He  replied 
to  these  questions  in  writing  and  under  oath.  The  questions  and  replies 
were  placed  before  the  commission  on  January  10,  1900,  and  are  as  follows: 

1.  Q.  What  was  the  first  combination  in  which  you  were  interested 
of  different  establishments  in  the  oil  industry? 

A.  The  first  combination  of  different  establishments  in  the  oil  industry 
in  which  I  was  interested  was  the  union  of  William  Rockefeller  &  Company, 
Rockefeller  &  Andrews,  Rockefeller  &  Company,  S.  V.  Harkness  &  H.  M. 
Flagler,  about  the  year  1867. 

2.  Q.     What  were  the  causes  leading  to  its  formation? 

A.  The  cause  leading  to  its  formation  was  the  desire  to  unite  our  skill 
and  capital  in  order  to  carry  on  a  business  of  some  magnitude  and  import- 
ance in  place  of  the  small  business  that  each  separately  had  heretofore 
carried  on.  As  time  elapsed  and  the  possibilities  of  the  business  became 
apparent,  we  found  further  capital  to  be  necessary,  obtained  the  required 
persons  and  capital  and  organized  the  Standard  Oil  Company,  with  a  capital 
of  $1,000,000.  Later  we  found  more  capital  could  be  utilized  and  found 
persons  with  capital  to  interest  tliemselves  with  us.  and  increased  our 
capital  to  $3,500,000.  As  the  business  grew,  and  markets  were  obtained  at 
home  and  abroad,  more  persons  and  capital  were  added  to  the  business,  and 
new  corporate  agencies  were  obtained  or  organized,  the  object  being  always 
the  same,  to  extend  our  business  by  furnishing  the  best  and  cheapest 
products. 

3.  Q.  Did  the  Standard  Oil  Company  or  other  affiliated  interests  at 
any  time  before  1887  receive  from  the  railroads  rebates  on  freight  shipped 
or  other   special  advantages? 

A.  The  Standard  Oil  Company  of  Ohio,  of  which  I  was  president,  did 
receive  rebates  from  railroads  prior  to  1880,  but  received  no  special  ad- 
vantages for  which  it  did  not  give  full  compensation.  The  reason  for  re- 
bates was  that  such  was  the  railroads'  method  of  business.  A  public  rate 
was  made  and  collected  by  the  railway  companies,  but  so  far  as  my  knowl- 
edge extends  was  never  really  retained  in  full;  a  portion  of  it  was  repaid  to 
the  shippers  as  a  rebate.  By  this  method  the  real  rate  of  freight  which 
any  shipper  paid  was  not  known  by  his  competitors  nor  by  other  railway 
companies,  the  amount  being  in  all  cases  a  matter  of  bargain  with  the 
carrying  company.  Each  shipper  made  the  best  bargain  he  could,  but 
whether  he  was  doing  better  than  his  competitor  was  only  a  matter  of  con- 
jecture. 

Much  depended  upon  whether  the  shipper  had  the  advantage  of  com- 
petition of  carriers.  The  Standard  Oil  Company  of  Ohio,  being  situated  at 
Cleveland,  had  the  advantage  of  different  carrying  lines,  as  well  as  of  water 
transportation  in  the  summer,  and,  taking  advantage  of  those  facilities, 
made  the  best  bargains  possible  for  its  freights.  All  other  companies  did 
the  same,  their  success  depending  largely  upon  whether  they  had  the  choice 
of   more   than    one    route. 

The  Standard  sought  also  to  offer  advantages  to  the  railways  for  the 
purpose  of  lessening  rates  of  freight.  It  offered  freights  in  large  quantity, 
car  load  and  train  loads.  It  furnished  loading  facilities  and  discharging 
facilities.  It  exempted  railways  from  liability  for  fire.  For  these  services 
it  obtained  contracts  for  special  allowances  on  freights.     These  never  ex- 


66  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

ceeded,  to  the  best  of  my  present  recollections,  10  per  cent.  But  in  almost 
every  instance  it  was  discovered  subsequently  that  our  competitors  had  been 
obtaining  as  good,  and  in  some  instances  better,  rates  of  freight  than  our- 
selves. 

4.  Q.  If  so,  in  what  years  were  these  advantages  largest,  and  from 
what  roads  were  they  received? 

A.  To  the  best  of  my  recollection  the  greatest  rebates  were  paid  from 
1877  to  1879.  During  that  time  we  had  an  agreement  for  a  special  10  per 
cent,  commission.  I  think  that  agreement  was  made  with  the  Pennsylvania, 
the  Erie,  and  the  New  York  Central  roads.  Large  rebates  were  also  paid 
during  the  summer  of  1878,  amounting,  I  believe,  to  64i/2  cents  on  refined 
oil,  to  equalize  eastern  shipments  by  rail  with  shipments  by  Erie  canal. 
But  these  rebates  were  paid  to  all  who  shipped  by  rail.  They  were  not 
discriminatory  rates.  I  am  not  now  sure  whether  any  other  roads  than  the 
Pennsylvania  collected  the  full  amount  and  paid  these  rebates.  The  Erie 
and  New  York  Central  made  the  same  reductions  in  rates  to  meet  canal 
shipments,  but  my  impression  is  that  the  Erie  at  least  did  not  collect  the 
higher  rate  from  shippers  and  rebate  it  as  did  the  Pennsylvania. 

5.  Q.  About  what  percentage  of  the  profits  of  the  Standard  Oil  Com- 
pany came  from  special  advantages  given  by  the  railroads  when  these 
were  greatest? 

A.  No  percentage  of  the  profits  of  the  Standard  Oil  Company  came 
from  advantages  given  by  railroads  at  any  time.  Whatever  advantages  it 
received  in  its  constant  efforts  to  reduce  rates  of  freight  was  deducted  from 
the  price  of  oil.  The  advantages  to  the  Standard  from  low  freight  rates 
consisted  solely  in  the  increased  volume  of  its  business  arising  from  the 
low  price   of  its  products. 

6.  Q.  Did  the  Standard  Oil  Company  or  any  of  its  affiliated  com- 
panies ever  receive,  under  any  name  whatever,  any  income  from  any  rail- 
road for  oil  shipped  over  those  roads  by  any  of  its  competitors?  If  so, 
give  particulars. 

A.  I  know  of  no  such  instance.  It  seems  that  some  arrangement  of 
that  nature  was  entered  into  by  one  of  our  agents  in  Ohio,  being  the  same 
case  which  has  been  testified  to  by  George  Rice.  When  notice  of  this 
agreement  was  brought  to  the  officers  of  the  company  for  which  it  was 
made  it  was  promptly  repudiated,  and  the  money  received,  some  small 
amount,  I  think  under  $300,  was  refunded.  And  this  was  done  not  because 
of  any  action  in  court,  or  judicial  opinion,  but  promptly  as  soon  as  reported, 
and  before  we  had  any  knowledge  of  judicial  proceedings. 

7.  Q.  Has  the  Standard  Oil  Company  received  any  financial  favors 
from  any  railroad   since   1887? 

A.     To   my   knowledge    none    whatever. 

8.  Q.  Has  the  ownership  of  stock  in  railroad  companies  by  ofllcers 
of  the  Standard  Oil  Company  given  the  Standard  advantages  with  those 
railroads  over  its  competitors?     If  so,  give  particulars. 

A.  It  has  not.  Stockholders  and  officers  of  the  Standard  have  in- 
vested in  stock  of  railway  companies,  but  in  no  instance  have  they  done 
so  for  the  purpose  of  influencing  the  policy  of  the  railway  companies,  nor 
to  the  best  of  my  knowledge  and  belief  has  any  attempt  ever  been  made 
through  such  ownership  to  influence  any  railway  in  favor  of  the  Standard. 

9.  Q.  To  what  advantages,  or  favors,  or  methods  of  management  do 
you  ascribe  chiefly  the  success  of  the  Standard  Oil  Company? 

A.  I  ascribe  the  success  of  the  Standard  to  its  consistent  policy  to 
make  the  volume  of  its  business  large  through  the  merits  and  cheapness  of 
its  products.  It  has  spared  no  expense  in  finding,  securing,  and  utilizing 
the  best  and  cheapest  methods  of  manufacture.  It  has  sought  for  the  best 
superintendents  and  workmen  and  paid  the  best  wages.  It  has  not  hesitated 
to  sacrifice  old  machinery  and  old  plants  for  new  and  better  ones.  It  has 
placed  its  manufactories  at  the  points  where  they  could  supply  markets  at 
the  least  expense.  It  has  not  only  sought  markets  for  its  principal  pro- 
ducts, but  for  all  possible  by-products,  sparing  no  expense  in  introducing 
them  to  the  public.  It  has  not  hesitated  to  invest  millions  of  dollars  in 
methods  for  cheapening  the  gathering  and  distribution  of  oils,  by  pipe  lines, 


JOHN  D.  ROCKEFELLER  AND  S.  C.  T.  DODD.  67 

special  cars,  tank  steamers,  and  tank  wagons.  It  has  erected  tank  stations 
at  every  important  railroad  station  to  cheapen  the  storage  and  delivery  of 
its  products.  It  has  spared  no  expense  in  forcing  its  products  into  the 
markets  of  the  world  among  people  civilized  and  uncivilized.  It  has  had 
faith  in  American  oil,  and  has  brought  together  millions  of  money  for  the 
purpose  of  making  it  what  it  is,  and  holding  its  markets  against  the  com- 
petition of  Russia  and  all  the  many  countries  which  are  producers  of  oil 
and  competitors  against  American  oil. 

10.  Q.  What  are  in  your  judgment  the  chief  advantages  from  in- 
dustrial combinations? 

(a)  Financially    to    stockholders. 

(b)  To  the  public. 

A.  All  the  advantages  which  can  be  derived  from  a  co-operation  of 
persons  and  aggregation  of  capital.  Much  that  one  man  cannot  do  alone 
two  can  do  together,  and  once  admit  the  fact  that  co-operation,  or  what  is 
the  same  thing,  combination,  is  necessary  on  a  small  scale,  the  limit  depends 
solely  upon  the  necessities  of  business.  Two  persons  in  partnership  may  be 
a  sufficiently  large  combination  for  a  small  business,  but  if  the  business 
grows,  or  can  be  made  to  grow,  more  persons  and  more  capital  must  be 
taken  in.  The  business  may  grow  so  large  that  a  partnership  ceases  to 
be  a  proper  instrumentality  for  its  purposes,  and  then  a  corporation  be- 
comes a  necessity.  In  most  countries,  as  in  England,  this  form  of  industrial 
combination  is  sufficient  for  a  business  co-extensive  with  the  parent  country, 
but  it  is  not  so  in  this  country.  Our  Federal  form  of  government  making 
every  corporation  created  by  a  State  foreign  to  every  other  State,  renders 
it  necessary  for  persons  doing  business  through  corporate  agency  to  or- 
ganize corporations  in  some  or  many  of  the  different  States  in  which  their 
business  is  located.  Instead  of  doing  business  through  the  agency  of  one 
corporation  they  must  do  business  through  the  agencies  of  several  corpo- 
rations. If  the  business  is  extended  to  foreign  countries — and  Americans 
are  not  to-day  satisfied  with  home  markets  alone — it  will  be  found  helpful 
and  possibly  necessary  to  organize  corporations  in  such  countries,  for 
Europeans  are  prejudiced  against  foreign  corporations,  as  are  the  people 
of  many  of  our  States.  These  different  corporations  thus  becoming  co- 
operating agencies  in  the  same  business,  and  are  held  together  by  common 
ownership  of  their  stocks. 

It  is  too  late  to  argue  about  advantages  of  industrial  combinations. 
They  are  a  necessity.  And  if  Americans  are  to  have  the  privilege  of  ex- 
tending their  business  in  all  the  States  of  the  Union,  and  into  foreign 
countries  as  well,  they  are  a  necessity  on  a  large  scale,  and  require  the 
agency  of  more  than  one  corporation.     Their  chief  advantages  are: 

1.  Command  of  necessary  capital. 

2.  Extension  of  limits  of  business. 

3.  Increase  of  number  of  persons  interested  in  the  business. 

4.  Economy   in   the   business. 

5.  Improvements  and  economies  which  are  derived  from  knowledge 
of  many  interested  persons  of  wide  experience. 

6.  Power  to  give  the  public  improved  products  at  less  prices  and  still 
make  a  profit  for  stockholders. 

7.  Permanent  work  and   good   wages  for  laborers. 

I  speak  from  my  experience  in  the  business  with  which  I  have  been 
intimately  connected  for  about  40  years.  Our  first  combination  was  a  part- 
nership and  afterward  a  corporation  in  Ohio.  That  was  sufficient  for  a  local 
refining  business.  But  dependent  solely  upon  local  business  we  should  have 
failed  years  ago.  We  were  forced  to  extend  our  markets  and  to  seek  for 
export  trade.  This  latter  made  the  seaboard  cities  a  necessary  place  of 
business,  and  we  soon  discovered  that  manufacturing  for  export  could  be 
more  economically  carried  on  at  the  seaboard,  hence  refineries  at  Brooklyn, 
at  Bayonne,  at  Philadelphia,  and  necessary  corporations  in  New  York, 
New  Jersey,  and   Pennsylvania. 

We  soon  discovered,  as  the  business  grew,  that  the  primary  method 
of  transporting  oil  in  barrels  could  not  last.  The  package  often  cost  more 
than   the   contents,   and   the  forests   of  the   country   were   not   sufficient   to 


68.  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

supply  the  necessary  material  for  an  extended  length  of  time.  Hence  we 
devoted  attention  to  other  methods  of  transportation,  adopted  the  pipe  line 
system,  and  found  capital  for  pipe  line  construction  equal  to  the  necessities 
of  the  business. 

To  operate  pipe  lines  required  franchises  from  the  States  in  which 
they  were  located,  and  consequently  corporations  in  those  States,  just  as 
railroads  running  through  different  States  are  forced  to  operate  under 
separate  State  charters.  To  perfect  the  pipe  line  system  of  transportation 
required  in  the  neighborhood  of  $50,000,000  of  capital.  This  could  not  be 
obtained  or  maintained  without  industrial  combination.  The  entire  oil  busi- 
ness is  dependent  upon  its  pipe  line  system.  Without  it  every  well  would 
shut  down  and  every  foreign  market  would  be  closed  to  us. 

The  pipe  line  system  required  other  improvements,  such  as  tank  cars 
upon  railways  and  finally  the  tank  steamer.  Capital  had  to  be  furnished  for 
them  and  corporations  created  to  own  and  operate  them. 

Every  step  taken  was  necessary  in  the  business  if  it  was  to  be  properly 
developed,  and  only  through  such  successive  steps  and  by  such  an  industrial 
combination  is  America  to-day  enabled  to  utilize  the  bounty  which  its  land 
pours  forth,  and  to  furnish  the  world  with  the  best  and  cheapest  light  ever 
known,  receiving  in  return  therefor  from  foreign  lands  nearly  $.50,000,000 
per  year,  most  of  which  is  distributed  in  payment  of  American  labor. 

I  have  given  a  picture  rather  than  a  detail  of  the  growth  of  one  in- 
dustrial combination.  It  is  a  pioneer,  and  its  work  has  been  of  incalculable 
value.  There  are  other  American  products  besides  oil  for  which  the  markets 
of  the  V.  orld  can  be  opened,  and  legislators  will  be  blind  to  our  best  in- 
dustrial interests  if  they  unduly  hinder  by  legislation  the  combination  of 
persons  and  capital  requisite  for  the  attainment  of  so  desirable  an  end. 

11.  Q.  What  are  the  chief  advantages  or  dangers  to  the  public  aris- 
ing  from    them? 

A.  The  dangers  are  that  the  power  conferred  by  combination  may 
be  abused,  that  combinations  may  be  formed  for  speculation  in  stocks, 
rather  than  for  conducting  business,  and  that  for  this  purpose  prices  may 
be  temporarily  raised  instead  of  being  lowered.  These  abuses  are  possible 
to  a  greater  or  less  extent  in  all  combinations,  large  or  small,  but  this  fact 
is  no  more  of  an  argument  against  combinations  than  the  fact  that  steam 
may  explode  is  an  argument  against  steam.  Steam  is  necessary  and  can 
be  made  comparatively  safe.  Combination  is  necessary  and  its  abuses  can 
be  minimized,  otherwise  our  legislators  must  acknowledge  their  incapacity 
to  deal  with  the  most  important  instrument  of  industry.  Hitherto  most 
legislative  attempts  have  been  an  effort  not  to  control,  but  to  destroy, 
hence  their  futility. 

12.  Q.  What  legislation,  if  any,  would  you  suggest  regarding  indus- 
trial combinations? 

A.  First^ — Federal  legislation,  under  which  corporations  may  be  created 
and   regulated,  if  that  be   possible. 

Second— In  lieu  thereof.  State  legislation  as  nearly  uniform  as  possible 
encouraging  combinations  of  persons  and  capital  for  the  purpose  of  carry- 
ing on  industries,  but  permitting  State  supervision,  not  of  a  character  to 
hamper  industries,  but  sufficient  to  prevent  frauds  upon  the  public. 

JOHN  D.  ROCKEFELLER. 
State  of  New  York,  County  of  New  York,   ss: 

I  swear  that  these  statements  made  by  me  of  my  own  knowledge  are 
true,  and  that  all  other  statements  I  believe  to  be  true. 

JOHN  D.   ROCKEFELLER. 

Sworn  and  subscribed  to  before  me  this  30th  day  of  December,  1899. 

J.  MARSHALL  BUSSELLE, 

Notary  Public,  No.   190. 


JOHN  D.  ROCKEFELLER  AND  S.  C.  T.  DODD.  69 

Mr.  S.  C.  T.  Dodd,  solicitor  of  the  Standard  Oil  Company,  in  response 
to  a  request  of  the  commission,  on  September  18,  1899,  furnished  informa- 
tion regarding  the  profits  of  the  Standard  Oil  Company  and  other  matters. 
The  data  concerning  the  profits  of  the  company  was  a  direct  contradiction 
of  the  almost  universal  claim  of  competitors  of  that  company,  who  had  as- 
serted that  it  had  made  inordinate  profits  by  means  of  rebates  prior  to  the 
interstate  commerce  act.  Mr.  Dodd's  statement  showed,  -on  the  contrary, 
that  the  greatest  profits  of  the  Standard  Oil  Company  had  been  made  since 
1887,  since  which  date  the  old  method  pursued  by  the  railroad  companies, 
of  giving  a  special  rate  to  all  shippers  of  oil,  as  well  as  of  other  commodities, 
had  been  superseded  by  allowing  the  published  rate  only  to  all,  which 
forced  all  shippers  of  oil  to  pay  exactly  what  the  Standard  Oil  Company 
was  paying.  In  1887  a  10  per  cent,  dividend  was  declared  on  stock  of  the 
Standard  Oil  Company.  From  that  year  there  was  an  increase  in  the 
amount  of  dividends  until  1897,  when  the  dividend  reached  33  per  cent.  In 
1898  it  was  30  per  cent. 

In  reply  to  the  request  of  the  commission  for  a  complete  list  of  divi- 
dends that  had  been  declared,  Mr.  Dodd  furnished  the  following  statement: 

Per  Cent.  Per  Cent. 

1S82  5.25  1891  12 

18S3  6  1892  12.21 

1884  6  1893  12 

1885  in.50  1894  12 

1886  10    1895  17 

1S87  10    1S9(; 31 

1888  11.50  1897  33 

1889  12    1898  30 

1890  12 

After  giving  a  list  of  patents  by  patent  numbers,  belonging  to  the  vari- 
ous companies  in  1882,  the  use  of  which  was  open  to  all,  Mr.  Dodd  replied  to 
questions  submitted  to  him  by  the  commission  as  follows: 

Q.  What  by-products,  if  any,  are  available  to  your  organization  which 
could  not  profitably  be  made  by  separate  plants?  A.  All  products  are  made 
by  separate  plants,  but  most  of  them  Avere  at  one  time  protected  by  patents, 
the  use  of  v/hich  became  available  to  all  plants. 

Q.  Has  there  been  under  the  organization  any  specialization  of  the 
plants,  further  than  at  time  of  the  organization,  giving  to  each  the  work 
for  which  it  is  best  adapted?  Give  details,  if  any.  A.  Some  of  the  corpora- 
tions whose  stock  were  taken  into  the  original  trust  were  abandoned  be- 
cause of  location  or  ill  adaptation  for  the  desired  work.  Others  were  or- 
ganized at  more  convenient  locations  and  with  superior  plants.  Those 
manufacturing  oil  for  export  are  located  at  tidewater,  while  those  for  do- 
mestic trade  are  located  at  central  shipping  points  in  the  interior. 

Q.  Have  any  plants  or  offices  of  the  organization  been  closed,  shut 
down,  suspended,  dismantled,  or  sold  out?  If  so,  give  list,  with  disposition 
made  of  each.  A.  No  plants  or  offices  of  the  organization  have  been  closed 
or  sold  out.  But  in  the  18  years  all  plants  of  companies  have  been  made 
new  and  more  effective,  and  plants  have  been  abandoned  at  one  place  be- 
cause of  more  effective  plants  erected  in  a  more  suitable  place.  I  am  unable 
to  give  the  particulars  of  the  changes  for  18  years:  suffice  it  to  say  that 
almost  nothing  now  remains  of  plants  of  18  years  ago. 

Q.  Are  your  prices,  in  fact,  the  same  throughout  the  United  States, 
allowing  for  cost  of  transportation?     A.  Yes. 

Q.  Are  they,  in  fact,  the  same  in  the  United  States  as  in  foreign 
countries,  allowing  for  cost  of  transportation?  A.  Somewhat  lower  in  the 
United   States. 

Q.  Have  your  agents  ever  authority  to  make,  or  have  they  ever,  in  fact, 
made  lower  prices  or  rebates  in  special  sections  of  the  country?  A.  No 
authority. 

Q.  Have  they  done  so  for  the  purpose  of  meeting  competition  or 
otherwise?  A.  No  doubt  prices  have  been  cut  to  meet  lower  prices  made 
by  competitors. 


70  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION". 

Q.  What  dividends  have  you  declared?  Give  complete  list  with  dates. 
A.  Dividends  were  paid  quarterly  and  have  aggregated  per  annum  as  fol- 
lows: 

Per  Cent.  Per  Cent. 

1882  5.25  1S91 12 

1883  6    1S92  12.21 

1884  : 6    1893  12 

1885  10.50  1894  12 

1886  10  1895  IT 

1887  10  1896  31 

1888  11-50  1897  33 

1889  12  1898  30 

1890  12 

Q.     Give  list  of  stock  dividends,  with  dates.     A.     May,  1887,  20  per  cent. 

Q.  What  was  the  total  amount  of  net  profit,  or  loss,  during  your  last 
business  year?     A.  Profit,  30  per  cent. 

Q.  What  distinctions,  if  any,  are  made  in  the  distribution  of  profits 
between  the  former  owners  of  closed  or  dismantled  plants  and  others?  A. 
None. 

Q.  What  sums  have  been  added  in  enlargement  or  improvement  of 
plant?  Specify  the  use.  Give  particulars,  with  dates.  A.  In  1882  the  prop- 
erty of  the  various  companies  was  estimated  to  aggregate  $75,000,000.  for 
which  amount  trust  certificates  were  issued.  In  1892  they  were  estimated  to 
aggregate  $121,631,312.  This  increase  was  partly  from  profits,  partly  from 
additional  capital  invested.  Possibly  50  per  cent,  of  the  addition  was  profit. 
No  estimate  has  since  been  made;  but  the  addition  of  profits  to  capital  was 
in  about  the  same  proportion  until  1896,  since  which  time  profits  have  been 
divided.  The  improvements  are  in  the  way  of  greater  efficiency  in  method 
and  in  facilities  for  enlarged  output. 

Q.  What  has  been  allowed  for  annual  depreciation?  A.  An  average  of 
5.77  per  cent. 

Q.  What  disposition  has  been  made  of  plants  closed  or  dismantled  since 
the  formation  of  the  organization?  List,  with  particulars  for  each.  A.  All 
that  was  useful  of  closed  or  dismantled  plants  was  used  in  construction  of 
new  plants;  all  else  was  sold  as  junk.  No  data  are  within  my  knowledge  or 
control  from  which  particulars  can  be  given. 

Q.  Give  any  further  particulars  which  show  the  work  of  the  organiza- 
zation  and  its  effects.  A.  About  the  year  1872  the  condition  of  the  refined 
oil  business  was  disastrous,  and  failures  were  of  constant  occurrence.  Lead- 
ing refiners  began  to  combine  for  the  purpose  of  making  the  business  suc- 
cessful. The  combination  was  by  means  of  purchase  of  stocks  and  interests 
of  various  companies,  and,  until  1882,  the  combination  was  solely  by  stock 
ownership  in  the  hands  of  a  limited  number  of  individuals,  who  controlled 
the  corporations  as  agencies  in  a  common  business.  In  1882  these  owners, 
whose  names  appear  in  Exhibit  A,  entered  the  trust  agreement.  The  com- 
panies whose  stock  they  owned,  in  whole  or  in  part,  appear  in  the  same 
agreement.  They  were  not  then  competing  companies.  The  individuals 
named  as  trustees  controlled  them  by  virtue  of  absolute  ownership  of  a  ma- 
jority of  their  stocks. 

When  the  trust  was  dissolved,  in  1892,  the  same  fact  existed.  The  indi- 
viduals then  trustees  continued  to  control  the  companies  by  virtue  of  abso- 
lute ownership  of  a  majority  of  their  stocks.  Consequently  the  corporations 
named  have  been,  many  of  them  since  1872,  separate  agencies  carrying  on 
business  as  a  unit  for  the  individuals  who  are  their  common  stockholders. 
What  they  have  accomplished  in  that  time  may  be  thus  briefiy  summarized: 

1.  Thev  have  cheapened  transportation,  both  local  and  to  the  seaboard, 
by  perfecting  and  extending  the  pipe  line  system;  by  constructing  and  sup- 
plying cars  by  which  oil  is  shipped  in  bulk;  by  building  tanks  for  storage  of 
oil  in  bulk;  by  purchasing  and  perfecting  terminal  facilities  for  receiving, 
handling,  and  re-shipping  oils;  by  purchasing  and  buildine  steamers  and 
lighters  for  river  and  harbor  service;  by  building  wharves,  docks,  and  ware- 
houses, for  foreign  shinments;  ])y  purchasing  and  building  ocean  steamers 
for  carrying  oil  in  bulk,  and   by  employing  in  foreign   countries  the   same 


J.   W.  LEE,  PRESIDENT  PURE   OIL  TRUST.  71 

special  methods  for  storing  and  transporting  oils  in  bulk,  by  which  means 
alone  the  markets  of  Europe  are  to-day  held  for  American  oil  against  Rus- 
sian competition. 

2.  By  uniting  the  capital,  skill,  and  acts,  and  the  various  processes  and 
patents  of  a  number  of  persons,  as  well  as  their  secret  processes,  and  by 
building  up  manufactories  on  a  more  extensive  and  perfect  scale,  with 
improved  machinery  and  appliances,  and  by  locating  them  in  the  centers  of 
the  trade  they  were  intended  to  reach,  the  manufacture  of  oil  has  been 
much  cheapened  and  improved. 

By  spending  large  sums  in  the  investigation  of  methods  of  utilizing 
Ohio  and  Indiana  oils,  and  by  purchase  of  various  patents,  they  have  suc- 
ceeded in  making  a  superior  article  of  illuminating  oil  out  of  what  for  some 
years  seemed  an  almost  worthless  product. 

3.  By  uniting  with  the  business  of  transporting  and  refining,  businesses 
necessarily  collateral  thereto,  to-wit,  the  manufacture  of  barrels,  tin  cans, 
boxes  for  inclosing  cans,  paints,  glue,  sulphuric  acid,  etc.,  and  by  union  of 
capital  and  skill,  obtaining  the  best  machinery,  and  manufacturing  on  a  large 
scale,  they  have  cheapened  these  products. 

4.  They  have  obtained  and  utilized  the  best  scientific  skill  in  investigat- 
ing and  experimenting  upon  the  obtaining  of  new  and  useful  products  from 
petroleum,  and  have  cheapened  illuminating  oil  and  otherwise  benefited 
mankind  by  the  utilization  of  these  by-products. 

5.  They  have  used  their  united  capital  in  opening  up  the  markets  of  the 
world  for  American  petroleum,  and  have  held  those  markets  against  the 
fiercest  foreign  competition.  This  was  rendered  possible  only  by  the  em- 
ployment of  millions  of  capital,  in  the  cheapening  of  transportation  at  home, 
across  the  ocean,  and  in  foreign  lands,  and  by  the  best  and  cheapest  methods 
of  manufacture. 

The  proofs  of  these  propositions  will  be  found  in  the  statistics  of  petro- 
leum, showing  its  production,  prices  of  crude  and  refined,  consumption  at 
home,  and  amount  exported  to  foreign  markets.  While  the  Standard  does 
not  produce,  refine  and  market  all  the  oil,  it  has  been  the  leader  in  the  busi- 
ness, and  competitors  have  succeeded  by  uniting  their  capital,  skill  and  acts, 
and  following  the  same  methods. 

It  may  be  asked  whether  all  this  could  have  been  accomplished  with- 
out combination.  It  could  if  one  man  could  have  commanded  the  necessary 
capital  and  employed  the  proper  means  and  persons.  But  that  was  mani- 
festly impossible.  It  could  have  been  accomplished  by  one  corporation 
instead  of  many,  but  no  charter  could  be  obtained  authorizing  a  corporation 
at  once  to  produce,  manufacture,  transport  by  pipe  line,  car  and  steamer, 
and  deal  in  oils,  and  also  to  manufacture  packages,  acids,  etc.  The  theory 
of  the  combination  was  that  a  corporation  created  by  and  largely  doing 
business  in  a  State  should  take  its  charter  from  that  State.  Until  charters 
can  be  granted  by  the  Federal  government,  the  agency  of  different  corpora- 
tions will  be  required  in  any  business  like  that  of  American  petroleum, 
which  seeks  all  the  markets  of  the  world. 


CHAPTER  VIL 

TESTIMONY  OF  MR.  J.  W.  LEE,  PRESIDENT  OF  THE 
PURE  OIL  TRUST. 

There  are  a  variety  of  inconsistencies  in  the  testimony  of  Mr.  J.  W.  Lee, 
president  of  the  Pure  Oil  Trust,  who  appeared  before  the  Industrial  Commis- 
sion on  May  11,  1899.  The  careful  reader  of  Mr.  Lee's  testimony  will  readily 
see  that  he  had  many  diflSculties  to  overcome  in  his  argument  in  which  he 
•endeavored  to  show  that  the  Pure  Oil  Trust  was  altogether  good,  while  the 
Standard  Oil  Company  was  altogether  bad. 


72  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

Mr.  Lee  and  other  competitors  of  the  Standard  Oil  Company  argued  that 
the  charge  of  twenty  cents  per  barrel  for  local  pipage  of  oil  as  made  by  the 
Standard  Oil  Company  was  extortionate.  When  closely  questioned  on  this 
matter,  he  said  he  thought  the  cost  of  piping  oil  would  be  between  seven 
and  eight  cents  a  barrel,  apparently  referring  to  local  piping.  In  reply  to  a 
question  by  Representative  Livingston,  who  asked  who  paid  the  expenses  of 
the  independent  pipe  line,  Mr.  Lee  said: 

"The  company  itself.  It  charges  15  cents  for  local  pipage  to  the  refiners. 
They  have  15  cents  pipage  out  of  which  they  pay  the  expenses,  and  if  there 
is  anything  left  it  is  their  profit." 

This  reply  indicated  that  the  dividend  of  the  independent  pipe  line  was 
very  uncertain,  and  yet  Mr.  Lee  a  short  time  before  had  testified  as  follows: 

Q.  (By  Professor  JENKS.)  Could  you  give  any  estimate  as  to  what  you 
think  the  cost  of  pipage  is  now  that  the  pipe  is  so  low?  How  would  you 
estimate  it?  A.  I  think  the  cost  of  pipage  would  be  between  seven  and 
eight  cents  a  barrel.* 

It  should  be  remembered  that  the  National  Transit  Company's  lines 
were  built  before  the  "pipe  was  so  low." 

Mr.  Lee  was  asked  whether  his  estimate  of  the  cost  of  pipage  included 
interest  on  the  capital  invested,  which  would  appear  to  be  a  very  important 
part  of  the  cost  of  local  pipage,  as  capital  could  hardly  be  engaged  for  such 
a  purpose  without  profit.  He  replied  that  his  estimate  of  the  cost  was 
simply  the  cost  of  pipage.  This  most  important  qualifying  statement,  which 
was  secured  only  after  persistent  questioning,  was  dropped  from  the  report 
of  his  testimony  before  it  was  given  official-  publication.  This  omission  was 
very  unfortunate,  as  it  made  the  testimony  of  Mr.  Lee  in  that  respect  wholly 
misleading. 

Other  witnesses  had  testified  that  the  cost  of  piping  oil  was  very  much 
cheaper  than  seven  or  eight  cents  a  barrel,  such  testimony  being  given  to 
show  that  the  profits  of  the  National  Transit  Company  were  exorbitant. 
Vice-Chairman  Phillips,  in  asking  Mr.  Thurber  a  question,  declared  it  could 
be  piped  for  five  cents  a  barrel.  If  dividends  were  doubtful  on  a  charge  of 
15  cents  per  barrel  by  the  United  States  Pipe  Line  Company,  it  is  difficult  to 
see  how  the  price  of  20  cents  per  barrel  charged  by  the  National  Transit 
Company  has  been  exorbitant. 

Mr.  Lee  testified  as  follows: 

Q.  (By  Vice-Chairman  PHILLIPS.)  Is  the  amount  given  and  the  length, 
of  time  it  was  received  (referring  to  alleged  rebates  paid  by  the  Pennsyl- 
vania and  other  railroads  which  the  witness  had  previously  said  the  Inter- 
state Commerce  Commission  had  assessed  against  these  roads)  shown  in  the 
testimony  of  Mr.  Cassatt?  A.  Yes,  sir,  it  Is  in  the  testimony  on  pages  242 
and  243  of  the  work  on  trusts. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Can  you  give  the  commission  the 
exact  amount  in  dollars?  A.  It  is  estimated  here  to  be  from  October  17, 
1877,  to  March  31,  1879,  $10,551,218. 

The  above  testimony  would  indicate  that  this  amount  of  discrimination 
was  testified  to  by  Mr.  Cassatt.  The  fact  is  Mr.  Lee  was  not  really  referring 
to  the  testimony  of  Mr.  Cassatt,  but  to  the  deductions  from  that  testimony 
by  Mr.  Lewis.  Emery.  .Jr.,  which  appear  on  pages  242  and  243  of  the  report 
of  the  testimony  taken  by  the  Committee  on  Manufactures  of  the  House  of 
Representatives,  the  absurdity  of  which  has  been  fully  shown  in  the  testi- 
mony of  Mr.  Archbold.  The  testimony  as  given  by  Mr.  Lee  is  altogether 
misleading  as  to  the  facts. 

The  discrepancies  between  the  testimony  as  actually  given  by  Mr.  Lee 
and  the  official  report  of  his  testimony  as  issued  by  the  Industrial  Commis- 
sion are  very  great.  Whether  the  official  censor  of  the  commission  or  Mr. 
Lee  himself  made  these  changes  in  his  testimony  before  thp  latter  swore  to 
the  correctness  of  his  statement  before  a  notary  public,  cannot  readily  be 


■^Both  Mr.  Phillips  and  Mr.  Kmory  sairl  the  cost  of  local  pi], age  was  from  three 
to  five  cents  a  barrel.  Mr.  Phillii)s  said  oil  rouUl  he  piped  to  the  terminal  in  New 
Jersey,  cari'ving  half  capacity  for  five  cenis  a  barrel,  and  with  full  capacity  for  less 
than  four  cents.  Mr.  Emery  said  oil  is  piped  from  the  wells  to  the  terminal  in  New 
Jersey  for  ten  cents  a  barrel. 


J.  W.  LEE,   PRESIDENT   PURE  OIL  TRUST.  73 

ascertained  by  the  public,  but  the  character  of  these  changes  is  significant. 

A  trifling  omission  occurs  in  the  opening  of  Mr.  Lee's  testimony.  In 
reply  to  a  question  by  Mr.  Phillips,  who  asked  what  methods  the  Pennsyl- 
vania Railroad  Company  and  the  Standard  Oil  Company  used  to  prevent 
the  passage  of  a  bill  in  the  Legislature  of  Pennsylvania,  he  said: 

"The  methods  that  are  usually  known,  I  think,  in  Legislatures,  especially 
in  the  Pennsylvania  Legislature." 

It  is  not  clear  what  reason  existed  for  cutting  out  the  term  "especially 
in  the  Pennsylvania  Legislature,"  but  it  does  not  appear  in  the  official  report. 

Not  only  were  these  changes  made  in  Mr.  Lee's  testimony,  but  they 
occurred  as  well  in  the  questions  asked  him  by  Vice-Chairman  Phillips,  the 
'leading"  portions  of  which  were  frequently  eliminated  by  some  one.  A 
careful  comparison  of  the  testimony  as  actually  given  and  as  officially  pub- 
lished, will  show  that  in  a  number  of  cases  the  leading  questions  of  Mr. 
Phillips  have  been  stricken  from  the  record,  the  answers  to  these  leading 
questions,  frequently  merely  a  repetition  of  the  questions,  being  retained. 
In  other  cases  the  questions  do  not  appear  as  such,  but  are  incorporated  as 
a  part  of  Mr.  Lee's  answers. 

The  testimony,  as  officially  published,  is  misleading  in  many  respects, 
if  the  reader  expects  to  find  in  it  a  reproduction  of  what  actually  took  place 
before  the   commission. 

Mr.  Phillips  asked  his  colleague  in  the  Pure  Oil  Trust:  "Do  they  obtain 
rebates  from  railroads?"  (referring  to  the  Standard  Oil  Company).  Mr.  Lee 
promptly  replied:  "They  do  obtain  rebates  from  the  railroads."  Those  who 
are  at  all  acquainted  with  the  testimony  taken  before  the  commission  know 
that  no  evidence,  worthy  to  be  considered  by  reasoning  men,  was  presented 
to  show  that  rebates  had  been  paid  to  the  Standard  Oil  Company  since  the 
passage  of  the  interstate  commerce  law.  Very  properly  when  the  official 
report  of  the  evidence  was  issued  the  "do"  of  both  Air.  Phillips  and  of  his 
friend  Mr.  Lee  w.is  changed  into  a  "did."  so  that  the  assertion  regarding 
rebates  might  refer  to  any  old  time.  Of  couse,  there  is  no  intention  to 
charge  either  Mr.  Phillips  or  Mr.  Lee  with  having  introduced  the  past  tense 
into  statements  originally  referring  to  the  present  time,  but  the  change  was 
in  keeping  with  the  facts  in  the  case  and  to  that  extent  should  be  com- 
mended. 

It  will  be  seen  that  when  Mr.  Farquhar  asked  the  witness  whether  the 
oil  producers  of  this  country  receive  a  fair  price  for  their  product,  he 
replied:  "They  certainly  do  not."  In  the  official  report  he  is  made  to  say: 
"They  certainly  have  not."  There  is  a  very  wide  difference  between  "do 
not"  and  "have  not."  There  is  no  question  that  at  times  oil  producers 
"have  not"  received  a  fair  remunerative  price  for  their  product,  and  it  was 
because  of  that  fact  that  the  Standard  Oil  Company  in  1887-88  co-operated 
with  the  producers  in  order  to  reduce  the  stock  by  limiting  the  production, 
so  that  the  oil  might  be  placed  on  a  paying  basis  for  the  producers.  The 
result  of  that  action  was  to  improve  conditions  in  the  oil  industry  so  that 
it  could  no  longer  be  said  that  the  producers  "do  not"  receive  a  fair  price 
for  their  product.  The  virtue  in  this  change  in  the  testimony  is  that  it  was 
at  least  in  the  direction  of  the  facts. 

Again  when  referring  to  the  old  yarn  about  the  $10,000,000  rebate.  Mr. 
Lee  said:  "It  went  to  the  Standard  Oil  Company  chiefly,  of  course."  That 
was  positive  testimony  of  a  kind  that  one  would  hardly  expect  to  be  made 
without  abundant  proof  to  sustain  it,  but  before  the  testimony  was  placed 
before  the  public  in  the  official  report,  this  positive  statement  became  mel- 
lowed into  a  mere  supposition,  as  Mr.  Lee  is  there  quoted  as  saying:  "It 
went  to  the  Standard  Oil  Company  chiefly.  I  suppose." 

Mr.  Lee  declared:  "I  do  not  think  any  of  the  trustees  (of  the  Standard 
Oil  Company)  have  had  any  practical  experience  in  the  business."  When 
he  w^as  asked  what  he  thought  of  Mr.  O'Day,  he  said  that  he  had  had  expe- 
rience as  a  pipe  line  man  and  Mr.  Archbold  had  had  quite  a  large  experience 
as  a  refiner.  In  the  official  report  there  was  some  spirit  of  condescension, 
apparently,  on  the  part  of  some  one.  for  Mr.  Lee  is  made  to  say:  "I  think 
with  the  exception  of  one  trustee,  none  of  the  trustees  have  had  any  expe- 
rience."     A    further    compliment    is    paid    Mr.    Archbold    by   the    additional 


74  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

remark  which  appears  in  the  oflBcial  report,  but  not  in  the  stenographic 
report,  Mr.  Lee  being  quoted  in  the  former  as  saying:  "I  think  he  (Mr. 
Archbold)  is  a  competent  man  in  that  business."  This  indeed  is  high  praise 
for  the  body  of  men  whose  genius  for  business  and  organization  has  con- 
structed the  most  wide-reaching  industrial  enterprise  the  world  has  ever 
known. 

Again,  when  speaking  of  what  he  considered  the  inordinate  profits  of 
the  Standard  Oil  Company,  Mr.  Lee  said:  "They  have  the  ability,  they 
have  the  power,  to  take  from  the  consumer  just  what  they  please  where 
there  is  no  competition,  and  I  do  not  think  anybody  would  be  moderate 
under  such  circumstances.  I  would  not  want  to  trust  myself,  I  think,  under 
those  circumstances."  In  the  official  report  this  candid  acknowledgement  of 
Mr.  Lee's  distrust  of  even  himself  under  temptations  to  take  an  inordinate 
profit,  does  not  appear. 

In  discussing  methods  by  which  great  corporations  might  be  controlled, 
Mr.  Lee,  in  referring  to  the  suggestion  that  no  company  should  have  over 
11,000,000  of  capital,  said:  "You  can  make  it  a  penal  offense  for  them  to  have 
more  than  that;  if  you  want  to  drive  them  out  and  make  them  begin  over 
again  do  away  with  the  trusts  altogether.  No  commercial  company  should 
have  more  than  that."  This  suggestion  of  the  particular  heroic  treatment 
that  Mr.  Lee  approves  does  not  appear  in  the  official  report.  When  ques- 
tioned by  Mr.  Phillips  regarding  the  sale  of  lubricating  oils  by  the  Standard 
Oil  Company  to  railroads  of  the  United  States.  Mr.  Lee  said  that  while  he 
could  not  give  any  positive  information  on  the  subject,  he  believed  the  Stand- 
ard was  securing  an  advantage  from  the  railroads  by  selling  them  lubricat- 
ing oil.  He  said:  "I  think  the  railroads  of  this  country  can  be  lubricated 
for  one-half  of  the  amount  which  they  pay  to-day,  and  a  large  profit  be  made 
out  of  it;  the  railroads  are  being  robbed  in  that  way." 

In  the  official  report  of  his  testimony  he  is  made  to  say:  "I  think  the 
railroads  of  this  country  can  be  lubricated  for  one-half  the  amount  which 
they  pay  to-day  and  a  large  profit  made  out  of  it;  but  the  railroads  are 
simply  giving  rebates  in  that  way."     (P.  268.) 

Representative  Livingston  asked  the  witness  what  stood  in  the  way  of 
the  Standard  Oil  Company  purchasing  the  remaining  companies.  The  wit- 
ness replied:     "Because  they  are  not  willing  to  sell — that  is  the  only  reason." 

After  being  edited  the  testimony  reads:  "Because  they  are  not  willing 
to  sell;  that  is  one  reason."  (p.  71.) 

Some  comparisons  between  the  testimony  as  shown  by  the  stenographic 
report  and  as  officially  published  follow: 

STENOGRAPHIC  REPORT.  OFFICIAL  REPORT   (p.   264). 

Q.   (By  Vice-chairman  PHILLIPS.)  Q.   (By  Vice-Chairman  PHILLIPS.) 

Do  they  obtain  rebates  from  the  rail-  Did  they  obtain  rebates  from  the  rail- 
roads? A.  They  do  obtain  rebates  roads?  A.  They  obtained  rebates 
from  the  railroads.  That  is  probably  from  railroads.  That  is  probably 
quite  an  old  subject,  etc.  quite  an  old  subject,  and  it  is  fully 

gone  into  here   in  the  testimony  of 
Mr.  Cassatt.     *     *     * 

STENOGRAPHIC  REPORT.  OFFICIAL  REPORT   (p.   268). 

Q.   (By   Mr.    FARQUHAR.)      As    a  Q.    (By    Mr.    FARQUHAR.)      As    a 

business    proposition,    does    it   make  business    proposition,    does    it   make 

any  difference  to  a  man  selling  oil,  any  difference  to  a  man  selling  oil 

whether  he  goes  to  the  president  or  to  a  railroad  whether  he  goes  to  the 

the  purchasing  agent — practical  dif-  president  of  the  railroad  or  to  a  pur- 

ference,  I  mean?  A.  Yes.  sir,  T  think  chasing   aeent?     A.    Yes,    I   think   it 

it  makes  a  great  difference,  because  makes  a  difference;  because  the  pur- 

a   purchasing   agent  is    supposed    to  chasing  agent  is  supposed  to  buy  his 

buy     the     oil    at     the     very     lowest  oil  at  the  very  lowest  prices.     It  is 

price  if  he  does  his  duty  to  the  stock-  different  in  the  case  of  the  president. 


J.  W.  LEE,  PRESIDENT   PURE  OIL  TRUST. 


75 


holders  of  the  road;  if  it  is  put  in 
the  hands  of  the  president  it  is  for 
one  purpose  and  that  is  to  pay  ex- 
tortionate prices. 

Q.  State  any  one  case  in  which 
you  know  that  the  president  or  the 
purchasing  agent  has  been  paying 
such  prices?  A.  No,  sir,  I  do  not 
know  of  any. 

STENOGRAPHIC  REPORT. 

Q.  (By  Vice-chairman  PHILLIPS.) 
Have  you  any  information  in  regard 
to  the  Standard  paying  a  large  bonus 
or  premium  for  refining  works  to  re- 
main in  idleness,  or  sums  of  money 
to  persons  to  not  enter  the  business, 
who  would  probably  have  done  so, 
without  going  in  with  them?  A.  I 
know  that  they  leased  a  number  of 
refineries  years  back;  not  within  the 
last  five  years,  but  prior  to  that  they 
leased  a  number  of  refineries  and 
simply  shut  them  down  and  allowed 
them  to  remain  idle.  As  to  persons 
receiving  money  to  remain  out  of 
business,  I  have  no  personal,  abso- 
lute knowledge  on  that  subject;  only 
common  rumor. 

STENOGRAPHIC  REPORT. 
Mr.  LEE.  You  will  observe  from 
the  figures  that  I  have  given,  that 
prior  to  the  time  the  Standard  Oil 
Company  obtained  so  large  a  control 
of  the  industry,  prices  of  crude  oil 
were  very  high.  The  price  of  crude 
since  the  beginning  of  1895  has  av- 
eraged $]  .05  a  barrel.  That  is  very 
close  to  the  general  average  price  of 
crude  for  the  last  four  years.  1  will 
not  say  that  is  within  a  fraction  of  a 
cent,  but  it  is  very  close  to  the  aver- 
age. During  the  ten  years  prior  to 
that  the  average  price  of  crude  oil 
wa>  below  80  cents,  and  that  was 
entirely  an  unprofitable  price,  con- 
sidering the  entire  industry.  Men 
could  not  produce  oil  and  get  cost 
for  it,  and  maintain  their  production 
generally.     *     *     *     * 

STENOGRAPHIC  REPORT. 
Q.  (By  Representative  LIVING- 
STON.) What  is  the  surplus  in  bar- 
rels carried  over  now?  A.  The  sur- 
plus in  round  numl)ers  is  a  little  over 
11.000.000  barrels  in  Pennsylvania 
oil,  and  about  14.000,000  in  Lima  oil. 
A  while  ago  Lima  oil  had  about  22.- 
000.000  barrels  surplus.  Pennsyl- 
vania has  increased  her  surplus 
about  2,000,000  barrels  in  the  last 
year. 


Q.  (By  Mr.  FARQUHAR.)  Is  there 
any  proof  by  which  you  know  that 
the  purchasing  agent  gets  competi- 
tive prices  on  oil?     A.  No. 


OFFICIAL  REPORT   (p.  272). 

Q.  (By  Vice-chairman  PHILLIPS.) 
Have  you  any  information  in  regard 
to  the  paying  of  a  large  bonus  or 
premium  for  refining  works  to  re- 
main in  idleness,  or  have  you  any 
information  in  regard  to  their  pay- 
ing sums  of  money  to  persons  to  stay 
out  of  the  business?  A.  I  know  that 
within  the  last  five  years  and  prior 
to  that,  they  leased  a  number  of  re- 
fineries, and  simply  shut  them  down 
and  allowed  them  to  remain  idle.  As 
to  persons  receiving  money  to  re- 
main out  of  business,  I  have  no  per- 
sonal, absolute  knowledge  of  that 
subject;  only  common  rumor. 


OFFICIAL  REPORT  (p.  279). 
Mr.  LEE.  You  will  observe,  from 
the  figures  I  quote,  that  prior  to  the 
time  of  the  Standard  Oil  combina- 
tion, competition  largely  controlled 
this  industry.  The  prices  of  crude 
were  very  much  higher  than  they 
have  been  since.  Beginnin"?  with 
1895  they  averaged  about  $1.05  a  bar- 
rel. During  the  ten  years  prior  to 
that  the  average  of  crude  oil  was  be- 
low 80  cents.  That  was  generally  an 
unprofitable  price.  Men  could  not 
produce  oil  and  get  cost  for  it  and 
maintain  the  production.     *     *     * 


OFFICIAL  REPORT  (p.  280). 
Q.  (By  Vice-President  PHILLIPS.) 
What  is  the  surplus  in  barrels  at 
present?  A.  The  surplus  stock  of  oil 
is  a  little  over  11,000.000  barrels  in 
Pennsylvania  oil  and  about  14,000.000 
barrels  in  Lima  oil.  A  year  ago  Lima 
had  more  than  22.000.000  barrels 
surplus.  Pennsylvania  has  increased 
its  surulus  about  1,000,000  barrels 
last  year. 


76 


REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 


STENOGRAPHIC  REPORT. 

Q.  (By  Mr.  FARQUHAR.)  You 
wish  to  state  unequivocally  the  pro- 
ducers of  this  country  do  not  receive 
a  fair  price  for  their  product?  A. 
They  certainly  do  not:  I  do  not  think 
that  the  counties  which  have  pro- 
duced oil  are  as  well  off  as  they 
would  have  been  if  they  had  never 
produced  a  barrel  of  oil,  and  yet  they 
have  already  taken  out  of  those 
counties  in  the  neighborhood  of  800,- 
000,000  barrels  of  oil. 


OFFICIAL  REPORT    (p.  282). 

Q.  (By  Mr.  FARQUHAR.)  You 
wish  to  say  that  the  producers  of 
this  country  do  not  receive  a  fair 
price  for  their  product?  A.  They 
certainly  have  not.  I  do  not  think 
that  the  counties  which  have  pro- 
duced oil  are  as  well  off  as  they 
would  have  been  if  they  had  never 
produced  a  barrel  of  oil;  yet  about 
800,000,000  barrels  of  oil  have  been 
taken  out  of  those  counties. 


STENOGRAPHIC  REPORT. 

Q.  (By  Professor  JENKS.)  You 
said  the  price  of  piping  is  still  20 
cents?     A.  Yes,  sir;    local  pipage. 

Q.  Could  you  give  any  estimate  as 
to  what  you  think  the  cost  of  pipage 
is,  now  that  the  price  is  so  low?  How 
would  you  estimate  it?  A.  I  think 
the  cost  of  pipage  would  be  between 
seven  and  eight  cents  a  barrel. 

Q.  That  includes  interest  on  the 
capital  invested?  A.  No,  sir;  that 
would  simply  be  the  cost  of  pipage; 
all  of  the  entire  cost. 

Q.  (By  Mr.  FARQUHAR.)  That 
does  not  carry  fixed  charges,  does  it? 

Professor  .TENKS.  No,  sir;  no 
fixed  charges. 


OFFICIAL  REPORT   (p.  284). 

Q.  (By  Professor  JENKS.)  Piping 
is  still  20  cents?  A.  Yes,  local  pip- 
ing. 

Q.  Could  you  give  any  estimate  as 
to  what  the  cost  of  piping  is  now? 
A.  I  think  the  cost  of  pipage  would 
be  between  seven  and  eight  cents  a 
barrel.* 


STENOGRAPHIC  REPORT. 

Q.  (By  Mr.  A.  L.  HARRIS.)  What 
was  the  character  of  the  rebates  at 
the  time  you  speak  of  in  the  Penn- 
sylvania oil  district?  What  I  mean 
to  say  is  this:  What  is  the  amount 
of  the  rebate  and  where  did  that 
rebate  go  to  sometimes?  A.  That 
rebate  was  in  the  shape  of  checks, 
I  suppose,  or  cash,  and  it  has  been 
estimated  to  have  amounted  to  $10,- 
000,000.  It  went  to  the  Standard  Oil 
Company  chiefly,  of  course.  I  do  not 
know  how  it  was  divided. 


OFFICIAL  REPORT   (p.  287). 

Q.  (By  Mr.  A.  L.  HARRIS.)  What 
was  the  character  of  the  rebates  at 
the  time  you  speak  of  in  the  Penn- 
sylvania oil  district?  What  I  mean 
is  this:  What  was  the  amount  of 
the  rebate,  and  whom  did  the  rebate 
go  to  in  that  district?  A.  That  re- 
bate was  in  the  shape  of  checks,  I 
suppose,  or  cash,  and  it  has  been 
estimated  to  have  amounted  to  ten 
millions  of  dollars.  It  went  to  the 
Standard  Oil  Company  chiefly.  I  sup- 
pose. I  do  not  know  how  it  was 
divided. 


*Tho  qualifying  questions  and  answois  sliown  in  tho  quotation  from  the 
stenographic  report  are  omitted  from  the  official  report.  While  several  of  the  so- 
called  independents  were  questioned  regarding  the  cost  of  local  pipage  of  oil  this  was 
the  only  Instance  in  which  any  of  them  was  asked  if  his  estimate  included  fixed 
charges. 


J.   W.   LEE,  PRESIDENT   PURE  OIL   TRUST. 


77 


STENOGRAPHIC  REPORT. 

Q.  (By  Vice-chairman  PHILLIPS.) 
What  was  the  rate  the  independent 
company  paid  to  the  railroad  and  did 
any  of  that  come  bacli  to  the  Stand- 
ard Oil  Company?  A.  The  independ- 
ent shipper  would  ship  his  oil  and 
pay  the  open  rate,  and  they  would 
pay  80  cents  of  the  amount  of  the 
freight  that  he  paid  over  to  the 
Standard  Oil  Company.  They  paid 
not  only  on  the  oil  that  the  Stand- 
ard Oil  Company  shipped,  but  the  oil 
that  he  shipped  to  anyone.  The 
Standard  Oil  Company  got  the  rebate 
on  that.  I  don't  say  that  80  cents  is 
the  amount,  but  they  did  that  in 
some  instances.  I  know  in  Ohio  they 
charged  55  cents  to  some  of  the  inde- 
pendent men  and  after  paying  that 
they  paid  25  cents  to  the  Standard 
Oil  Company. 

Q.  (By  Mr.  FARQUHAR.)  Was 
that  a  matter  of  proof?  A.  It  was 
stated  in  testimony.  That  was  done 
in  the  case  of  the  receivership  in 
Marietta,  and  the  court  removed  the 
receiver  on  that  ground. 


OFFICIAL  REPORT    (p.  287.) 

Q.  (By  Mr.  A.  L.  HARRIS.)  Was 
it  paid  to  the  railroad  and  then  paid 
back  to  the  Standard  Oil  Company? 
A.  The  independent  shipper  would 
ship  his  oil  and  pay  the  open  rate — 
we  will  say  $1.80;  and  80  cents  of 
this  freight  that  he  paid  was  handed 
over  to  the  Standard  Oil  Company. 
They  got  the  rebate  not  only  on  the 
oil  they  shipped,  but  on  the  oil  he 
shipped.  No  one  could  stand  that. 
I  do  not  say  that  80  cents  is  the 
amount,  but  they  did  that  in  some 
instances. 


STENOGRAPHIC  REPORT. 

Q.  (By  Professor  JENKS.)  Would 
the  same  thing  hold  in  reference  to 
the  cost  of  other  materials  they  use 
in  connection  with  the  shipment — 
tin  cans,  and  barrels,  etc.?  A.  No, 
sir;  others  make  these  just  as  cheap- 
ly as  they  can.  The  making  of  titi 
cans  is  a  very  simple  process.  It  is 
all  done  by  machinery,  and  they  are 
made  very  rapidly.  I  think  others 
can  manufacture  them  just  as  cheap- 
ly as  they  do,  and  they  can  manufac- 
ture barrels  just  as  cheaply  as  the 
Standard  Oil  Company.  I  judge  they 
cannot  manufacture  any  cheaper 
than  other  people,  because  they  do 
not  do  it,  and  in  the  other  branches 
of  their  business  they  manufacture 
no  cheaper  than  the  other  people. 
They  are  not  any  better  producers 
than  the  independent  producers,  nor 
as  good;  and  they  do  not  transport 
oil  any  cheaper  on  any  pipe  line. 


OFFICIAL  REPORT   (p.   269). 

Q.  (By  Professor  JENKS.)  Would 
the  same  thing  hold  with  reference 
to  the  materials  they  use  in  ship- 
ping? With  reference  to  the  cost  of 
tin  cans  and  barrels?  A.  The  mak- 
ing of  tin  cans  is  a  very  simple  pro- 
cess; it  is  all  done  by  machinery,  and 
they  are  made  very  rapidly.  I  think 
others  can  manufacture  them  just  as 
cheaply  as  they  do.  Barrels  can  be 
manufactured  just  as  cheaply  as  the 
Standard  Oil  Company  can  make 
them.  I  judge  they  cannot  manufac- 
ture these  things  any  cheaper  than 
other  people,  because  they  do  not  do 
the  other  parts  of  the  business  any 
cheaper  than  the  other  people.  They 
are  not  any  better  producers  than 
the  independent  producers,  nor  as 
good,  and  they  do  not  transport  the 
oil  any  cheaper  through  a  given  size 
of  pipe  than  we  do. 


78 


REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 


STENOGRAPHIC  REPORT. 

Q.  (By  Professor  JENKS.)  In  your 
opinion  then,  whatever  advantage 
they  have  comes  from  some  special 
discrimination  through  the  monop- 
oly, and  not  from  any  advantage  of 
a  large  capital?  A.  I  think  you  are 
entirely  correct;  they  have  no  ad- 
vantage so  far  as  the  real  doing  of 
the  business  is  concerned,  unless  it 
is  through  some  discrimination  that 
they  get  in  some  way. 

STENOGRAPHIC  REPORT. 

Q.  (By  Mr.  FARQUHAR.)  You 
said  some  time  ago  you  thought 
those  who  were  interested  in  the  in- 
dependent companies  and  had  been 
brought  up  to  the  business  and  had 
long  experience  in  it,  were  better 
managers  than  the  agents  the  Stand- 
ard Oil  Company  employs  in  the  re- 
fining or  transporting  or  selling  of 
oil.  Is  it,  or  not,  a  fact  that  in  the 
acquirement  of  these  properties  the 
Standard  Oil  Company  has  usually 
taken  the  expert  mixers  and  refiners 
and  business  men  of  these  concerns 
into  the  working  force  of  the  Stand- 
ard Oil  Company?  In  other  words, 
are  not  the  controlling  spirits  of  the 
Standard  Oil  Company  to-day  the 
men  who  have  been  in  the  field  from 
the  first  with  as  wide  an  experience 
as  any  of  the  independent  companies 
could  have?  A.  No,  I  don't  think  so. 
I  do  not  think  any  of  the  trustees 
have  had  any  experience;  have  had 
any  practical  experience  in  the  busi- 
ness. 

Q.  What  is  the  experience  of  Mr. 
O'Day?  A.  He  has  had  experience 
as  a  pipe  line  man,  and  Mr.  Archbold 
has  quite  a  large  experience  as  a  re- 
finer. 

STENOGRAPHIC  REPORT. 

Q.  (By  Representative  LIVING- 
STON.) Now  give  the  reasons  to 
the  commission  why  you  think  so. 
A.  The  reasons  are  that  any  man 
who  is  permitted  to  take  whatever 
he  wants  to,  is  never  moderate  in 
his  taking.  They  have  the  ability, 
they  have  the  power,  to  take  from 
the  consumer  just  what  they  please, 
where  there  is  no  competition;  and 
I  do  not  think  anybody  would  bo 
moderate  under  such  circumstances. 
1  would  not  want  to  trust  myself,  I 
think,  under  those  circumstances.  I 
do  not  believe  anybody  should  be 
trusted  with  unlimited  powers  any- 
where. 


OFFICIAL  REPORT   (p.  269.) 

Q.  (By  Professor  JENKS.)  In  your 
judgment,  then,  any  advantage  they 
have  comes  from  some  special  dis- 
criminations or  through  monopoly, 
and  not  from  any  legitimate  advan- 
tage they  have  through  large  capi- 
tal? A.  I  think  you  are  entirely  cor- 
rect; they  have  not  much  advantage, 
so  far  as  the  actual  doing  of  the  bus- 
iness is  concerned,  except  through 
discriminations. 

OFICIAL  REPORT  (p.  271.) 

Q.  (By  Mr.  FARQUHAR.)  You 
mentioned  the  fact  some  time  ago 
that  you  thought  those  who  were  in- 
terested in  the  independent  com- 
panies, and  had  been  brought  up  in 
the  business,  and  had  long  experi- 
ence in  it,  are  better  managers  than 
the  agents  that  the  Standard  Oil 
Company  employ  in  refining,  or 
transporting,  or  selling.  Is  it.  or  is 
it  not  a  fact  that  in  the  acquirement 
of  these  plants,  the  Standard  Oil 
Company  has  usually  taken  the  ex- 
pert mixers  and  refiners  of  those 
concerns  into  the  working  force  of 
the  Standard  Oil  Company  itself.  In 
other  words,  under  the  controlling 
spirits  of  the  Standard  Oil  Company 
to-day,  have  not  the  men  in  the  field 
had  as  wide  experience  as  any  in- 
dependent company  can  have?  A. 
No,  I  think  not.  I  think,  with  the 
exception  of  one  trustee,  none  of 
the  trustees  have  had  any  experi- 
ence. 

Q.  What  is  the  experience  of  Mr. 
O'Day?  A.  He  has  had  experience 
as  a  pipe  line  man.  Mr.  Archbold, 
I  think,  has  had  quite  a  large  ex- 
perience as  a  refiner.  I  think  he  is 
a  competent  man  in  that  business. 

OFFICIAL    REPORT    (pp.    272-273.) 

Q.  (By  Representative  LIVING- 
STON.) Why?  A.  The  reasons  are 
that  anyone  who  is  permitted  to 
take  whatever  he  chooses  is  never 
moderate  in  his  taking.  They  have 
the  ability  and  power  to  take  from 
the  consumer  just  what  they  please, 
where  there  is  no  competition;  and 
I  do  not  think  that  anybody  would 
be  moderate  under  such  circum- 
stances. I  do  not  believe  that  any- 
body should  be  trusted  with  un- 
limited power  to  fix  prices. 


J.  W.  LEE,  PRESIDENT  PURE  OIL  TRUST. 


79 


STENOGRAPHIC  REPORT. 

Q.  (By  Mr.  A.  L.  HARRIS.)  Would 
you  reach  the  remedy  for  this 
trouble  by  what  are  commonly 
called  the  anti-trust  laws,  or  would 
you  do  it  through  the  corporation 
acts  of  the  different  States?  A. 
They  would  have  to  be  real  anti- 
trust laws.  You  would  say  that  no 
company  should  have  over  $1,000,000 
capital.  You  can  make  it  a  penal 
offence  for  them  to  have  more  than 
that  if  you  want  to  drive  them  out 
and  make  them  begin  over  again  and 
do  away  with  the  trusts  altogether. 
No  commercial  company  should  have 
more  than  that.  You  can  have  a 
perfect  division  of  labor  with  $1,000,- 
000  capital,  and  all  political  econo- 
mists say  that  is  all  that  is  desired 
by  the  aggregation  of  capital.  But 
that  is  not  what  the  trusts  desire. 
The  trusts  desire  to  get  in  a  posi- 
tion to  squeeze  somebody  out  of 
business,  to  drive  somebody  out  of 
business,  to  obtain  a  monopoly 
whereby  they  can  levy  tolls  upon 
the  public  generally.  That  is  what 
the  trusts  are  after.  They  are  all 
after  that. 


OFFICIAL  REPORT    (p.  295). 

Q.  (By  Mr.  A.  L.  HARRIS.)  Would 
you  reach  the  trouble  better  by  what 
is  commonly  called  the  anti-trust 
laws,  or  in  the  corporation  acts  of 
the  different  States?  A.  They  would 
have  to  be  real  anti-trust  laws;  you 
would  have  to  say  that  no  company 
should  have  more  than  $1,000,000 
capital.  You  can  have  a  perfect  di- 
vision of  labor  with  $1,000,000  capi- 
tal; and  all  political  economists  say 
that  is  all  that  is  desired  by  the 
aggregation  of  capital.  That  is  not 
what  the  trust  desires.  The  trusts 
desire  to  get  into  position  to  squeeze 
somebody;  drive  somebody  out  of 
business;  whereby  they  can  levy 
tolls  on  the  public  generally.  That 
is  what  the  trusts  are  for. 


STENOGRAPHIC  REPORT. 

Q.  (By  Representative  LIVING- 
STON.) If  one  State  is  allowed  to 
issue  charters  as  it  pleases, and  those 
charters  are  to  be  operative  in  all 
of  the  other  States,  how  are  you  go- 
ing to  remedy  it  by  State  legislation? 
A.  You  can,  we  will  say,  provide 
that  no  trust  can  do  business  in  the 
State  of  Georgia. 

Q.  We  have  an  iron-bound,  rock- 
ribbed  law  there  now?  A.  And  that 
no  trust  nor  corporation  can  do  busi- 
ness with  a  capital  over  $1,000,000. 
If  a  dozen  States  would  pass  laws 
of  that  kind  that  would  enable  in- 
dependent companies  to  come  in 
those  States  and  do  business  on 
those  lines. 

Q.  If  a  corporation  comes  into  my 
State  to  sell  goods  with  $500,000  or 
$500,000,000  capital,  and  does  not  use 
imfair  methods,  does  not  attempt  to 
destroy  competition,  why  not  let  it 
have  $500,000,000  as  well  as  $1,000,- 
000?  A.  I  do  not  object  to  the  capi- 
tal, but  to  the  amount  of  it. 

Q.  I  do  not  see  the  object  of  limit- 
ing it  to  $1,000,000  because  a  rascal 
can  be  a  rascal  with  $1,000,000  just 


OFFICIAL  REPORT   (p.  295). 

Q.  (By  Representative  LIVING- 
STON.) If  one  State  in  the  Union 
is  allowed  to  issue  charters  just  as 
she  pleases,  and  do  as  she  pleases, 
and  those  charters  are  operated  in 
all  the  other  States,  how  are  you  go- 
ing to  legislate?  A.  You  could  say 
in  the  State  of  Georgia  that  no  trust 
should  be  possible  in  that  State.  Sup- 
pose a  dozen  States  should  pass  laws 
that  no  trust  should  be  possible  or 
no  corporation  should  do  business 
in  those  States  with  a  capital  of  over 
$1,000,000;  that  would  enable  inde- 
pendent companies  to  go  in  and  do 
business  in  those  lines.  I  do  not 
object  to  the  amount  of  capital.  I 
only  limit  it  to  $1,000,000  because  a 
company  with  $1,000,000  capital  can 
not  engage  in  destructive  competi- 
tion. It  might  be  mean  in  a  small 
way,  but  it  could  not  do  much  dam- 
age. A  company  with  $100,000,000 
or  $500,000,000  capital  can  drive 
everybody  out  of  that  business;  and 
the  question  is,  will  they  not  do  it? 
There  is  no  way  of  curbing  their 
power  except  by  restricting  their 
capital,   or   else   making   it   a   penal 


80 


REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 


as  easy  as  with  $100,000,000.  A.  I  only 
limited  it  to  $1,000,000  because  a 
company  with  $1,000,000  capital  can- 
not engage  extensively  in  destruc- 
tive competition. 

Q.  He  can  to  that  extent,  on  a 
smaller  scale  it  would  be  just  as 
mean?  A.  It  might  be  mean,  but  as 
much  damage  could  not  be  done  by 
a  company  of  $100,000  or  $500,000  of 
capital.  A  company  with  $500,000,- 
000  of  capital  can  drive  out  every- 
body else  in  the  industry,  and  when 
they  do  it  they  want  to  secure  a 
monopoly.  That  is  all.  I  am  afraid 
they  will  do  it  and  there  is  no  way 
of  curbing  their  power  except  to 
take  their  capital  away  from  them ; 
not  allow  them  to  have  that  capital. 


offence  to  engage  in  destructive  com- 
petition. 


STENOGRAPHIC    REPORT. 

Q.  (By  Professor  JENKS.)  I  want 
to  see  if  we  can  have  made  clear 
the  causes  for  three  or  four  of  the 
most  important  fluctuations.  I  un- 
derstood you  to  say  that  the  South 
Improvement  Company  was  formed 
in  1872,  and  that  within  the  next 
two  years  there  was  a  great  fall  in 
prices.  What  influence  did  the 
South  Improvement  Company  have 
in  the  way  of  forcing  those  prices 
down,  if  any?  A.  I  think  it  had  the 
effect  of  forcing  those  prices  down, 
because  they  had  a  combination 
v.'ith  the  railroads  to  control  trans- 
portion  to  a  very  great  extent,  and 
the  producers  became  frightened  and 
would  sell  their  oil  and  get  rid  of  it, 
and  in  1873  was  also  the  panic  year. 
You  remember  the  panic  had  some 
effect  on  prices.  The  man  who  owed 
debts  for  drilling  and  had  to  pay  up 
had  to  sacrifice  his  oil,  and  to  get 
out,  threw  the  oil  on  the  market. 

Q.  Did  any  new  discoveries  have 
anything  to  do  with  it  at  that  time? 
A.  At  that  time  also  there  was  a  new 
di'^covery  in  Butler  County,  which 
looked  as  if  tliey  had  a  very  prolific 
and  large  field,  which  thev  had. 


OFFICIAL  REPORT   (p.  283). 

Q.  (By  Professor  JENKS.)  I  want 
to  see  if  you  have  made  clear  the 
causes  for  three  or  four  of  the  most 
important  fluctuations.  I  understood 
you  to  say  that  the  South  Improve- 
ment Company  was  formed  in  1872, 
and  that  within  the  next  two  years 
there  was  a  great  fall  in  price.  What 
influence  did  the  South  Improvement 
Company  have  in  the  way  of  forcing 
these  prices  down,  if  any?  A.  I  think 
it  had  the  effect  of  forcing  prices 
down,  because  they  had  combined 
with  the  railroads  and  controlled 
transportation  to  a  very  great  extent 
and  the  producers  became  fright- 
ened. Eighteen  hundred  and  sev- 
enty-three was  the  panic  year.  You 
will  remember  the  panic  had  some 
effect  on  prices.  At  that  time,  also, 
there  was  a  new  discovery,  in  But- 
ler County.  That  promised  to  be  a 
very  prolific  field;  and  it  proved 
to    be. 

Q.  Those  two  factors  worked  to- 
gether?     A.      Yes,    sir. 


STENOGRAPHIC    REPORT. 

Q.  (By  Vice-chairman  PHILLIPS.) 
Is  there  or  not  a  movement  to 
unite  the  various  pipe  line  com- 
panies and  the  refineries?  A.  There 
have  been  suggestions  of  that  kind. 
They  will  be  stronger  if  united  in 
one  organization  and  the  stock  all 
owned  by  one  company. 


OFFICIAL  REPORT   (p.  290). 

Q.  (By  Vice-Chairman  PHILLIPS.) 
Was  there  or  was  there  not  a  move- 
ment on  foot  to  unite  the  various 
pipe  line  companies  and  the  refiner- 
ies? A.  There  have  been  suggestions 
of  that  kind.  It  has  been  thought 
that  we  should  be  stronger  if  we  were 
united  into  one  organization. 


J.  W.  LEE,  PRESIDENT   PURE  OIL   TRUST.  81 

The  testimony  of  Mr.  Lee  is  given  in  full,  this  being  done  for  the 
reason  that  for  many  years  he  has  been  the  attorney  of  various  competi- 
tors of  the  Standard  Oil  Company,  and  is  at  the  head  of  the  Pure  Oil 
Trust,  which  he  was  largely  instrumental  in  forming.  He  had  probably 
prepared  his  case  against  the  Standard  Oil  Company  with  great  care, 
and  Vice-Chairman  Phillips,  his  associate  in  the  oil  business,  presiding  at 
the  head  of  the  Industrial  Commission,  asked  numerous  questions.  If  be- 
tween them  they  did  not  make  out  their  case,  they  surely  could  blame 
no  one   but  themselves  or  a  poor  cause. 

The  complete  testimony  of  Mr.  Lee  follows: 

*Vice-Chairman  PHILLIPS.  The  commission  will  please  be  in  order. 
I  will  state  to  the  members  of  the  Commission  that  we  will  dispose  of  the 
regular  order  this  morning  because  Senator  Lee,  of  Pennsylvania,  is  present 
from  Pittsburg.  Senator  Lee  has  been  long  and  familiarly  acquainted  with 
oils  and  petroleum  in  all  their  departments,  and  I  will  state  to  the  commission 
that  Senator  Lee  has  said  that  he  would  like  to  present  his  testimony  under 
three  heads,  namely,  "How,  in  your  opinion,  do  Trusts  affect  the  consumer? 
How  do  they  affect  the  producer?  How  do  they  affect  the  laborer,  and 
what  remedy  can  be  applied?"  I  would  request  the  commissioners  to 
take  note  of  anything  that  they  desire  to  ask  the  witness  and  reserve  their 
questions  until  after  he  has  finished  under  each  head,  so  that  he  may  not 
be  interrupted  in  his  general  statement,  and  we  will  take  occasion  to  ask 
Senator  Lee  some  preliminary  questions  before  entering  upon  this.  After 
these  questions  any  commissioner  who  wants  any  information  about  the 
oil  region  or  petroleum  will  be  at  perfect  liberty  to  ask  questions.  I  am 
pleased,  gentlemen  of  the  commission,  to  present  Senator  Lee,  of  Pittsburg. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Will  you  give  your  name,  place  of 
residence,  and  business?  A.  James  W.  Lee,  I  reside  at  Pittsburg,  Pa.,  and 
at  present  am  engaged  in  practicing  law.  I  am  also  connected  with  the 
independent  pipe  line  and  independent  oil  companies.  There  are  four 
companies.     I  am  president  of  three  of  them  and  attorney  for  the  fourth. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Will  you  please  name  those  com- 
panies? A.  The  first  company  to  be  organized  was  the  Producers'  Oil 
Company,  Ltd.,  with  its  general  office  at  Warren,  Pa.  The  second  company 
to  be  organized  was  the  Producers  and  Refiners'  Oil  Company,  Ltd.,  with 
its  general  office  at  Titusville,  Pa.,  and  the  third  was  the  United  States  Pipe 
Line  Company,  which  is  exclusively  for  the  transportation  of  both  refined 
and  crude  oil  by  means  of  pipe  lines,  with  one  of  the  termini  at  Oil  City, 
and  the  other  intended  to  be  finally  at  the  seaboard.  The  fourth  company 
is  the  Pure  Oil  Company,  which  has  the  right  to  engage  in  the  production, 
transportation,  manufacture  and  marketing  of  oil  and  its  products.  That 
company  was  organized  three  years  ago  last  November,  and  was  the  last 
to  be  organized;  they  are  all  owned  substantially  by  the  same  persons  and 
operated   together. 

Q.  (By  Vice-Chairman  PHILLIPS.)  *You  have  stated  that  you  are  a  prac- 
ticing attorney.  Where  were  you  admitted  to  the  Bar?  A.  I  was  admitted 
to  the  Bar  of  Franklin,  in  Venango  County,  which  is  one  of  the  original  oil 
counties  in  the  State. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Did  you  practice  law  in  Franklin 
after  being  admitted  there?  A.  I  practiced  law  in  Franklin  until  five 
years  ago,  when  I  went  to  Pittsburg. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Who  was  your  partner  there  in 
the  law  business?  A.  My  first  partner  was  S.  C.  T.  Dodd,  now  of  the  Stand- 
ard Oil  Company,  of  New  York.  I  was  afterwards  in  partnership  with  Mr. 
George  S.  Criswell,  now  judge  of  the  county,  and  Mr.  Hastings. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Have  you  ever  held  any  public 
office?  A.  None,  except  I  was  Mayor  of  the  city  in  1875  and  served  two 
terms  of  four  years  each  in  the  State  Senate  of  Pennsylvania,  beginning 
in  1879. 


♦Black  faced  type  indicates  matter  omitted,    in   the  course   of  editing,    from    the 
official  report. 


82  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

Q.  (By  Vice-chairman  PHILLIPS.)  *You  have  stated  that  you  served 
two  terms  in  the  State  Senate  of  Pennsylvania.  Was  there  or  had  there 
been  any  pending  legislation  with  regard  to  free  pipe  lines,  or  any  dis- 
crimination before  you  were  elected,  and  had  you  any  part  in  such  legisla- 
tion while  in  the  Senate?  A.  If  you  will  permit  me,  probably  it  would  be 
interesting  to  the  commission  to  have  a  very  brief  statement  as  to  the 
beginning  and  growth  of  the  oil  business,  especially  that  branch  of  it  which 
relates   to  transportation. 

Q.  (By  Vice-Chairman  PHILLIPS.)  The  commission  would  be  pleased 
to  hear  you,  no  doubt.  Senator.  A.  The  first  oil  was  discovered,  as  is  gen- 
erally known,  by  Colonel  E.  L.  Drake,  who  drilled  directly  for  it  in  1859 

Q.  (By  Vice-Chairman  PHILLIPS.)  (Interrupting.)  On  Oil  Creek?  A. 
Ou  Oil  Creek,  which  is  a  tributary  to  the  Allegheny  river.  The  first  well 
was  probably  eighteen  miles  distant  from  the  river.  Then  oil  was  from 
that  time  developed  along  Oil  Creek  to  the  south  until  the  production 
reached  a  thousand  barrels  in  1861  and  1862.  The  means  of  getting  it  to 
market  at  that  period  was  by  loading  it  into  vessels  on  Oil  Creek  and 
building  temporary  dams  and  cutting  them  and  thus  making  an  artificial 
flood  and  sending  the  boats  out  on  that  flood  into  the  river  and  thence  by 
river  to  Pittsburg,  where,  at  that  period  refineries  were  located.  The  first 
pipe  line,  I  think,  was  constructed  in  1865  or  1866.  It  ran  from  Pithole, 
on  the  left  of  Oil  Creek,  down  Oil  Creek  about  five  miles  to  the  Allegheny 
river,  for  the  purpose  of  transporting  the  oil  to  the  river,  to  be 
there  loaded  into  boats  and  sent  to  market.  From  that  time  the 
business  of  transporting  oil  by  means  of  pipe  lines  increased  and  the  busi- 
ness developed,  extending  first  north  to  Tidioute,  in  Warren  County,  then 
south  into  Clarion,  and  thence  into  Armstrong  and  Butler,  and  finally  into 
Allegheny  and  Washington.  In  1875  they  extended  north  to  ivicKean  County 
where  the  largest  development  of  oil  took  place;  and  then  further  north 
to  Allegany  County,  N.  Y.,  probably  making  the  length  of  the  belt  in  1880 
about  300  miles  and  the  width  about  forty  miles,  which  embraced  all  the 
oil  that  was   produced   at   that   period. 

As  the  fields  extended,  it  became  necessary  to  employ  pipe  lines  and 
that  caused  the  building  of  pipe  lines  quite  extensively  in  1871  and  1872, 
with  very  small  capital  at  first.  The  company  which  is  now  the  National 
Transit  Company,  was  started  as  the  United  Pipe  Lines,  with  a  capital  at 
first  of  about  $4,000,  and  it  grew  very  rapidly  until  the  capital  has  reached 
millions  and  the  number  of  barrels  of  oil  transported  in  1877  was  probably 
about  15,000,000.  I  may  not  be  entirely  correct  in  these  figures,  but  it 
was  a  very  large  amount.  Other  pipe  lines  were  started,  but  the  United 
Pipe  Lines  soon  got  into  the  control  of  people  who  are  now  known  as  the 
Standard  Oil  Company  or  Standard  Oil  Trust.  These  small  lines  were  laid 
in  various  parts  of  the  oil  field  to  convey  the  oil  to  the  railroads  because 
there  were  no  lines  leading  to  the  seaboard  prior  to  1883.  A  pipe  line  law 
was  passed  which  limited  the  laying  of  pipe  lines  to  certain  counties.  An 
effort  was  made  from  1870  onward  to  obtain  a  general  State  law,  allowing 
the  laying  of  pipe  lines  and  giving  to  the  companies  organized  for  that  pur- 
pose, the  right  of  eminent  domain.  That  was  opposed  by  the  railroad  com- 
panies and  also  by  the  Standard  Oil  Company  when  it  came  into  existence. 
That  bill  was  introduced  in  successive  Legislatures  from  1870  and  failed 
each  session  until  1883,  when  it  was  finally  passed.  I  was  present  in  the 
Legislature  in  1879  when  that  bill  failed  and  again  in  1881  when  it  failed, 
and  in  1883  it  was  only  passed  by  the  oil  people  who  were  interested  in 
having  it  passed  holding  mass  meetings  throughout  the  agricultural  coun- 
ties of  Eastern  Pennsylvania  and  securing  petitions  of  the  farmers  to  their 
own  representatives  to  vote  for  the  bill.  Then  it  passed  in  each  House  by  a 
very    meagre    majority. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Were  you  present  in  that  Legisla- 
ture? A.  I  was  present  in  that  Legislature,  and  attended  a  number  of  the 
mass  meetings    that    ^vere   held.     I    remember  at  one  mass   meeting  if  you 


*P.Iack  fricecl  type  indicates  matter  omitted,    in    the  course    of   editing-,    from    the 
official  report. 


J.  W.   LEE,   PRESIDENT  PURE   OIL  TRUST.  83 

will  permit  the  statement,  dodgers,  small  hand  bills,  were  passed  through 
the  audience,  saying  that  if  the  bill  became  a  law  the  orchards  would  be 
destroyed,  the  springs  would  be  polluted  and  that  death  would  lurk  under 
their  door  sills — of  course,  a  very  effective  way  of  frightening  people  who 
were  not  acquainted  with  that  means  of  transportation,  while  it  was  a 
great  deal  safer  and  a  great  deal  more  economical  than  any  other  method 
of  transportation.  I  do  not  think  there  has  been  a  single  life  lost  in  trans- 
porting oils  by  means  of  pipe  lines  in  twenty  years  and  there  were  a  great 
many  lives  lost  in  transporting  it  by  the  railroad  prior  to  that  time. 

Q.  (By  Mr.  NORTH.)  Were  these  the  real  objections  to  the  passage  of 
the  bill?  A.  No,  the  real  objections  were  that  it  would  give  the  people 
who  desired  to  enter  into  business,  an  opportunity  of  doing  so.  The  real 
objection  was  to  maintain  in  the  Standard  Oil  Company  the  exclusive  right 
to  operate  those  lines  and,  by  combinations  with  the  railroads,  to  secure 
unfair  advantages  over  all  competitors;  and  if  any  proof  on  that  subject 
is  desired,  I  would  like  to  submit  it  right  now.  I  have  here  the  statement 
under   oath. 

Q.  (By  Vice-Chairman  PHILLIPS.)  *You  can  submit  it  now,  or  in  the 
other  part  of  your  testimony,  as  you  see  proper?  A.  I  guess  it  would  be 
perfectly  logical  to  submit  it  right  now.  Mr.  A.  J.  Cassatt,  who  was  the 
vice-president  of  the  Pennsylvania  Railroad  Company,  in  his  testimony 
given  before  the  master  in  a  case  which  was  instituted  in  Pittsburg,  in  the 
Supreme  Court  of  Pennsylvania,  gave  his  testimony  in  regard  to  that  sub- 
ject. He  said:  (Reading.)  "Q.  Did  you  understand  at  that  time  that  these 
railroad  companies  and  the  United  Pipe  Lines  had  united  with  the  Standard 
Oil  Company  in  order  to  force  the  Empire  Transportation  Company  out  of 
the  refining  business?"  (The  Empire  Transportation  Company  was  a  com- 
pany owning  a  large  number  of  tank  cars,  the  president  of  which  was  Mr. 
Joseph  D.  Potts,  probably  as  fully  acquainted  with  the  subject  of  trans- 
portation as  any  man  who  ever  lived  in  the  United  States — I  think  I  am 
not  saying  too  much — a  man  of  very  great  ability  and  with  very  wide 
knowledge  on  that  subject.)  (Reading.)  "A.  I  believe  they  did;  I  believe 
that  was  the  object  of  their  onslaught  upon  us." 

Q.  (By  Senator  DANIEL.)  Who  was  "us?"  A.  That  is  the  testimony 
of  Mr.  Cassatt. 

Q.  (By  Senator  DANIEL.)  I  say.  who  was  "us?"  A.  That  is  the  Penn- 
sylvania Railroad  Company.  The  Standard  had  combined  with  three  trunk 
lines  to  force  the  Pennsylvania  Railroad  Company  to  exercise  its  option  to 
buy  the  cars  of  the  Empire  Transportation  Company  and  to  cease  the  refin- 
ing of  oil,  so  as  to  give  the  Standard  Oil  Trust  a  monopoly  of  the  business. 
That  is  on  page  177  of  a  book  which  was  published  by  the  Government;  it 
was  the  investigation  before  the  Committee  on  Manufactures.  I  think,  in 
18S8. 

Q.  (By  Mr.  NORTH.)  Of  the  Pennsylvania  Legislature?  A.  Of  Con- 
gress. (Reading.)  "Q.  Was  it  after  the  Standard  had  threatened  to  with- 
draw its  patronage  from  your  road?  A.  Well,  they  had  not  threatened  to 
withdrav,'  their  patronage  from  our  road  at  the  time,  but  they  had  protested 
very  strongly  against  the  Empire  Line  being  interested  in  that  New  York 
refinery  I  spoke  of  before,  and  had  complained  that  the  Empire  Line  was 
giving  facilities  to  that  refinery  on  account  of  their  interest  in  it  that  they 
did  not  give  to  them,  and  had  been  endeavoring  for  several  months  to  get 
us  to  insist  upon  the  Empire  Line  going  out  of  the  refining  business."  That 
is  the  testimony  of  Mr.  Cassatt  on  page  178.  Mr.  Joseph  D.  Potts  testified 
before  the  same  committee  of  Congress  as  recorded  on  page  261  of  this 
same  book.  He  was  the  president  of  the  Empire  Transportation  Company. 
(Reading.)  "Q.  I  will  call  your  attention  to  this  subject;  do  you  not  know 
and  did  you  not  also  at  that  time,  through  railroad  officials  and  other  sources, 
that  the  Standard  Oil  Company  complained  of  the  impropriety  of  a  trans- 
porting line,  upon  which  they  were  dependent  for  their  supply  of  oil,  being 
also  engaged  at  the  same  time  in  competition  with  them  in   refining?     A. 


*Black  faced  type  indicates  matter  omitted,    in    the  course   of  editing,    from   the 
official  report. 


84  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

Yes,  sir,  that  was  the  point  that  was  made."  And  at  that  time  the  trans- 
portation company's  cars  were  purchased  by  the  Pennsylvania  Railroad 
Company,  and  their  refining  plant  by  the  Standard  Oil  Company,  and  they 
went  out  of  the  business.  *That  is  in  answer  to  your  question,  IVlr.  North, 
whether  that  was  their  sole  reason  for  opposing  the  bill;  that  was  not  their 
reason  at  all.     That  bill  was  passed   in   1883. 

Q.  (By  Vice-Chairman  PHILLIPS.)  What  methods  did  the  Pennsylvania 
Railroad  Company  and  the  Standard  Oil  Company,  or  either  of  them,  use, 
if  any,  to  prevent  the  passage  of  the  pipe  line  bill  in  1883?  A.  The  methods 
that  are  usually  known,  I  think,  in  Legislatures,  *especially  in  the  Pennsyl- 
vania  Legislature. 

Q.  (By  Mr.  FARQUHAR.)  How  much  control  of  oil  production  did  the 
Standard  Oil  Company  have  in  1883,  compared  with  all  others?  A.  I  think 
about  five  per   cent. 

Q.  (By  Mr.  FARQUHAR.)  Five  per  cent  of  all?  A.  Yes,  sir.  You  are 
speaking  of  production  now.  They  had  none  directly,  I  think  there  were 
other  companies  that  were  supposed  to  be,  as  they  term  it.  affiliated  with 
thgm,  such  as  the  Forest  Oil  Company  and  probably  the  Anchor  Oil  Com- 
pany and  one  or  two  others. 

Q.  (By  Mr.  FARQUHAR.)  Then  would  you  say  that  the  foundation 
of  the  strength  of  the  Standard  Oil  Company,  after  the  passage  of  the  Act 
of  1883,  lay  in  their  means  to  make  combinations  with  other  companies  to 
secure  the  whole  control?  A.  The  great  power  which  they  obtained,  lay 
in  their  discriminations  which  they  obtained  from  the  railroads  over  all 
other  persons.  That  is  found  in  the  testimony  of  Mr.  Cassatt  before  the 
same  committee  on  page  191. 

Q.  (By  Vice-Chairman  PHILLIPS.)  I  would  like  the  Senator  to  proceed 
in  regard  to  this  opposition;  how  they  did  before  the  passage  of  this  free 
pipe  line  law.  What  methods  did  they  take  to  prevent  others  from  getting 
through  to  the  seaboard,  if  any?  A.  It  was  impossible  to  lay  a  line  to  the 
seaboard  without  having  from  the  Legislature  the  right  of  eminent  domain; 
it  would  be  useless  to  attempt  it.  because  anyone  owning  a  piece  of  land 
could  absolutely  prohibit  a  pipe  line  passing  over  it,  and  within  the  region 
the  pipe  line  law  was  only  extended  to  certain  counties.  As  the  oil  business 
grew,  it  went  beyond  the  counties  to  which  the  law  applied,  making  it  diffi- 
cult to  lay  lines  even  within  what  were  known  as  the  oil  producing  counties. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Were  there  other  attempts  to  lay 
lines  to  the  seaboard  and  how  did  they  attempt  to  circumvent  them?  *Did 
they,  or  did  they  not,  lease  land  in  advance,  or  purchase  it,  over  which  they 
could  not  obtain  the  right  of  way?  Have  you  any  knowledge  of  this  class 
of  facts?  A.  I  understand  that  when  any  attempt  was  made  to  lay  a  line 
to  the  seaboard,  tracts  of  land  in  front  of  the  pipe  line  would  be  purchased, 
and  it  was  impossible  to  cross  such  pieces  of  land.  Thus  they  could  and 
did  prevent  the  laying  of  pipe  lines,  so  that  it  became  absolutely  necessary. 
in  order  to  lay  a  line  to  the  seaboard,  that  a  corporation  organized  for  that 
purpo.se  should  have  the  right  of  eminent  domain. 

Q.  (By  Representative  OTJEN.)  You  said  they  controlled  five  per  cent 
of  the  production  in  1883.  What  percentage  of  the  transportation  did  they 
control  at  that  time?     A.  I  think  they  controlled  ninety  per  cent,  of  it. 

Q.    (By  Representative  OT.JEN.)      Even  at   that  time?     A.   Yes.  sir. 

Q.  (By  Vice-Chairman  PHILLIPS.)  *Now  ycu  can  go  on  on  the  other 
questions;  have  you  anything  further  to  say  on  the  pipe  lines?  A.  No,  sir. 
If  anyone  has  any  question  to  ask  me  in  reference  to  transportation  or  the 
laying  of  pipe  lines,  I  would  be  glad  to  answer  it  now.  A  number  of  smaller 
lines  were  laid  through  the  oil  country  and  these  were  rapidly  absorbed  by 
the  National  Transit  Company  or  the  United  Pipe  Lines,  which  was  a 
Standard  or-^anization,  so  that  in  1883  they  practically  had  command  of  all 
the   transportation    of   crude   oil. 

Q.    (By  '^Tr.  C.  .1.  HARRIS.)     Has  it  been  their  policy  to  secure  control 
of  any  new  lines  that  have  been  laid  since  then?     A.  Yes,  sir. 
Q.  At  whatever  cost?    A.  No  matter  what  the  cost. 


*BIack  faced  type  indicates  matter  omitted,    in    the  cour.«e   of  editing,    from    tlie 
official  report. 


J.  W.  LEE,   PRESIDENT  PURE   OIL   TRUST.  85 

Q.  (By  Vice-Chairman  PHILLIPS.)  Do  they  obtain  rebates  from  the 
railroads?  A.  They  do  obtain  rebates  from  the  railroads.  That  is  prob- 
ably quite  an  old  subject  and  it  is  fully  gone  into  in  the  testimony  of  Mr. 
Cassatt.  which  is  easily  accessible  to  the  commission.  They  got  their 
power  by  means  of  rebates;  they  got  a  rebate,  not  only  on  the  oil  they 
shipped  themselves,  but  on  the  oil  everybody  else  shipped;  a  very  excessive 
rebate;  the  rebate  was  so  much  that  nobody  else  could  stay  in  the  business. 

Q.  (By  Vice-Chairman  PHILLIPS.)  How  much  did  that  rebate  amount 
to  in  any  given  period  of  time?  A.  On  page  191*  Mr.  Cassatt  said  at  that 
time  it  was  eighty  cents  a  barrel  in  their  favor. 

Q.  (By  Vice-Chairman  PHILLIPS.)  In  round  sums,  do  you,  or  do  you 
not,  know  how  much  they  obtained  in  the  course  of  a  year  or  some  such 
length  of  time,  from  all  the  railroads?  Have  you  any  evidence  on  that 
subject?  A.  I  should  think  it  would  run  into  the  millions;  probably  as 
high  as  eight  to  ten  millions  a  year. 

Q.   (By    Vice-chairman    PHILLIPS.)     In    rebates?     A.  I   think    so. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Has  there  been  any  testimony 
taken  heretofore  on  that  subject  to  your  knowledge?  A.  There  has;  very 
fully.  It  was  very  fully  gone  into  in  the  testimony  that  was  taken  before 
the   Committee   on   Manufactures    in    1888. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Is  the  precise  sum  stated  in  the 
testimony?  A.  The  precise  sum  is  stated  on  page  191.  (Reading.)  "Q. 
I  mean  the  tariff  rate?  A.  $1.90.  Q.  What  was  the  actual  rate?  A.  If 
shipped  to  the  Standard  Oil  Company  at  that  time,  it  would  be  eighty  cents  a 
barrel,"  (resuming)  which  was  just  one-half,  and  it  was  even  higher  than 
that;   I  think  it  was  higher  than  $1.16  a  barrel. 

tVice-Chairman  PHILLIPS.  Has  any  gentleman  of  the  commission 
any  more  questions  to  ask   In   regard  to  the  pipe   line  system? 

Q.  (By  Representative  OTJEN.)  What  percentage  of  transportation  do 
they  control  now?  A.  They  control  probably  about  eighty-eight  to  ninety 
per  cent  of  it. 

Q.  About  the  same  as  they  did  in  1883?  A.  Yes.  sir;  there  have  been 
times  when  they  tcontrolled   it  all;   practically  controlled  it  all. 

tVice-Chairman  PHILLIPS.  Now,  if  there  is  no  objection,  I  will  state 
that  Senator  Lee  will  now  take  up  the  questions  in  the  order  that  he  has 
presented  them  here,  that  he  would  like  to  make  his  statement  and  at  its 
conclusion,  as  I  remarked  before,  under  the  head  of  any  one  question,  any 
member  of  the  commission  will  be  at  perfect  liberty  to  ask  questions;  and 
we  prefer  that  they  take  the  opportunity  to  ask  him  at  the  conclusion  of  his 
statement. 

Q.  (By  Mr.  FARQUHAR.)  Will  you  permit  one  general  question  before 
you  start  that? 

Vice-chairman  PHILLIPS.     Certainly. 

Q.  (By  Mr.  FARQUHAR.)  Was  the  establishment  of  these  pipe  lines  a 
positive  advantage  to  the  oil  industry  in  Pennsylvania  as  a  whole?  A.  I 
think  so. 

Q.  (By  Vice-Chairman  PHILLIPS.)  How,  in  your  opinion,  do  trusts 
affect  the  consumer?  A.  I  think  a  very  general  impression  is  sought  to  be 
created  by  the  trusts  themselves,  that  the  organization  of  trusts,  and  the 
introduction  of  what  they  call  the  economies  of  manufacture,  reduce  the 
price  of  the  manufactured  article  to  the  consumer.  I  think  that  is,  in  fact, 
wholly  erroneous;  that  instea'8  of  decreasing  the  price  to  the  consumer  they 
increase  the  price  until  it  becomes  absolutely  extortionate.  One  would 
suppose  that  that  would  be  the  case,  from  the  mere  fact  that  these  trusts  are 
organized  for  the  purpose  of  securing  a  complete  monopoly  of  the  business 
in  which  they  are  engaged.  They  permit  no  one  else,  if  they  can  help  it.  to 
engage  in  the  same  business..  They  pay  enormous  prices  for  other  estab- 
lishments in  the  same  line  for  the  express  purpose  of  closing  them  up  and 
thus  obtaining  a  complete  monopoly  of  the  business.     When  they  have  ac- 


*The  witness  referred  to  the  report  of  the  Committee  on  Manufactures  of  18S8. 
tBlack  faced  type  indicates  matter  omitted,    in   the  course   of  editing,    from   the 
ofncial  report. 


86  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

complished  that,  or  approximately  accomplished  it,  they  have  absolute  con- 
tiol  of  the  fixing  of  prices  to  the  consumer  and  I  do  not  believe  that  any 
body  of  men  anywhere,  and  especially  when  organized  for  the  purpose  of 
profit,  can  be  trusted  with  the  inordinate  power  of  absolutely  fixing  prices 
to  the  consumer.  One  would  suppose  that  in  doing  so  they  would  fix  extor- 
tionate prices  in  order  that  their  profits  might  be  high.  I  believe  it  could 
be  shown,  in  fact,  that  this  is  the  effect  of  the  creation  of  trusts,  and  es- 
pecially of  the  first  trust,  and  to  this  day,  the  greatest,  the  Standard  Oil 
Trust.  Now  that  they  do  charge  extortionate  prices  would  be  a  very  easy 
matter  for  this  commission  to  prove,  by  simply  getting  the  prices  at  which 
they  sell  refined  oil  at  all  points  where  they  are  without  competition,  and 
in  securing,  for  comparison  with  those  prices,  the  prices  at  which  they 
sell  refined  oil  at  all  points  where  there  is  a  competitive  market.  I  think 
it  is  always  well  to  deal  in  the  concrete,  rather  than  in  the  abstract,  and  I 
will  give  an  example  which  the  commission  can  readily  verify.  In  New 
York  and  Brooklyn  and  Jersey  City,  in  March,  1896,  they  were  selling  oil 
to  the  local  merchants  and  to  what  are  known  as  the  wagon  men,  the  re- 
tailers, at  nine  and  nine  and  a  half  cents  a  gallon.  The  Pure  Oil  Company 
having  lieen  organized  on  the  9th  day  of  March,  put  a  wagon  on  the  streets 
in  New  York  and  sold  the  first  day  ten  gallons  of  oil  at  nine  *and  a  half 
cents  a  gallon.  As  soon  as  the  Standard  knew  that  the  Pure  Oil  Company 
was  doing  business  in  the  City  of  New  York  and  vicinity,  they  commenced 
a  rapid  reduction  of  their  price,  until,  in  July,  1896,  they  had  reduced  the 
price  to  five  and  a  half  cents  a  gallon  for  the  best  quality  of  water  white 
oil,  sold  a*^  letail;  ^old  in  small  quantities  out  of  their  wagons  in  the  City 
of  Nev.'  York  at  retail.  When  the  price  was  nine  and  a  half  cents  a  gallon 
the  price  of  crude  petroleum  was  $1.30  a  barrel,  which  was  a  trifle  over 
three  cenvs  a  gallon.  Crude  oil  is  always  measured  in  barrels  of  forty-two 
gallons  each;  three  cents  a  gallon  would  be  $1.26.  When  they  put  the  price 
at  five  and  a  half  cents  a  gallon,  crude  oil  was  $1.15  a  barrel.  In  other 
word;5,  they  reduced  the  price  of  refined  oil  $1.68  a  barrel  when  crude  had 
only  declined  fifteen  cents.  Now  nine  and  a  half  cents  a  gallon  was  an 
inordinate  price  for  refined  oil  in  New  York,  and  five  and  a  half  cents  was 
below  cost.  They  could  not  make  the  oil,  transport  it  to  New  York  and 
sell  it  for  that  price  and  get  cost  for  it.  The  same  is  true  of  the  City  of 
Philadelphia,  where  there  has  been  competition  for  two  years. 

Q.  (By  Mr.  NORTH.)  How  long  had  they  competition  in  New  York? 
A.  We  put  additional  wagons  on  in  a  small  way  and  I  do  not  hesitate  to 
say  that  we  have  lost  money  every  month  in  New  York  since  we  started, 
three  years  a^o  last  March. 

Q.  The  prices  remaining  the  same?  A.  With  some  slight  changes — 
practically  the  same.  They  are  a  little  better  now.  I  think  crude  oil  is 
within  two  cents  of  the  price  it  was  in  July,  1896;  it  was  then  $1.15.  it  is 
now  $1.13;  yet  the  prices  of  refined  are  a  little  higher  now  than  they  were  in 
1896.  But  I  do  not  hesitate  to  say  that  by  the  competition  which  we  intro- 
duced in  the  City  of  New  York  during  the  last  three  years.  Greater  New  York 
has  been  saved  at  least  $3,000,000. 

Q.  What  have  you  to  say  about  Philadelphia  now?  A.  The  same  is  true 
of  Philadelphia.  The  Pure  Oil  Company,  one  of  our  companies,  has  been 
doing  business  in  Philadelphia  since  the  19th  day  of  June,  1896,  and  prior  to 
that  time  there  was  another  company,  which  our  company  succeeded,  that 
had  been  doing  business  there  for  years,  and  the  price  of  oil  in  Philadelphia 
is  even  lower  than  it  is  in  New  York. 

Q.  (By  Mr.  C.  J.  HARRIS.)  This  saving  to  consumers  would  probably 
not  have  been  made  unless  it  had  been  for  competition,  would  it?  A.  Oh, 
no,  sir,  I  think  the  trust  would  have  maintained  during  this  entire  period 
the  price  of  nine  and  a  half  cents  *or  more. 

Q.  (By  Mr.  FARQUHAR.)  Are  these  prices  carried  by  both  competing 
parties  at  a  loss  now?  A.  Certainly,  at  a  loss;  *they  have  to  be  if  they  are 
carried  at  all.     Their  purpose  is  to  drive  out  competition,  and  unless   the 


♦Black  faced  type  lndicatP.s  matter  omitted,    In   the  course   of  editing-,    from   the 
official  report. 


J.  W.  LEE,  PRESIDENT   PURE   OIL  TRUST.  87 

company  has  considerable  capital  it  could  not  exist;  no  individual  can  com- 
pete with  them.  They  have  absolutely  destroyed  all  enterprise  in  the  oil 
business. 

Q.  Would  it  not  have  been  a  better  business  method  to  have  adopted  the 
price  of  the  opposing  company?  That  would  have  involved  no  loss  to  the 
company,  which  would  simply  have  been  a  competitor  against  them,  instead 
of  going  below  their  figures.  A.  If  we  were  to  sell  oil  at  all  we  had  to  sell  it 
at  their  price  and  that  was  done.  We  did  not  care  to  do  business  at  a  loss 
and  would  have  liked  to  have  avoided  it  if  possible. 

Q.  (By  Mr.  C.  J.  HARRIS.)  They  made  the  reductions?  A.  They  made 
the  reductions;  they  made  the  cuts,  and  they  did  it  to  make  it  destructive. 

Q.  (By  Mr.  FARQUHAR.)  The  cut,  you  said,  was  from  nine  and  a 
half  to  five  and  a  half  cents?     A.  Yes,  sir,  from  March  to  July. 

Q.  Were  you  in  competition  at  that  time  with  the  nine-and-a-half-cent 
rate?     A.  Yes,  sir,   when  we  commenced,    March   9th. 

Q.  At  the  nine-and-a-half-cent  rate?    A.  Yes,  sir. 

Q.  The  other  company  then  made  the  first  reduction?     A.  Yes,  sir. 

Q.  Was  the  first  reduction  they  made,  the  five-and-a-half-cent  rate,  or 
was  it  a  less  figure  than  nine  and  a  half?  A.  The  first  reduction  was,  I 
think,  to  eight  cents,  and  seven  and  a  half,  and  six,  but  quickly  down  to 
five  and  a  half. 

Q.  (By  Mr.  NORTH.)  Can  you  state  a  figure  at  which  the  oil  could  have 
been  sold  at  that  time  with  a  reasonable  profit?  A.  Seven  cents  would 
have  given  a  very  handsome  profit  both  to  them  and  to  us. 

Q.  (By  Mr.  KENNEDY.)  How  about  the  price  of  the  same  quality  of 
oil  in  other  cities  where  the  Standard  has  not  the  competition  of  which  you 
are  speaking?  A.  In  New  York,  for  instance,  the  prices  are  very  low,  and 
as  they  s;et  entirely  away  from  competition,  they  get  what  prices  they  please. 

Q.  Can  you  name  a  case  in  any  city?  A.  No,  I  cannot  give  you  the 
figures  in  other  cities;  not  from  memory.  I  know  the  figures  here  because 
it  was  my  business  to  know  them. 

Q.  (By  Vice-Chairman  PHILLIPS.)  These  figures  will  be  obtained  and 
presented  to  the  commission,  no  doubt,  in  satisfactory  shape.  A.  But  it  is 
true  that  wherever  there  is  no  competition  their  prices  are  high. 

Q.  (By  Vice-chairman  PHILLIPS.)  We  are  still  on  the  question  of 
how,  in  your  opinion,  do  trusts  affect  the  consumer?  A.  Well,  give  the  trust 
the  absolute  power  to  fix  prices  and  they  will  always  fix  them  high,  because 
that  is  the  only  way  they  can  get  their  inordinate  profits  on  their  watered 
stock,  and  the  consumer,  of  course,  must  suffer.  No  government  should 
allow  any  power  to  be  lodged  anywhere  to  absolutely  fix  prices  for  the  con- 
sumer of  a  given  product,  if  it  can  be  prevented. 

*Q.  (By  Senator  DANIEL.)  Can  you  tell  how  the  United  States  govern- 
ment can  prevent  it?  A.  I  have  made  one  head  of  that  kind  at  the  conclu- 
sion;   I    prefer  to  wait  until  then. 

(h).  (By  Mr.  NORTH.)  Are  there  many  competitive  points  in  the  United 
States?  A.  Yes,  sir,  there  are  probably  a  hundred  competitive  points  in 
the  United  States,  where  the  independent  people  have  stations  or  distribut- 
ing points  for  oil,  but  usually,  I  think,  at  a  very  great  disadvantage  in 
freight  rates. 

Q.  Is  the  number  of  these  competitive  points  increasing  or  decreasing? 
A.  I  think  they  are  increasing,  as  the  independent  interests  are  increasing. 
If  they   should   diminish,  we  would   correspondingly   diminish. 

Q.  (By  Mr.  FARQUHAR.)  In  proportion  to  their  capital,  are  the  inde- 
pendent companies  making  as  much  money  as  the  Standard?  A.  Oh,  I 
think  not,  sir,  if  we  are  to  judge  by  their  declared  dividends.  I  think  the 
Standard  recently  declared  for  the  last  three  months  a  dividend  of  three 
per  cent,  and  a  special  dividend  of  nine  per  cent,  which  would  make  twelve 
per  cent  in  three  months,  on  a  capital  of  -*10'^,000,000,  if  the  commercial 
statements  can  be  relied  upon. 


*Black  faced  type  indicates  matter  omitted,   in  the  course   of  editing,   from   the 
official  report. 


88  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

Q.  Through  how  many  states  did  this  pipe  line  have  to  go  before  it 
reached  the  seaboard?  A.  Pennsylvania  and  New  Jersey.  Probably  it 
would  be  interesting  for  the  commission  to  know  that  the  independent  in- 
terest first  undertook  the  transportation  of  refined  oil  by  means  of  pipe 
lines.  The  Standard  people  said  it  was  impossible  to  transport  refined  oil 
long  distances  by  means  of  pipe  lines.  The  independents  laid  a  pipe  line  via 
Titusville,  Warren.  Bradford,  and  Wilkesbarre,  Pa.,  to  Hampton  Junction, 
N.  J.,  for  the  purpose  of  reaching  New  York  harbor  to  transport  refined  oil. 
That  line  has  been  in  operation  four  years,  and  has  transported  millions 
of  barrels  of  refined  oil  without  the  condemnation  of  a  single  barrel  of  oil, 
and  it  was  the  only  means  that  enabled  the  independent  refiners  to  live*. 
Without  that  they  would  have  been  driven  out  of  business  by  the  railroad 
companies.  tThey  had  to  get  away  from  the  railroad  companies  in  order 
to  live  at  all4 

Q.  Did  these  pine  lines  find  any  trouble  in  getting  their  right  of  way? 
A.  Oh,  yes.  sir,  they  did.  Even  in  Pennsylvania  they  were  hindered  and 
delayed  and  stopped  in  a  great  many  ways  in  reaching  Wilkesbarre.  Men 
went  in  advance  of  them  and  took  options  on  the  right  to  lay  a  line  at  very 
high  rates  for  the  purpose  of  establishing  a  rate  for  this  line  that  was  coming. 
They  would  offer  a  man  to  take  the  option  for  the  right  of  way  at  very  much 
more  than  the  value  of  his  entire  farm. 

Q.  Isn't  that  the  usual  way,  either  with  a  railroad  or  with  a  pipe  line, 
that  the  second  customer  is  the  one  that  is  very  apt  to  pay  an  inordinate 
rate?  A.  The  first  person  that  went  there  was  not  intending  to  lay  the 
line  at  all,  but  was  simply  going  in  advance  to  fix  the  prices  for  the  one 
that   did   intend    to    lay   the   line. 

Q.  (By  Vice-chairman  PHILLIPS.)  Will  you  state  the  efforts  made  by 
the  United  States  Pipe  Line,  to  ship  both  refined  and  crude?  Will  you 
state  to  the  commission  what  adverse  circumstances  you  met  in  the  State 
of  New  Jersey  in  trying  to  get  to  New  York?  A.  The  line  was  first  pro- 
jected by  way  of  Hancock  on  the  Delaware  river,  and  through  New  York 
to  the  Hudson  river,  and  when  we  reached  a  place  near  Hancock  on  the 
Delaware  river,  above  New  York,  we  found  the  Erie  railroad  there  with 
cannon  and  with  other  appliances  necessary  to  prevent  the  laying  of  the  line, 
and  we  found  we  would  be  delayed  there  a  long  term  of  years,  probably, 
in  securing  the  right  to  lay  that  line  through  to  New  York,  because  the 
free  pipe  line  law  of  New  York  had  been  so  amended  as  to  make  it  very 
difficult  to  lay  another  pipe  line.  We  did  not  see  how  it  could  be  accomp- 
lished then.  We  saw  they  could  prevent  the  laying  of  additional  lines 
there,  so  we  gave  up  the  project  of  getting  to  New  York  by  means  of  Han- 
cock and,  crossing  New  York  to  the  Hudson  river,  started  from  Athens  south 
to  Wilkesbarre. § 
( 

*Mr.  Lee  did  not  explain  to  the  commission  that  the  oil  of  the  so-called  "inde- 
pendents" is  tested  by  an  expert  before  it  is  allowed  to  go  into  the  pipe  lines,  dO 
that  the  condemnations  take  place  before  the  oil  reaches  the  seaboard.  Mr.  Lee  must 
have  been  well  aware  of  the  fact  that  a  large  number  of  rejections  of  oil  refined 
by  the  "independents"  occur  annually  at  the  receiving  end  of  their  pipe  line.  His 
boast  that  no  oil  was  rejected  at  the  seaboard  was  made  possible  only  because  such 
rejections  were  anticipated  at  the   points  of  manufacture. 

vHlack  faced  type  indicates  matter  omitted,  in  the  course  of  editing,  from  the 
official  report. 

tin  arguing  that  the  "independents"  "had  to  get  away  from  the  railroad  com- 
panies in  order  to  live  at  all,"  Mr.  Lee  merely  acknowledged  the  fact  that  the  Pure  Oil 
Trust  has  copied  the  pipe  line  system  of  the  Standard  Oil  Company,  in  order  to 
secure  the  most  economical  method  of  transportation.  The  system  of  piping  oil  was 
developed  by  the  Standard  Oil  Company  as  a  necessary  adjunct  to  their  business 
and  as  a  means  for  supplying  oil  to  consumers  at  the  lowest  possible  cost.  The  Pure 
Oil  Trust  found  that  in  order  to  succeed  they  should  follow  in  the  steps  of  the 
Standard  Oil  Company  in  every  particular. 

§This  testimony  has  been  contradicted  in  an  affidavit  filed  by  the  president  of 
the  I'nited  States  Pipe  Line  Company  In  the  courts  of  Luzerne  county,  setting 
forth  that  the  line  as  projected  to  Hancock  was  merely  experimental  and  was  not 
intended  as  a  permanent  location. 


J.  W.  LEE,  PRESIDENT  PURE  OIL  TRUST.  89- 

Q.  (By  Vice-chairman  PHILLIPS.)  That  is  Athens,  Pennsylvania?  A. 
Athens  is  in  Pennsylvania,  about  four  miles  from  the  New  York  line.  We 
intended  to  lay  the  line  thence  directly  through  New  Jersey  to  the  Bay  of 
New  York,  where  the  Columbia  Oil  Company,  with  which  we  are  associated, 
has  loading  facilities.  We  reached  the  Delaware  river  and  crossed  it.  and 
met  the  first  objection  in  New  Jersey  from  the  Belvidere  railroad,  owned 
by  the  Pennsylvania,  and  although  we  owned  an  acre  of  land  at  the  crossing, 
they  enjoined  us  from  crossing  that  by  means  of  a  bill  in  equity  filed  before 
the  vice-chancellor,  but  that  was  reversed  in  the  Court  of  Errors  and  Ap- 
peals, the  highest  court  in  New  Jersey.  We  crossed  under  that  road,  but 
we  were  delayed  a  year  after  getting  to  that  point,  and  then  we  met  our 
next  difficulty  at  the  Delaware,  Lackawanna  &  Western  railroad,  where  we 
owned  a  line,  and  that  is  still  in  litigation.  They  undertook  to  tear  that 
line  out,  and  we  maintained  our  position  by  force.  They  had  a  battle  there 
and  some  men  were  hurt.  We  retained  the  line  under  the  railroad,  and  it 
is  still  there;  that  is  still  in  litigation.  We  crossed  under  the  Essex  Canal 
at  a  culvert  and  reached  Hampton  Junction,  which  is  sixteen  miles  from 
the  Delaware  river  in  the  State  of  New  Jersey,  and  51  miles  from  the  harbor 
of  New  York.  There  are  two  lines  from  Bradford,  Pa.,  to  Hampton  Junction, 
one  through  which  crude  oil  is  transported,  and  the  other  through  which 
refined  oil  is  transported.  We  transport  three  different  grades  through  the 
same  line;  push  one  out  with  a  purer  grade,  and  when  the  pure  oil  comes, 
cut  it  off  by  means  of  a  valve  into  the  tank,  and  transport  that  second  grade 
of  oil  for  a  while,  until  we  have  transported  the  amount  desired.  Then  we 
put  in  the  third  grade  of  oil,  and  push  that  through  until  we  have  transported 
the  amount  we  desire  of  that  grade,  and  then  do  the  same  thing  with  the 
first — just  keep  alternating  them. 

Q.  (By  Vice-Chairman  PHILLIPS.)  How  can  you  transport  these  grades 
of  oil  without  mixing  them  to  any  extent?  A.  Well,  in  pumping  oils  100 
miles  it  doesn't  mix  for  50  feet,  but  of  course  the  better  grade  of  oil  simply 
comes  in  with  the  poorer  and  makes  it  that  much  better. 

Q.  (By  Mr.  FARQUHAR.)  Does  the  Standard  Oil  Company  use  the 
same  system  in  transporting?    A.  No,  sir. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Is  your  company  the  first  company 
that  ever  pumped  refined  oil  for  any  distance  by  means  of  a  pipe  line?  A. 
By  means  of  a  pipe  line,  yes,  sir;  I  think  the  Standard  is  pumping  some  dis- 
tillate in  Ohio  to  New  York  for  treatment. 

Q.  (By  Mr.  FARQUHAR.)  Is  there  in  Pennsylvania,  or  in  any  oil  dis- 
trict, a  feeling  against  the  transporting  of  crude  oil,  and  in  favor  of  giving 
these  localities  the  benefits  of  refining  the  oil?  A.  No,  I  think  not;  there  is 
a  pretty  liberal  spirit  on  that  subject.  They  are  willing  that  the  oil  shall  be 
refined  wherever  it  can  be  refined  cheapest. 

Q.  Then  you  state  that  there  is  an  advantage  in  going  to  the  seaboard 
for  your  refining?  A.  No.  I  think  that  oil  can  be  refined  cheaper  in  the 
interior,  and  transported  as  refined  by  means  of  pipe  lines,  getting  labor  at 
low  cost. 

Q.  Giving  employment  to  the  locality  where  the  oil  is  produced?  A. 
Yes.  sir;  I  think  so.  I  think  so  for  several  reasons;  land  is  cheaper,  help  is 
cheaper,  fuel  is  cheaper,  and  water  is  abundant  and  of  good  quality. 

Q.   (By  Senator  DANIEL.)     Living  is  cheaper?    A.  And  living  is  cheaper. 

Q.  And  it  tends  to  diversify  labor?    A.  Yes,  sir. 

Q.  (By  Mr.  FARQUHAR.)  Is  there  a  better  market  at  the  seaboard  for 
what  you  call  the  by-product  or  residuum  of  petroleum,  than  there  is  at  your 
local  refineries  in  Pennsylvania?  A.  That  I  would  not  be  competent  to 
answer  fully.  I  think  that  the  market  for  by-products  is  all  over  the  country, 
and  probably  one  part  of  the  country  is  as  valuable  as  a  market  as  another; 
it  depends  upon  population  entirely,  I  think. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Does,  or  does  not.  the  Standard  Oil 
Company  have  a  monopoly  of  the  lubricating  oils,  especially  as  to  the  rail- 
roads of  the  United  States?  A.  I  want  to  state  something  that  I  do  not 
state  to  be  absolutely  true.  I  do  not  know  it  to  be  true,  but  it  is  a  matter  of 
belief  with  me.  I  believe  the  Standard  is  getting  just  as  great  discrimina- 
tions from  the  railroads  as  ever,  but  I  think  they  get  them  in  an  entirely 


90 


REVIEW   OF  TESTIMONY— INDUSTRIAL  COMMISSION. 


different  way,  in  a  way  that  I  do  not  see  how  it  can  be  reached.  Jt^^  P}[- 
chas  ng  o7oils  for  the  railroads  has,  by  a  great  many  roads,  been  taken  out 
of  the  lands  of  their  purchasing  agents  and  put  in  the  hands  of  the  president 
or  some  managing  director,  and  I  think  they  get  their  rebates  from  the 
railroads  by  means  of  the  prices  at  which  they  oil  these  roads. 

Q.  (By  Vice-chairman  PHILLIPS.)  The  lubricating  oils?  A.  Yes.  sir. 
Q.  (By  Vice-chairman  PHILLIPS.)  Does  that  require  a  large  amount; 
is  it  a  very  large  item  of  expense  in  regard  to  railroads?  A.  I  think  the 
railroads  of  this  country  can  be  lubricated  for  one-half  of  the  amount  which 
they  pay  to-day  and  a  large  profit  made  out  of  it;  the  railroads  are  being 
robbed  in  that  way. 

Q.  (By  Mr.  FARQUHAR.)  As  a  business  proposition,  does  it  make  any 
difference  to  a  man  selling  oil,  whether  he  goes  to  the  president  or  the  pur- 
chasing agent — practical  difference,  I  mean?  A.  Yes,  sir;  I  think  it  makes 
a  great  difference,  because  a  purchasing  agent  is  supposed  to  buy  the  oil  at 
the  very  lowest  price  if  he  does  his  duty  to  the  stockholders  of  the  road; 
if  it  is  put  into  the  hands  of  the  president,  it  is  for  one  purpose,  and  that  is 
to  pay  extortionate  prices. 

Q.  State  any  case  in  which  you  know  that  the  president  or  the  purchas- 
ing agent  has  been  paying  such  prices?  A.  No,  sir;  I  do  not  know  of  any. 
Q.  (By  Professor  JENKS.)  The  statement  has  been  very  frequently 
made,  that  another  of  the  advantages  was  from  the  large  capital  of  the 
Standard  Oil  Company  by  which  it  could  and  did  refine  a  good  deal  cheaper 
than  other  companies,  because  they  make  better  use  of  the  by-products.  Can 
you  tell  us  in  reference  to  that,  whether  you,  for  example,  have  as  good  facil- 
ities for  refining  as  the  Standard?  A.  I  presume  that  in  refining  a  large  quan- 
tity of  oil  in  a  given  refinery,  there  would  be  a  slight  difference  in  favor  of  a 
large  refinery,  but  I  think  that  would  be  so  slight  as  to  make  no  real  differ- 
ence. I  think  the  independent  people  make  just  as  good  oil  and  better  than 
the  Standard  Oil  Company. 

Q.  And  they  get  also  substantially  the  same  by-products?  A.  They  get 
also  ^substantially  the  same  by-products  besides;  have  the  facilities  for  mak- 
ing them. 

Q.  Does  it  require  anything  like  the  amount  of  capital  that  the  Standard 
has  to  get  an  establishment  big  enough  to  make  good  use  of  these  by- 
products?   A.  No,  sir. 

Q.  How  much  would  you  say  would  be  necessary?  A.  I  suppose  that  a 
capital  of  $500,000  would  make  a  complete  refinery,  so  as  to  get  every  by- 
product out  at  the  very  cheapest  possible  cost. 

Q.  Would  the  same  thing  hold  in  reference  to  the  cost  of  other  materials 
they  use  in  connection  with  the  shipment — tin  cans,  and  barrels,  etc.?  A. 
No,  sir;  others  make  these  just  as  cheaply  as  they  can.  The  making  of  tin 
cans  is  a  very  simple  process.  It  is  all  done  by  machinery,  and  they  are 
made  very  rapidly.  I  think  others  can  manufacture  them  just  as  cheaply  as 
they  do,  and  they  can  manufacture  barrels  just  as  cheaply  as 
the  Standard  Oil  Company.  I  judge  they  cannot  manufacture  any  cheaper 
than  other  people,  because  they  do  not  do  it;  and  in  the  other  branches  of 
their  business  they  manufacture  no  cheaper  than  the  other  people.  They  are 
not  any  better  producers  than  the  independent  producers,  nor  as  good;  and 
they  do  not  transport  oil  any  cheaper  on  any  pipe  line. 

Q.  Then  you  think  that.  *owing  to  the  fact  that  they  have  a  monopoly, 
they  do  not  take  such  great  care  in  reference  to  their  refineries  as  the  others 
do?  A.  I  think  that  the  very  best  talent  in  the  oil  world  is  in  the  business 
of  producing  oil  individually,  and  they  are  giving  their  own  personal  atten- 
tion to  that  specific  thing,  while  all  their  production  must  be  under  the 
supervision  of  paid  agents,  who  are  not  as  able  in  the  business  as  the  men 
who  have  been  in  it  for  30  years  or  more. 

Q.  In  your  opinion  then,  whatever  advantage  they  have  comes  from 
some  special  discrimination  through  the  monopoly  and  not  from  any  advan- 
tages of  a  large  capital?  A.  1  think  you  are  entirely  correct;  they  have  no 
advantage  so  far  as  the  real  doing  of  the  business  is  concerned,  unless  it  is 
through  some  discrimination  *that  they  get   in   some  way. 

♦Black  faced  type  indicates  matter  omitted,  in  the  course  of  editing,  from  the 
ofRcial  report. 


J.  W.  LEE,  PRESIDENT  PURE  OIL  TRUST.  91 

Q.  (By  Mr.  C.  J.  HARRIS.)  You  have  said  that  the  price  of  oil  was 
nine  and  a  half  cents  per  gallon  in  March,  1896.  Would  not  that  give  them, 
at  wholesale  rates,  a  profit  of  50  or  60  per  cent.?  A.  It  would  give  them  a 
profit  of  100  per  cent,  because  the  oil  would  be 

Q.  (Interrupting.)  I  do  not  mean  on  the  crude;  I  mean  if  it  was  refined? 
A.  It  would  give  them  100  per  cent.  They  could  buy  the  oil  so  as  to  make  that 
profit — pretty  close  to  100  per  cent. 

Q.  That  is  a  pretty  big  profit  for  a  wholesale  business,  isn't  it?  A.  I 
think  so. 

Q.  (By  Representative  OTJEN.)  I  understood  you  to  say  that  there  were 
about  100  competing  points.  In  what  part  of  the  country  are  they?  A.  I  can 
give  you  a  good  many  of  them:  New  York,  Philadelphia,  Pittsburg,  Chicago, 
Milwaukee,  Rock  Island,  Evansville,  Memphis,  St.  Louis,  Des  Moines,  Kan- 
sas City 

Q.  Any  on  the  Pacific  Coast?  A.  They  have  such  a  great  advantage 
over  us  by  the  rules  the  railroads  have  adopted,  that  it  is  almost  impossible 
for  independent  companies  to  sell  large  quantities  of  oil  on  the  Pacific  Coast. 
The  Interstate  Commerce  Commission  has  assessed  against  a  number  of  rail- 
roads in  favor  of  the  independent  refineries  the  sum  of  $86,000  that  they 
have  found  the  railroads  should  pay  to  the  independent  refiners,  by  reason 
of  discriminations  and  suits  are  pending  for  that  sum  now  in  the  United 
States  Circuit  Court  at  Pittsburg. 

Q.  (By  Mr.  C.  J.  HARRIS.)  Does  not  the  Standard  Oil  Company  con- 
trol the  country  trade  almost  exclusively?  A.  Very  largely  they  control  the 
country  trade  which  railroads  reach.  The  competitive  points  are  where  you 
can  get  away  from  the  railroads  and  get  water  transportation. 

Q.  (By  Mr.  KENNEDY.)  Has  the  Standard  Oil  Company  been  making 
attempts  to  secure  control  of  these  independent  companies?  A.  In  1894  and 
in  the  beginning  of  1895  they  had  conferences  with  some  of  the  independent 
refiners,  in  which  conferences  they  proposed  to  buy  all  the  independent  lines 
and  all  the  independent  refineries.  The  independent  pipe  lines  and  a  number 
of  the  refiners  declined  to  sell,  but  they  did  at  that  time  purchase  three 
refineries  along  the  line  of  our  pipe  line,  and  which  were  under  contract  to 
take  oil  from  us,  and  although  they  were  in  good  condition  and  one  of  them 
was  practically  new,  they  tore  those  refineries  down  and  destroyed  them. 

Q.  Did  they  offer  much  more  than  the  properties  were  worth?  A. 
Yes.  sir;  they  offered  more  than  the  properties  were  worth. 

Q.  (By  Vice-chairman  PHILLIPS.)  What  other  methods  did  they  take 
to  get  control  of  the  independent  pipe  lines?  A.  They  reduced  the  prices  so 
that  oil  was  sold  at  the  seaboard  for  a  long  time  below  the  cost  of  crude  in 
the  oil  region,  and  the  refineries  had  to  suffer  a  large  loss. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Did  they,  or  did  they  not,  purchase 
stock  in  any  of  these  independent  pipe  line  companies?  If  so,  how  much 
and  in  what  companies?  A.  The  first  company  we  organized  was  the  Pro- 
ducers' Oil  Company,  Limited,  with  a  capital  of  $600,000 — a  small  capital, 
and  there  were  a  thousand  and  ninety-five  subscribers  to  the  stock 
of  that  company.  They  were  scattered  over  about  300  miles  in 
length  of  territory,  widely  separated  from  each  other,  and  the  officers  of  the 
Standard  Oil  Company  started  to  get  control  of  that  company  and  employed 
agents.  They  had  a  bank  cashier  working  for  them  in  nearly  every  town 
throughout  the  whole  region  where  their  stock  was  owned  and  they  had 
agents  in  the  field.  They  commenced  purchasing  that  stock  at  par,  and  paid 
as  high  as  220,  until  they  secured  a  majority  of  the  stock  of  that  company — 
$1,000  over  one-half.  Then  they  instituted  a  suit  to  get  into  that  company, 
and  they  were  beaten  in  that  suit,  which  was  brought  in  the  name  of  John 
J.  Carter.  He  was  alleged  to  be  the  purchaser  and  owner  of  that  stock  of 
the  National  Transit  Company,  and  they  transferred  it  to  him  on  the  16th 
of  January,  1896,  and  he  brought  suit  to  get  into  the  company,  to  become  a 
member  of  that  company  without  being  elected  to  membership. 


92  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

*Q.    (By  Vice-chairman   PHILLIPS.)    It  being  a  limited   partnership?     A. 

It  being  a  limited  partnership  and  the  law  provided  that  no  one  who  pur- 
chased stock  could  become  a  member  without  being  elected.  He  alleged 
that  he  was  one  of  the  original  subscribers  to  the  stock,  and  was  entitled  to 
vote  that  additional  stock  in  the  meetings  and  have  it  transferred  to  him. 
That  was  denied  by  the  company,  and  he  lost,  both  below  and  in  the  Supreme 
Court.  That  was  one  of  the  means  by  which  they  sought  to  get  control. 
He  told  me,  swore  to  it  in  fact,  that  he  purchased  the  stock  for  the  purpose 
of  getting  control  of  the  company  and  changing  its  policy  from  one  opposed 
to  the  Standard  Oil  Company  to  one  in  harmony  with  it. 

*Q.  (By  Vice-chairman  PHILLIPS.)  Did  they  buy  stock  in  any  one  of 
these  independent  companies?  A.  They  bought  stock  in  the  United  States 
Pipe  Line,  and  in  order  to  prevent  them  from  getting  the  control  of  that 
company  a  majority  of  that  stock  was  put  in  trust  in  the  name  of  three 
trustees  who  were  not  allowed  to  sell  it,  but  to  vote  it  at  all  meetings. 

Q.  (By  Vice-Chairman  PHILLIPS.)  About  how  much  stock  did  they  pur- 
chase in  the  United  States  Company?  A.  Somewhere  in  the  neighborhood 
of  $350,000  to  $400,000  out  of  $1,200,000  paid  up  capital.  They  instituted  a 
suit  against  that  company  to  get  control.  We  refused  to  allow  them  to  come 
into  that  company,  and  they  instituted  suit  to  get  into  that  company.  They 
won  it  in  the  court  below  and  it  was  taken  to  the  Supreme  Court  and  on  a 
technicality  the  appeal  to  the  Supreme  Court  was  quashed. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Had  they  a  director  in  that  com- 
pany?   A.  They  have  one  director  in  that  company  now. 

Q.  (By  Vice-Chairman  PHILLIPS.)  How  did  they  obtain  that  director? 
A.  They  obtained  that  director  b.v  the  purchase  of  the  stock  and  through 
the  decree  of  the  court  that  he  should  be  entitled  to  vote  it  at  the  election. 
*They  were  entitled  to  vote  it. 

Q.  (By  Mr.  KENNEDY.)  Senator  Lee,  have  the  independent  companies 
found  it  necessary,  in  order  to  pi'otect  themselves  against  the  encroachment 
of  the  Standard,  to  enter  into  any  form  of  combination?  A.  Well,  not  so  far, 
except  the  combination  that  comes  from  combination  of  interest.  They  are 
practically  one  and  the  same  people.  They  would  be  much  better  and 
stionger,  undoubtedly,  if  they  were  welded  into  one  organization. 

Q.  Then  practically  they  are  not  independent  *of  each  other,  but  inde- 
pendent of  the  Standard  Oil  Company?  A.  They  are  independent  of  each 
other  and  they  are  independent  of  the  Standard  Oil  Company. 

Q.  You  say  they  are  controlled  by  the  same  people?  A.  By  way  of  illus- 
tration :  The  refineries  are  all  owned  by  different  people,  individual  or 
companies;  each  man  owns  his  own  refinery,  and  each  company  owns  its 
own  refinery,  and  they  take  oil  from  the  pipe  line,  and  pay  us  15  cents  pipage, 
while  the  Standard  pipage  is  20  cents.  We  have  always  maintained  the 
uniform  rate  of  15  cents  for  local  pipage,  but  they  operate  their  own  refiner- 
ies, sell  their  oil  where  they  please,  compete  with  each  other,  and  compete 
with  the  Standard,  so  they  are  entirely  independent. 

Q.  (By  Mr.  A.  L.  HARRIS.)  How  many  different  companies  have  been 
absorbed  by  the  Standard  Oil  Company?  A.  Oh,  in  round  numbers  I  would 
say  over  a  hundred  in  the  last  20  years. 

Q.  Is  there  a  list  of  these  companies  with  the  amount  of  the  capital  in 
each?  A.  Yes.  sir;  there  is  a  list  given  here,  up  to  a  certain  date;  the  list 
of  refineries  that  were  obtained  and  dismantled.  Of  course  a  complete  list 
can  be  made  of  it. 

Q.  *(By  Vice-chairman  PHILLIPS.)  In  what  book  is  that?  A.  That  is 
in  the  testimony  of  Senator  Emery  before  the  Committee  on  Manufactures 
in  1888.    It  is  indexed  and  the  list  can  be  found  in  that  l)ook. 

Q.  (By  Representative  LIVINGSTON.)  What  stands  in  the  way  of  their 
absorbing  the  remaining  companies?  Is  it  from  the  fact  that  they  produce 
oil  enough  to  meet  the  demand  or  are  they  trying  to  work  them  to  lower 
figures?  Why  do  they  not  absorb  the  other  independent  companies?  A. 
Because  they  are  not  willing  to  sell — that  is  the  only  reason. 


*Black  faced  type  indicates  matter  omitted,    in    the  course   of  editing,    from    the 
official  report. 


J.  W.  LEE,  PRESIDENT  PURE  OIL  TRUST.  93 

Q.  (By  Mr.  FARQUHAR.)  Do  you  mean  by  that,  that  there  is  sufficient 
profit  in  the  independent  lines  now,  so  they  can  ask  their  own  prices  and  not 
sell?  A.  No,  sir;  we  refused  to  sell  at  112,  which  is  12  per  cent,  above  cost, 
when  we  oxpected  to  go  into  the  hands  of  the  sheriff,  and  be  sold  out.  We 
maintained  those  companies  largely  as  a  matter  of  sentiment  and  as  a  pro- 
tection to  the  independent  producing  interests. 

Q.  You  stated  a  minute  ago,  in  speaking  of  the  purchase  and  dismantling 
of  refineries,  that  they  paid  inordinately  high  prices  for  them.  This  com- 
mission would  naturally  understand  that  when  independent  companies  will 
not  be  absorbed  by,  will  not  sell  to  the  Standard  Oil  Company,  they  do  not 
so  act  on  account  of  sentiment  or  philanthropy  towards  the  consumer,  but 
because  there  is  a  large  profit,  present  or  prospective,  to  keep  them  out  of 
the  Standard  Oil  Company?  A.  Well,  no;  men  naturally  desire  to  remain 
in  the  business  which  they  have  selected  and  with  which  they  are  acquaint- 
ed, and,  while  they  are  satisfied  with  moderate  profits,  they  do  not  like  to  be 
driven  out  of  their  business.  There  is  an  American  pride  in  being  able  to 
m.aintain  and  live  in  a  business  that  a  man  feels  he  is  entirely  competent 
to  carry  on  and  has  adequate  capital  to  carry  on  if  he  has  a  fair  chance. 

Q.  Is  it  not  a  fact  that  the  independent  companies  of  this  country  are 
making  money,  and  make  a  sufficient  percentage  on  their  capital?  Is  that 
not  one  of  the  reasons  why  they  do  not  sell?  A.  That  is  true  just  at  present, 
but  this  proposition  to  purchase  them  was  made  after  they  had  been  doing 
a  continually  losing  business  for  20  months,  and  in  that  20  months  they  lost 
$200,000  in  actual  money,  and  then  they  declined  to  sell. 

Q.  You  said  that  some  time  ago  you  thought  those  who  were  interested 
in  the  independent  companies  and  had  been  brought  up  in  the  business  and 
had  long  experience  in  it,  were  better  managers  than  the  agents  the  Stand- 
ard Oil  Company  employs  in  the  refining,  or  transporting,  or  selling  of  oil. 
Is  it,  or  not,  a  fact  that  in  the  acquirement  of  these  properties  the  Standard 
Oil  Company  has  usually  taken  the  expert  mixers  and  refiners  and  business 
men  of  these  concerns  into  the  working  force  of  the  Standard  Oil  Company? 
In  other  words,  are  not  the  controlling  spirits  of  the  Standard  Oil  Company 
to-day  the  men  who  have  been  in  the  field  from  the  first  with  as  wide  an 
experience  as  any  of  the  independent  companies  could  have?  A.  No,  I  do 
not  think  so.  I  do  not  *hink  any  of  the  trustees  have  had  any  experience; 
have  had  any  practical  experience  in  the  business. 

Q.  What  is  the  experience  of  Mr.  O'Day?  A.  He  has  had  experience 
as  a  pipe  line  man,  and  Mr.  Archbold  has  quite  a  large  experience  as  a 
refiner. 

Q.  When  they  absorbed  the  old  Galena  Oil  Company  did  they  not  take 
the  foreman  and  eight  or  ten  of  the  experts  and  the  best  operatives  of  that 
company  and  put  them  in  the  Standard  Oil  Company?  A.  What  Galena 
Company  do  you  refer  to? 

Q.  The  Ohio  Company;  the  Head  Light  Oil  Company.  A.  That  is 
located  in  Fianklin,  and  I  think  the  same  men  are  in  that  company  that 
have   always   been  in   it. 

Q.  .(By  Mr.  A.  L.  HARRIS.)  I  wish  you  would  turn  to  page  438  of  that 
report.*  How  many  of  the  companies  in  that  listf  are  in  existence  at  the 
present  lime?  A.  I  cannot  speak  of  Cleveland  nor  of  New  York.  Oh,  yes, 
sir,  of  New  York,  Borne,  Scrymser  &  Company  have  been  absorbed  by  the 
Standard,  and,  I  think,  Lombard.  Ayres  &  Company.  They  are  marked 
there  as  affiliated  with  the  Standard  then.  At  Pittsburg,  Bear  Creek  Re- 
fining Company  is  a  Standard  works,  as  I  understand,  now.  lola  Oil  Works 
is  a  very  small  works,  and  the  Globe  Refining  Company.  I  think,  is  Standard. 
At  Oil  City  the  Keystone  Refining  Company  was  wrecked  and  torn  dov/n  by 
the  Standard  Oil  Company.  The  Standard  Oil  Company,  I  think,  became 
the  purchaser  of  that  at  sheriff's  sale.  It  is  torn  down  and  wrecked.  I 
know  that.     The  ground  is  bare  now,  with  the  exception  of  a  few  tanks. 

Q.  I  wish  you  would  state  as  you  go  along  what  has  become  of  the 
different  companies  that  have  gone  out  of  existence,  and  how  they  went  out 

*Report  of  Committee  on  Manufactures,  House  of  Representatives,  ISSS. 
tList  of  "outside  refineries." 


94  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

of  existence;  whether  acquired  by  the  Standard  Oil  Company  or  not.  A. 
The  Reno  Mutual  Oil  Company  was  purchased  by  the  Standard  in  May,  1895, 
and  wrecked — torn  down — nothing  left  standing  but  the  chimney  as  a  monu- 
ment of  disaster.  I  am  not  sure  but  what  the  chimney  is  down  now.  At 
Franklin  those  are  small  refineries;  they  are  not  running,  I  think;  I  think 
most  of  them  are  shut  down.  I  do  not  know  anything  about  those  at  Buffalo, 
Toledo,  Findlay,  Lima,  Bradner,  Smith's  Ferry,  Boston,  nor  Baltimore. 
Bradford — those  are  not  in  existence  now.  I  do  not  know  what  became 
of  them. 

Q.  I  wish  you  would  state  as  you  go  along,  if  they  are  not  in  existence, 
whether  you  know  what  became  of  them.  A.  No,  I  do  not  know  what  be- 
came of  those  at  Bradford.  At  Parkersburg  one  of  the  refineries  that  was 
in  existence  at  that  time  has  been  absorbed  by  the  Standard.  At  Marietta, 
I  am  not  informed  as  to  those  refineries,  and  at  Titusville,  Rice,  Robinson 
&  Witherup  have  sold  out,  but  it  is  being  run  by  an  independent  company 
now.  John  Schwartz  was  a  refiner  whose  property  was  destroyed  by  flood. 
He  then  went  into  the  National  Oil  Company  or  into  the  Union  Refining 
Company,  and  in  1895  that  was  bought  and  absorbed  by  the  Standard  and 
torn  down.  The  International  Oil  Works  (J.  P.  Thomas)  was  also  absorbed 
and  purchased  by  the  Standard  in  1895.  It  was  practically  a  new  works,  in 
fine  condition,  and  was  torn  down.  The  National  Oil  Company  was  united 
with  the  Union,  as  I  have  said,  and  the  Union  was  purchased  by  the  Stand- 
ard Oil  Company  and  torn  down.  The  same  was  true  of  the  Western  Refin- 
ing Company;  the  Western  went  into  the  Union.  They  united  those  re^n- 
erios,  leaving  but  two  out  of  that  number  now  in  existence  at  Titusv  1"  ^ 
and  one  that  has  been  erected  since  by  the  Manhattan  Oil  Company,  known 
as  the  Oil  Creek  Oil  Works.  Clarendon — those  are  small  works  at  Claren- 
don, and  I  am  not  familiar  with  them.  I  think  one  of  them  is  still  operated 
by  the  independents,  and  I  think  the  others  are  not  operated  at  all.  1  am 
not  informed  as  to  the  refineries  at  San  Francisco.  At  Philadelphia,  Boss- 
hart  &  Wilson  are  not  in  business.  As  to  the  others,  I  am  not  informed. 
Florence,  Colorado — The  Florence  Oil  Company — I  am  not  familiar  with 
that.     This  list  was  made,   1   see,  in   1888. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Have  you  any  information  in  re- 
gard to  the  Standard  paying  a  large  bonus  or  premium  for  refining  works 
to  remain  in  idleness,  or  sums  of  money  to  persons  to  not  enter  the  business, 
who  would  probably  have  done  so,  without  going  in  with  them?  A.  I  know 
that  they  leased  a  number  of  refineries  years  back;  *not  within  the  last  five 
years,  but  prior  to  that  they  leased  a  number  of  refineries  and  simply  shut 
them  down  and  allowed  them  to  remain  idle.  As  to  persons  receiving 
money  to  remain  out  of  business,  I  have  no  personal  absolute  knowledge 
on   that  subject,   only   common   rumor. 

Q.  (By  Vice-chairman  PHILLIPS.)  But  you  know  as  a  fact  that  they 
have  leased  works  that  have  been  shut  down  for  a  period  of  years?  A. 
Yes,   sir,  I   know   that   fact. 

Q.  (By  Vice-Chairman  PHILLIPS.)  And  paid  large  sums  of  money  in 
some    instances?     A.  Yes,    sir.    paid    large    rents. 

Q.  (By  Vice-chairman  PHILLIPS.)  Did  they  or  not?  A.  Yes.  sir.  I 
think  that  has  been  done. 

Q.  (By  Representative  LIVINGSTON.)  What,  in  your  opinion,  would 
be  the  price  of  oil  to  consumers,  provided  in  any  way  the  Standard  Oil  Com- 
pany should  be  abandoned  or  dismantled?  A.  I  believe  that  the  price  to 
the  consumer  generally,  the  average  price  to  the  consumer,  all  over  the 
United  States,  and  all  over  the  world,  would  be  very  much  less  than  it  is 
to-day  with  the  same  price  for  crude  oil. 

Q.  Now  give  the  reasons  to  the  commission,  why  you  think  so.  A. 
The  reasons  are  that  any  one  who  is  permitted  to  take  whatever  he  wants 
to.  is  never  moderate  in  his  taking.  They  have  the  ability,  they  have  the 
power,  to  take  from  the  consumer  just  what  they  please,  where  there  is  no 
competition   and    I   do   not   think   anybody   would    be   moderate   under   such 


*Black  fncefl  type  inclicates  matter  rjmitted,    in    tlu'   rcnu.'-e    of   fditing,    from    the 
official  report. 


J.  W.  LEE,  PRESIDENT  PURE  OIL  TRUST.  95 

circumstances.  *l  would  not  want  to  trust  myself,  I  think,  under  those  cir- 
xumstances.  I  do  not  believe  anybody  should  be  trusted  with  unlimited 
powers  anywhere. 

Q.  You  say  then  that  competition  would  so  rule  or  control  that  the 
independent  companies  would  be  forced  to  sell  oil  for  a  less  price  than  the 
Standard  now  obtains?     A.  Yes,  sir,  I  have  not  a  bit  of  doubt  about  1l. 

Q.  That  being  true,  what  interest  has  the  independent  company  in 
forcing  the  disintegration  of  this  company?  A.  Just  this  interest:  they 
stand  always  in  mortal  dread  of  being  entirely  wiped  out.  They  do  not 
know  whether  they  can  live  six  months  or  a  year.  They  always  have  to 
fight  for  their  lives,  and  they  do  not  make  fair  profits  even  now.  Taking 
five  years  together,  they  have  not  made  what  would  be  called  fair  manu- 
facturing  profits. 

Q.  (By  Mr.  NORTH.)  What  do  you  call  a  fair  manufacturing  profit? 
A.  They  would  be  entirely  satisfied  to  do  this  business  at  ten  cents  a  barrel 
on  crude  oil  that  runs  through  their  refineries.  I  think  the  Standard  Oil 
Company  makes  $1.50  to  $2  on  every  barrel  that  goes  through  its  refineries. 

Q.  About  what  per  cent?  A.  That  would  be  ten  cents  a  barrel  on  the 
amount  that  they  refine — the  number  of  barrels. 

Q.  "WTiat  per  cent  of  profit? 

Q.  (By  Mr.  FARQUHAR.)  Per  cent  on  the  investment?  A.  That 
would  probably  be  about — that — let  me  see — $1  a  barrel — that  would  be 
about  ten  per  cent. 

Q.  (By  Mr.  NORTH.)  Which  you  call  a  very  good  manufacturing  profit? 
A.  I  should  think  so.  I  have  heard  independent  refiners  say  they  would  be 
entirely  satisfied  to  enter  into  a  contract  for  any  number  of  years  to  make 
ten  cents  a  barrel  on  every  barrel  of  crude  oil  that  they  refine,  and  with 
oil  at  $1  a  barrel  that  would  be  a  profit  of  about  ten  per  cent. 

Q.  Have  you  any  knowledge  of  the  price  at  which  the  Standard  Oil 
Company  sells  its  product  abroad?  A.  The  Pure  Oil  Company,  which  was 
organized  in  1895,  for  the  purpose  of  aiding  the  independent  refiners,  was 
organized  in  an  open  meeting,  held  at  Butler,  on  January  24,  1895,  for  the 
purpose  then  stated,  of  organizing  a  company  that  would  take  the  oil  from 
the  refiners  at  cost.  They  were  willing  to  refine  oil  at  cost,  if  they  could 
live  that  way;  just  to  enable  them  to  live.  They  were  willing  to  say  they 
would  continue  in  the  business,  to  give  oil  to  a  new  company  at  cost, 
without  making  a  cent;  and  this  company  was  organized  for  the  purpose 
of  taking  that  oil  at  cost  and  marketing  it  abroad. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Now  will  you  kindly  state,  if  you 
can,  what  means  the  Standard  Oil  Company  is  taking  to  destroy  the  market 
abroad  under  those  circumstances? 

Mr.  NORTH.     He  is  coming  to  that. 

The  WITNESS.  They  had  made  the  market  abroad  so  bad,  that  oil 
was  sold  in  New  York  for  a  number  of  months  below  the  cost  of  the  crude 
at  the  refinery,  without  anything  for  refining  it,  and  without  anything  for 
transporting  it  from  the  refineries  to  New  York.  The  refiners  had  lost 
large  sums  of  money.  Then  they  said  they  could  not  continue  unless  they 
were  aided  by  the  producers  and  they  formed  the  Pure  Oil  Company  for 
the  purpose  of  taking  their  oil  at  cost,  in  order  to  enable  them  to  stay  in 
the  business,  and  not  to  be  driven  out  by  the  Standard  Oil  Trust.  That 
was  in  an  open  meeting  held  at  the  Opera  House  at  Butler,  and  the  stock 
of  that  company  was  subscribed  there  to  the  amount  of  $65,000  in  a  few 
minutes.  It  went  on  until  it  now  has  a  capital  of  $377,000  with  an  author- 
ized capital  of  $1,000,000  and  that  company  has  been  buying  oil  from  the 
independent  refiners  and  marketing  it  abroad.  They  have  a  station  erected 
at  Hamburg,  Germany;  their  own  tankage  and  their  own  tank  cars.  They 
have  one  erected  at  Rotterdam,  Holland;  their  own  tankage,  barrel  houses, 
pumping  outfits,  etc.  They  are  erecting  one  at  Mannheim  on  the  Rhine, 
in  Germany,  and  they  have  rented  a  plant  at  Amsterdam,  Holland. 

♦Black  faced  type  indicates  matter  omitted,  in  the  course  of  editing,  from  the 
official  report. 


-96  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

*Q.  What  methods,  if  any,  did  the  Standard  Oil  Company  take  to  pre- 
vent the  sale  of  oil  abroad?  A.  I  was  going  to  finish  this,  and  then  I  will 
do  that,  Mr.  Phillips.  Those  plants  were  established,  one  of  them  two  years 
ago  last  October,  the  other  a  year  ago  last  August;  the  third  one  a  year  ago 
the  first  of  April,  and  the  other  is  in  process  of  erection.  The  oil  is  trans- 
ported to  those  plants  by  means  of  tank  steamers  in  bulk,  and  pumped  out 
into  the  tanks,  and  distributed  just  as  the  Standard  distributes  oil  through- 
out Germany.  I  want  to  say  here,  and  I  say  it  with  a  blush  for  this  country, 
that  everybody  can  do  business  in  Germany  on  an  equal  footing,  and  no- 
body has  any  advantage  over  any  others.  It  ought  to  be  true  in  the  United 
States.     It  is   a   sad   thing  that  it  is  not. 

Q.  (By  Senator  DANIEL.)  Please  explain  that  a  little.  A.  They  do 
not  permit  any  discrimination;    they  will  not  allow  it. 

Q.  By  whom?  A.  The  government  will  close  up  an  establishment,  or 
forbid  them  to  do  business,  if  they  enter  into  any  discrimination.  *Their 
railroads  do  not  discriminate. 

Q.  You  mean  to  say  they  prevent  trusts  and  combines?  A.  I  think  they 
do,  or  at  least  I  think  one  individual  has  no  advantage  over  another  indi- 
vidual. 

Q.  (By  Mr.  NORTH.)  Not  for  his  own  purposes  to  sell  at  a  loss?  A. 
Not  for  his  own  purposes,  they  will  not  permit  them ;  they  will  not  permit 
that.     They  will  not  permit  anybody  to  do  business  at  a  loss  in  Germany. 

Q.  For  the  sake  of  destroying  a  competitor?  A.  Yes,  sir,  they  will  not 
allow   that. 

Q.  You  have  not  quite  answered  the  question  I  originally  asked  you'.' 
A.  What  was  that? 

Q.  I  want  to  know  how  the  foreign  prices  of  the  Standard  Oil  Company 
compare  with  their  domestic  prices?  A.  Prior  to  that  time  the  independent 
refineries  sold  nearly  all  the  oil  they  marketed  in  Germany,  to  a  man  by 
the  name  of  Poth.  He  always  said  that  he  could  not  do  business  in  Germany 
at  a  loss,  which  we  found  to  be  true,  and  of  course  they  gave  him  the  right 
to  say  what  he  could  buy  oil  for,  and  he  got  rich  out  of  the  purchase  of  oil 
from  the  refiners  during  a  period  of  a  few  years. 

Q.  (By  Vice-chairman  PHILLIPS.)  The  independent  refiners?  A.  Yes, 
sir,  and  finally  he  sold  out  to  the  Standard  Oil  Company,  and  he  was  over- 
whelmed with  grief  after  he  had  done  so,  and  found  that  the  refiners  had 
stood  by  him.  *He  had  been  told  that  they  had  all  deserted  him  and  sold 
out,  and  he  went  home  and  died  within  three  days.  He  is  dead  and  his  busi- 
ness is  carried  on  now  by  the  Standard  Oil  Company. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Did  they  take  any  means  to  buy 
tankage?  A.  They  would  often  tie  up  all  the  tankage  at  any  given  port, 
and  they  sold  oil  abroad  at  low  prices  for  a  period 

Q.  (By  Mr.  NORTH.)  At  lower  prices  than  they  were  selling  for  in 
this  country  at  the  same  time?     A.  Oh,  yes,  sir,  very  low  prices. 

Q.  (By  Professor  JENKS.)  How  about  the  quality  of  oil  that  is  ex- 
ported, compared  with  that  which  is  used  here?  A.  The  oil  that  the  inde- 
pendents export,  while  it  is  equal  to  second  grade  oil.  is  nearly  as  good  a 
burning  oil  as  the  very  highest  quality.  The  refiners  tell  me  they  would 
as  soon  burn  what  is  known  as  export  oil  as  water-white.  It  don't  make 
quite  as  brilliant  a  light,  *but  it  is  entirely  safe,  and  it  is  a  good  quality  of 
oil.     *lt  looks  white   in  the   lamp. 

Q.  (By  Mr.  NORTH.)  Are  you  able  to  carry  on  competition  in  foreign 
counti'ies  with  the  Standard  Oil  Company  without  those  disadvantages  that 
you  encounter  at  home?  A.  A  great  deal  better  in  foreign  countries  than 
in  America.  Competition  is  preserved  in  Germany  to  a  very  much  greater 
extent  than  it  is  in  the  ITnited   States;   it  is  in  England,  too. 

Q.  (By  Vice  Chairman  PHILLIPS.)  Is  the  Pure  Oil  Company  making  a 
profit?  A.  The  Pure  Oil  Company  is  making  a  profit — doing  a  profitable 
business. 

Q.  (By  Mr.  NORTH.)  Selling  at  market  rates  abroad?  A.  Selling  at 
market  rates  abroad  and  doing  a  profitable  business. 


*Black  faced  type  indicates  matter  omitted,    In   the  course   of  editing,    from    the 
official  report. 


J.  W.  LEE,  PRESIDENT  PURE  OIL  TRUST.  97 

*Q.  (By  Mr.  RATCHFORD.)  Senator  Lee  has  referred  frequently  dur- 
ing his  evidence  to  independent  companies;  are  we  to  understand,  from  this 
term,  Senator,  that  these  companies  are  not  connected  with  the  Standard 
Oil   Company?     A.  Yes,  sir. 

Q.  You  have  stated,  I  believe,  that  a  hundred  or  more  of  these  com- 
panies were  absorbed  by  the  Standard  Oil  Company?     A.  Yes,  sir. 

Q.  Has  there  been  any  such  thing  as  a  transfer  of  the  property  or  plants 
from  one  of  these  independent  concerns  to  another,  at  any  time?  A.  Oh, 
very  frequently  these  interests  will  be  sold. 

Q.  They  have  bought  and  sold  to  each  other?  A.  They  change  owner- 
ship to  some  extent. 

Q.  The  reason  that  others  have  not  sold  to  the  Standard  Oil  Company 
was  because  they  were  unwilling  to  sell?     A.  Yes,  sir. 

Q.  Now  if  these  independent  companies  have  bought  and  sold  and 
changed  ownership,  have  they  not  been  absorbed  by  each  other  in  the 
same  sense  in  which  the  Standard  Oil  Company  has  absorbed  some  of  them? 
A.  No,  sir,  in  changing  ownership  they  do  not  absorb  their  works;  they 
simply  buy  the  one  concern,  and  conduct  the  business  just  as  it  has  been 
conducted  before. 

Q.  When  an  independent  company  buys  another  company,  its  plant 
and  property,  does  it  continue  to  operate  it?     A.  Yes,  sir. 

Q.  The  only  difference  then,  between  them  and  the  Standard  is  that 
in  one  case  the  plant  is  bought  for  the  purpose  of  continuing  the  business, 
and  in  the  other  for  the  purposes  of  destruction,  laying  it  in  waste.  Is  that 
it?     A.  Very  frequently  it  is  bought  for  the  purpose  of  destruction. 

Q.  I  should  think  the  term  "destroyed  or  laid  in  waste"  would  be  a 
better  term  than  "absorbed."  A.  I  say  "absorbed  and  dismantled,"  which 
means   destroyed. 

Q.  Has  the  product  of  the  Standard  Oil  Company  improved  in  quality 
during  the  past  twenty  years?  A.  I  think  it  has  deteriorated  in  quality 
and  would  like  to  give  the  reason  for  that.  Prior  to  twenty  years  ago  we 
did  not  use  what  is  known  as  Lima  oil,  or  oil  that  has  sulphur  in  it.  Within 
the  last  twenty  years  they  have  used  a  very  large  proportion  of  Lima  oil 
and  therefore  I  think  their  manufactured  oil  generally  is  not  as  good  as  it 
used  to  be. 

*G.   Because  they  mix  Lima  oil  with  it?     A.  Yes,  sir. 

Q.  For  what  reason?  A.  Lima  oil  is  said  to  contain  both  arsenic  and 
sulphur.     One  clouds  the  chimney  and  the  other  makes  a  bad  odor. 

Q.  How  about  their  by-products?  A.  No  doubt  they  make  their  by- 
products very  lucrative  to  themselves. 

Q.  Have  any  of  their  prices  been  materially  reduced  during  the  past 
twenty  or  twenty-five  years?  A.  I  read  a  statement  made  by  a  gentleman 
who  I  thought  was  not  at  all  familiar  with  the  oil  business — Mr.  Thurber, 
of  New  York — that  the  prices  had  been  correspondingly  reduced  with  the  cost 
of  material  employed  in  production.  In  other  words,  there  has  not  been  a 
relative  reduction  in  the  price  of  refined  as  compared  with  the  cost  of  the 
crude,  and  they  have  had  nothing  to  do  with  making  the  cost  in  the  pro- 
duction of  the  crude.  All  the  improvements  in  drilling  the  oil  wells  and 
in  producing  the  crude,  have  been  made  by  the  people  who  were  actually 
engaged  in  that  business,  and  many  of  them  workingmen. 

O.  Are  you  prepared  to  state  whether  or  not  the  cost  of  say  half  a 
'^ozeiv  other  articles  of  common  use  has  or  has  not  been  reduced  propor- 
tionately with  that  of  the  product  of  the  Standard  Oil  Company?  A.  Oh, 
yes,  'iir,  I  think  that  nearly  all  of  the  leading  staple  articles  have  been 
redu^'ed  within  the  last  twenty  years  in  larger  degree  than  the  price  of 
refined  oil. 

Q.  (By  Senator  DANIEL.)  Has  not  the  price  of  the  crude  article  been 
reduced  more  in  proportion  than  the  price  of  the  refined?  A.  Undoubtedly;  I 
am  going  to  speak  of  that  hereafter. 


♦Black  faced  type  Indicates  matter  omitted,   In  the  course   of  editing,   from   the 
official  report. 


98  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

Q.  (By  Professor  JENKS.)  The  Senator  has  had  his  attention  called 
to  these  figures.  There  have  been  some  figures  put  up  here*,  and  this 
upper  line  represents  the  cost  of  refined,  and  this  lower  line  the  cost  of 
crude  oil,  so  that  the  distance  between  the  two  shows  the  cost  of  refining 
plus  the  profits.  Now  these  figures  are  very  frequently  cited  by  those 
who  favor  the  Standard  Oil  Company  to  show  that  they  have  very  rapidly 
reduced  this  cost.  These  are  the  dates,  here.  The  Standard  Oil  Company 
started  in  1872,  and  went  into  the  trust  in  1882.  It  seems  to  have  been 
not  very  much  changed  since  1882.  Can  you  explain  to  us  whether  these 
average  annual  figures  show  definitely  or  not,  the  way  in  which  the  Standard 
Oil  Company  fixed  its  prices?  A.  That  difference  there  between  your  lines 
indicates  the  cost  of  refining  plus  the  profit. 

Professor  JENKS.  That  is  the  price  of  the  crude  and  refined  made 
on  the  basis  of  this  base  line,  so  that  is  the  difference  between  the  two.  A. 
That  does  not  signify  anything.  They  can  make  the  price  just  what  they 
please. 

Mr.  FARQUHAR.  Does  not  that  diagram  show  tha.,  since  the  Standard 
Oil  Company  came  into  the  business  they  have  run  both  refined  and  crude 
almost   parallel? 

Q.  (By  Professor  JENKS.)  There  has  been  a  slight  reduction  here  all 
the  time,  but  of  course  the  Standard  Oil  Company  men  will  say  that  when 
you  get  the  price  of  crude  down  to  less  than  a  cent  a  lallon,  there  is  not 
any  possibility  of  reducing  it  many  cents  lower  than  that.  I  would  like 
the  Senator  to  explain  that.  A.  I  am  told  by  refiners  tLat  in  twenty  years 
the  cost  of  refining  has  been  reduced  from  two  and  a  half  cents  a  gallon 
to  less  than  half  a  cent  a  gallon,  so  of  course  those  lines,  if  parallel,  woula 
leave  a  very  much  larger  margin  of  profit. 

Q.  Will  you  also  state  in  reference  to  the  way  in  Vvhich  they  fix  their 
price,  whether  the  cost  of  the  crude  and  the  cost  of  the  refining  is  a  definite 
basis  for  the  fixing  of  their  profit  or  whether  it  is  agreed  upon  arbitrarily. 
A.  I  do  not  think  the  Standard  Oil  Company  fixes  its  prices  on  the  basis 
of  the  cost  of  refining  or  the  cost  of  the  crude  oil,  either.  They  are  trying 
to  avoid  that.  In  other  words,  sometimes  when  crude  is  very  low  refined 
is  very  high,  and  when  refined  is  very  low  crude  is  very  high.  They  do  not 
want  the  public  to  understand  how  they  fix  their  prices.  They  are  entirely 
arbitrary.  They  have  had  very  low  prices  for  refined  )il  when  crude  was 
very  high  and  very  high  prices  for  refined  oil  when  cruds  was  very  low. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Does  not  that  come  about  through 
their  selling  in  one  period  and  supplying  the  market  for  a  number  of 
months  ahead?  A.  Probably  through  selling  ahead  and  then  putting  the 
price  of  crude  up  so  that  their  competitors  would  have  to  pay  higher  prices 
for  the  crude  while  they  would  be  manufacturing  c  -ude  that  they  had 
already  purchased. 

Q.  (By  Mr.  KENNEDY.)  You  have  stated  that  un  ler  the  conditions  of 
competition  in  Germany  and  Great  Britain  you  could  nake  a  profit  there? 
A.  Yes,   sir. 

Q.  The  Standard  Oil  Company  could  not  drive  you  out  there  so  that  you 
could  not  make  a  profit?     A.  Yes,  sir. 

Q.  And  in  this  country  their  competition  or  metho(  s  have  generally  been 
ruinous  to  you,  so  that  you  could  not  make  a  profit.  Has  the  profit  which 
you  have  been  enabled  to  make  in  Germany  and  C  reat  Britain  in  years 
passed,  been  the  means  of  enabling  your  companies  to  live,  notwithstanding 
the  destructive  methods  of  the  Standard  Oil  Company  in  this  country?  A. 
Yes,  sir. 

Q.  How  long  have  you  been  operating  in  these  ci  untries?  A.  We  have 
been  operating  in  Germany  for  three  years  next  Octob  sr.  Now,  for  instance, 
this  year  the  price  for  export  oil,  which  is  a  secopii  grade  oil,  has  been 
almost  as  high  as  water-white  oil,  although  the  cost  ot  drilling  oil  wells  and 
obtaining  the  oil  is  very  much  greater  within  the  last  three  or  four  months, 

*Referrlng  to  a  chart  which  was  exhibited  on  the  wall,  and  which  is  reproduced 
elsewhere. 


J.  W.  LEE,  PRESIDENT  PURE  OIL  TRUST.  99 

than  it  was  last  year,  on  account  of  the  advance  in  all  materials  and  the 
prosperous  condition  of  the  country.  But  they  hav  ;  kept  water-white  oil 
very  low  in  this  country  during  the  last  year. 

Q.  We  have  been  told  often  that  the  Standard  Oil  Company  has  in  some 
instances  almost  given  away  oil  to  drive  out  competii  Ion?     A.  Yes,  sir. 

Q.  Is  it  true  that  they  could  not  give  away  oi'  if  they  wanted  to  in 
Germany  or  Great  Britain?  A.  No,  sir,  I  do  not  think  they  would  be 
allowed  to  do  thtit  there. 

Q.  You  think  not?     A.  No,  sir,  I  don't  think  so. 

Q.  The  government  would  come  in?     A.  And  int  irfere,  yes,  sir. 

Q.  And  say:  "You  cannot  sell  this  oil  at  ten  cei  ts,  or  a  cent  a  gallon 
less  than  other  people."     A.  I  don't  think  they  would  b  ^  permitted  to  do  that. 

Q.  (By  Representative  OTJEN.)  With  the  unt  erstanding  that  they 
were  doing  it  to  crush  somebody  else  out?  A.  Yes,  i  ir,  I  don't  think  they 
could. 

Q.  The  government  would  be  the  judge  of  their  methods  then?  A.  I 
think  they  would  not  permit  it. 

Q.  (Br.  Mr.  FARQUHAR.)  Is  there  any  act  of  Parliament  which  would 
prevent  their  giving  away  oil  or  selling  it  at  any  price?  A.  The  government 
is  somewhat  despotic  over  there;   they  don't  allow  it. 

Q.  How  do  they  manage  then,  with  the  American  meats  coming  into 
competition  both  in  England  and  Scotland  and  cutting  the  English  price 
probably  thirty-three  per  cent?  A.  I  suppose  those  are  sold  at  a  profit 
*even  after  they  have  cut  the  price.  They  do  not  prevent  your  selling  goods 
but  they  do  not  allow  one  company  to  have  an  advantage  over  another, 
and  they  will  not  permit  business  to  be  done  at  a  loss  there. 

Q.  (By  Mr.  KENNEDY.)  I  would  like  an  explanation  of  how  they  pre- 
vent a  man  from  doing  business  at  a  loss.  A.  *They  will  not  permit  you  to 
do  business.     They  close  up  your  establishment. 

Q.  (By  Mr.  NORTH.)  You  mean  to  say  they  guarantee  that  every  man 
who  goes  into  business  will  make  money?  A.  No,  he  can  quit  when  he 
pleases. 

Q.  (By  Senator  DANIEL.)  Are  you  speaking  from  an  examination  of 
the  German  laws  on  the  subject?  A.  Speaking  from  a  knowledge  of  the 
business  done  there  by  them  for  the  last  ten  years. 

Q.  Give  us  some  item  of  your  own  knowledge.  A.  In  regard  to  doing 
business  with  Mr.  Poth.  He  said  to  us  that  he  was  not  permitted  to  do 
business  at  a  loss.     Their  books  are  open  to  inspection  under  some  law. 

Q.  Where  was  that?     A.  In  Germany. 

Q.  What  place?  A.  He  was  doing  business  at  Hamburg,  and  Mann- 
heim, and  a  number  of  other  places  in  Germany.  He  said  he  could  not  do 
business  at  a  loss,  therefore  he  must  do  business  at  a  profit.  Since  we  have 
gone  in  there,  our  agents  say  to  us :  "They  will  not  permit  us  to  do  business 
at  a  loss,  they  will  not  allow  us  to  sell  goods  at  a  loss  and  do  a  losing  busi- 
ness;  we  can  close  up  and  quit." 

Q.  (By  Professor  JENKS.)  You  said  the  prices  here  were  considerably 
higher  in  your  judgment  than  they  would  be  if  there  had  been  anything  like 
free  competition?     A.  Yes,  sir. 

Q.  And  yet  it  was  very  difficult  for  these  independent  refiners  to  get 
along,  to  make  a  good  living,  to  make  good,  fair  profits.  Can  you  tell  us  a 
little  more  accurately  what  the  methods  of  the  Standard  Oil  Company  are 
that  would  make  these  two  things  consistent?  A.  In  any  market  reached 
by  the  independent  oil  they  put  the  price  down  so  low  that  there  is  no 
particular  profit  in  marketing  the  oil,  and  at  points  where  the  independent 
refiners  do  not  reach  they  put  the  price  up  so  as  to  recoup  their  losses 
at  the  competitive  point.  They  have  very  great  information  as  to  every 
shipment.  For  instance,  before  a  shipment  of  oil  made  by  the  independent 
refiner  reaches  its  destination,  they  will  land  at  the  same  place  a  cargo  of 
oil  to  be  sold  at  a  very  much  reduced  price,  and  they  will  reduce  their 
prices  two  or  three  days  before  that  oil  arrives,  so  as  to  prevent  the  man 
who  bought  it  once  from  buying  it  again.     If  a  merchant  buys  it  once  he  has 


♦Black  faced  type  Indicates  matter  omitted,    In   the  course   of  editing,   from    the 
official  report. 


100  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

to  lose  on  that  lot  of  oil  because  he  has  paid  a  higher  price  than  he  can  sell 
it  for.  They  will  sell  it  lower  than  he  can  and  get  out,  and  they  will  send  some 
one  to  him  and  say:  "You  can't  get  any  but  Standard  oil,"  and  that  is  their 
method  of  doing  business. 

Q.  (By  Senator  DANIEL.)  Have  they  done  that  in  Germany?  A.  No, 
sir,  they  are  not  allowed  to  do  that  in  Germany. 

Q.  (By  Professor  JENKS.)  You  will  perhaps  add  a  word  in  reference 
to  the  way  they  are  getting  along  in  France?  A.  I  don't  know  much  about 
the  French  business  except  that  the  Standard  Oil  Company  is  *associated 
with  the  French  refineries  and  are  doing  largely  the  business  in  France. 

Q.  (By  Representative  LIVINGSTON.)  Can  the  oil  that  the  refiners 
send  abroad  and  sell  in  Germany  and  other  places  be  sold  in  the  States  here? 
A.  In  some  of  the  States,  yes,  sir.  It  can  be  sold  in  Pennsylvania.  It  is  a 
marketable  oil  in  Pennsylvania. 

=^Q.  Then  it  is  not  up  to  the  standard  that  they  require  in  the  States  here? 
A.  No,  not  regarded  so,  although  probably  it  is  as  good  oil  as  is  burned  in 
the  United  States,  but  it  is  excluded  by  reason  of  the  statutes  that  have  been 
passed. 

Q.  What  is  the  gravity  of  the  export  oil?  A.  It  is  called  seventy-three 
Abel  Test.     I  am  not  familiar  practically  with  the  specific  gravity. 

Q.  What  does  the  law  of  New  York  or  any  other  State  require  when 
the  oil  drops  to  110°?  A.  Well,  it  is  110°  oil.  It  is  called  110°  oil.  150° 
is  the  highest  grade  of  water-white,  and  it  is  about  forty-eight  gravity.  150° 
oil.  forty-eight  gravity,  is  considered  the  best  class  of  oil. 

Q.  (By  Professor  JENKS.)  What  proportion  of  the  refined  product 
is  exported,  and  what  proportion  is  consumed  here?  A.  About  forty  per 
cent  of  all  the  crude  manufactured  is  exported.  That  is  beside  the  lubricat- 
ing oils.     There  would  be  some  lubricating  oils  in  addition. 

Q.  In  this  industry  it  has  been  necessary  for  a  great  many  years,  in 
order  to  keep  the  prices  up,  to  export  large  quantities  of  oil.  Has  this 
large  export  business  enabled  the  Standard  Oil  Company  to  keep  prices 
higher  than  it  otherwise  would?  Has  there  been  any  special  effort  made 
to  limit  production  here,  in  order  to  keep  prices  up?  A.  Yes,  sir,  there 
was  at  one  time  a  movement  to  limit  the  amount  of  crude  produced.  That 
was  in  1887.  They  limited  it  to  the  amount  of  about  17,500  barrels  a  day. 
That  is  fully  entered  into  in  this  book.f 

Q.  (By  Representative  LIVINGSTON.)  I  have  been  furnished  with  a 
statement  based  on  statistics  of  last  year  which  shows  that  about  fifty  per 
cent  of  all  oil  is  exported  or  consumed  abroad.  A.  Well,  I  said  forty  per 
cent  of  the  amount  manufactured  from  the  crude  is  exported  in  the  shape 
of  refined.  In  addition  to  that  forty  per  cent  add  whatever  lubricating 
oil  would  be  sent  abroad,  so  that  it  would  probably  make  it  fifty  per  cent. 

Q.  Does  the  oil  from  the  independent  refineries  that  is  not  of  such  a 
standard  as  to  be  consumed  in  the  States  come  in  competition  with  the  oil 
sent  abroad  and  sold  by  the  Standard  Oil  Company?  A.  Oh,  yes,  sir,  the 
Standard  has  had  a  very  large  business  in  Germany.  Germany  is  the 
largest  oil  market  in  the  world.  I  think  the  population  is  about  the  same 
as  France,  and  it  uses  probably  twenty  times  as  much  oil  as  does  France. 
I  think  I  am  not  far  wrong  in  that. 

Q.  Then  do  the  sales  of  the  oil  from  the  independent  refiners  reduce 
the  prices  of  the  Standard  Oil  Company's  product  there?  A.  No.  sir,  they 
sell  at  very  fair  prices  abroad  and  have  been  for  the  last  two  years.  The 
profits  are  not  excessive  and  they  are  reasonable  all  around. 

Q.  You  mean  the  Standard  alone?  A.  The  Standard  prices  and  the 
independent  prices. 

Q.  Rut  if  you  were  to  withdraw  or  were  forced  out  of  the  market?  A. 
We  think  that  prices  then  would  be  very  much  increased. 

Q.  (By  Mr.  FARQUHAR.)  Is  there  any  difference  in  the  grade  of  oil 
the  Standard  Oil  Company  and  the  independent  oil  companies  sell  in  Ger- 
many?    A.  We  think   we  sell  a  very   much  better  oil   than   they  do  for  the 


*BIack  faced  type  indicates  matter  omitted,    in   the  course   of  editing,    from    the 
ofHcial  report. 

;The    witness   referred    to   the   Derrick's  Handbook  of  Petroleum. 


J.  W.  LEE,  PRESIDENT  PURE  OIL  TRUST.  101 

reason  that  we  do  not  manufacture  any  but  Pennsylvania  oil,  while  they  do 
manufacture  and  export  some  Lima  oil  that  we  believe  is  mixed  with 
the  other.     But  that  I  do  not  speak  positively  about,  for  I  do  not  know. 

Q.  (By  Mr.  KENNEDY.)  Do  you  meet  with  much  competition  in  Ger- 
many from  the  Russian  oil  fields?  A.  The  Russian  oil  has  not  been  largely 
used  in  Germany,  because  it  does  not  climb  the  wick  as  well  as  the  Penn- 
sylvania oil,  or  American  oil.  The  Germans  have  their  own  lamps  and  they 
do  not  change  them  readily.  It  has  not  been  largely  used,  although  the 
Standard  has  been  pushing  the  introduction  of  Russian  oil.  It  is  said  it 
has  bought  a  large  amount  of  Russian  oil  and  is  trying  to  push  that  into 
the  markets  as  against  the  American  oil. 

Q.  (By  Professor  JENKS.)  The  Standard  Oil  Company  has  often 
claimed  that  it  has  had  decided  advantages  by  virtue  of  the  patents  it  has 
succeeded  in  getting  with  the  large  number  of  establishments  that  have 
come  in  with  it.  In  your  judgment,  does  it  have  any  advantage  along  that 
line?  A.  No,  sir,  I  think  their  process  of  manufacture  is  very  similar  to 
that  employed  by  the  independent  refiners. 

Q.   (By  Mr.  FARQUHAR.)     Do  you  mean  the  process  of  making  the  oil? 

Professor  JENKS.  Anything  that  is  appertaining  to  their  product; 
it  may  be  either  process  or  machinery. 

Mr.  FARQUHAR.  Suppose  you  add  "formula"  then  to  the  "patents" 
in  your  question. 

The  WITNESS:  I  do  not  believe  they  have  much  advantage  in  that 
regard,  if  any. 

Q.  Do  they  have  any  advantage,  in  your  judgment,  in  the  matter  of 
getting  fuel  cheaper  *by  virtue  of  the  large  amount  taken  by  them,  and  pos- 
sibly in  connection  with  the  railways?  A.  Yes,  sir.  I  think  that  all  large 
purchasers  have  an  undue  advantage  in  securing  fuel,  and  I  think  that  it  has, 
yes,  sir.  I  will  speak  of  that  hereafter,  to  show  that  it  has  depressed  labor. 
In  oiher  words,  when  they  want  an  amount  of  coal  they  practically  fix  the 
price  and  they  say:  "We  will  take  this  coal  if  you  will  furnish  it  at  a 
certain  price;  if  you  don't  furnish  it  at  that  price,  we  will  not  take  it." 
As  they  use  so  large  an  amount  the  coal  companies  must  furnish  it,  and 
in  order  to  get  even  they  cut  their  own  men.  That  is  the  way  the  miners 
have  been  cut  down  to  meet  the  demands  of  these  large  companies  to  get 
coal  and  other  raw  material  at  too  low  a  price.  The  companies  must  fur- 
nish it  and  in  order  to  furnish  it  they  must  cut  their  men. 

After  recess  from  1  until  2  p.  m.,  Vice-Chairman  Phillips  called  the  com- 
mission to  order. 

Vice-Chairman  PHILLIPS.  The  commission  will  please  be  in  order. 
Now,  I  will  state  again  the  three  propositions  that  Senator  Lee  is  giving 
us  information  upon;  he  has  passed  from  the  first  one,  "How  in  your 
opinion  do  the  trusts  affect  the  consumer;"  the  next  one  is,  "How  do  they 
affect  the  producer."  We  will  be  pleased  to  hear  Senator  Lee  upon  this, 
and  after  he  is  through  making  his  general  statement  upon  it,  before  we 
proceed  to  any  other,  we  will  be  pleased  to  have  any  member  of  the  com- 
mission  ask  any  question   he  may   desire. 

Representative   LIVINGSTON.      Please    read    the    first   one. 

Vice-Chairman  PHILLIPS.  "How  in  your  opinion  do  the  trusts  affect  the 
consumer."  That  we  passed  over  this  morning;  you  were  not  in  when 
we  entered  upon  that.  Colonel.  The  next  proposition  is,  "How  do  they 
affect  the  producer."  That  is  before  us  now;  and  after  the  Senator  makes 
his  statement  on  this  proposition,  then  it  will  be  open  for  questions,  and 
we  would  like  to  ask  the  gentlemen  to  make  pencil  notes  of  anything  they 
would  like  to  ask  when  he  gets  through,  and  you  will  get  a  more  concise, 
connected  statement  by  not  interrupting  while  he  is  making  his  statement 
on  this  proposition.     The  question  is:      "How  do  trusts  affect  the  producer." 

The  WITNESS.  The  reason  I  desire  to  state  why,  in  my  opinion, 
trusts  affect  the  consumer  by  making  him  pay  a  higher  price  for  the  manu- 
factured article,  is  because,  in  doing  so,  it  is  their  aim  and  object  to  get  a 
complete  monopoly  of  the  business.     When  they  have  once  got  a  complete 


*BIack  faced  type  Indicates  matter  omitted,    in   the  course   of  editing,    from    the 
official  report. 


102  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

monopoly  of  the  marketing  and  manufacture  of  a  certain  article  they  have 
the  producer  of  the  raw  material  as  absolutely  in  their  power  as  they  have 
the  consumer.  They  can  fix  for  him  whatever  price  they  please  and  compel 
him  to  take  it,  and  the  only  thing  they  do  consider  is  whether  he  will  remain 
in  the  business  and  produce  that  raw  material  for  them  at  a  given 
price,  and  they  simply  allow  the  producer  of  the  raw  material  to  get  about 
cost  out  of  it,  or  a  very  little  margin,  if  any,  of  profit.  The  price  of  crude 
oil  prior  to  the  time  the  Standard  Oil  Company  virtually  obtained  a  monopoly 
of  the  business  was  very  much  higher  than  it  has  been  at  any  time  since. 
The  price  was  as  high  (I  have  before  me  a  work  that  gives  the  prices)  in 
1869  as  $7  a  barrel;  in  1870,  $4.90;  in  1871,  $4.75;  in  1872,  $4.10— no,  higher 
than  that,  $4.55;  in  1873  (now  their  power  began  to  be  felt,  not  as  the 
Standard  Oil  Company,  but  as  members  of  the  South  Improvement  Com- 
pany) the  price  declined  until  the  highest  price  in  1873  was  $2.75,  and  the 
lowest  was  $1.05.  In  1874,  the  highest  price  was  $2.07 ^/^  and  the  lowest  was 
82%  cents  a  barrel.  In  1875  the  highest  price  was  $1.82i/^,  and  the  lowest 
price  was  97^/^  cents.  In  1876  the  highest  price  was  $4.23%,  and  the  lowest 
was  $1.98%.  In  1877  the  highest  price  was  $3.69%,  and  the  lowest  $1.96i4. 
In  1878  the  highest  price  was  $1.63%,  and  the  lowest  price  95%-  In  1879 
the  highest  price  was  $1.28%,  and  the  lowest  was  70%  cents.  In  1880  the 
highest  price  was  $1.24%  and  the  lowest  86%.  In  1881  the  highest  price  was 
$1.01^4  and  the  lowest  price  was  80%  cents  per  barrel.  In  1882  the  highest 
price  was  $1.37,  and  the  lowest  61%  cents.  In  1883  the  highest  price  was 
$1.24%,  and  the  lowest  97%  cents.  In  1884  the  highest  price  was  $1.15%. 
and  the  lowest  was  75  cents.  In  1885  the  highest  price  was  $1.12%,  and 
the  lowest  was  75%  cents.  In  1886  the  highest  price  was  91%,  and  the 
lowest  66  cents.  In  1887  the  highest  price  was  )0  cents,  and  the  lowest 
was  65%  cents.  In  1888  the  highest  price  was  $1,  and  the  lowest  price 
82%  cents.  In  1889  the  highest  price  was  $1.12 1/^  and  the  lowest  86  cents. 
In  1890  the  highest  price  was  $1.07%,  and  the  lowest  72%.  In  1891  the 
highest  price  was  81%  cents,  and  the  lowest  61%  cents.  In  1892  the  highest 
price  was  63%  cents,  and  the  lowest  53  cents.  In  1893  the  highest  price 
was  80  cents,  and  the  lowest  54%  cents.  In  1894  the  highest  price  95%, 
and  the  lowest  80%.  In  1895  the  highest  price  was  $2.60,  and  the  lowest 
$1.00%.  In  1896  the  highest  price  was  $1.50,  the  lowest  was  $1.05.  In 
1897  the  highest  price  was  96  cents,  and  the  lowest  was  65  cents.  There 
the  quotations  for  the  open  market  ceased,  because  in  January,  1895,  the 
Standard  Oil  Company  quit  paying  the  market  price  for  oil.  as  it  was  de- 
veloped upon  the  Oil  Exchange,  and  simply  hung  out  on  their  window  the 
price  they  would  pay  for  what  are  known  as  credit  balances,  or  amounts 
standing  to  the  credit  of  each  individual  producer  upon  their  books;  that 
they  would  pay  that  price  and  no  other. 

Q.  (By  Mr.  NORTH.)  What  effect  did  that  have  on  the  market?  A. 
That  enabled  them  to  fix  absolutely  whatever  price  they  saw  fit.  All  oil 
speculation,  and  the  general  trade  in  oil.  had  no  effect  on  the  prices.  They 
controlled  the  price  absolutely  by  determining  what  they  would  pay. 

Q.  (By  Vice-chairman  PHILLIPS.)  Did  that  shut  up  the  doors  of  the 
exchange  in  oil?  A.  Well,  it  almost  entirely  killed  speculation  in  oil,  and 
drove  the  brokers  in  oil  to  doing  business  in  other  lines.  You  will  observe, 
from  the  figures  that  I  have  given,  that  prior  to  the  time  the  Standard  Oil 
Company  obtained  so  large  a  control  of  the  industry,  prices  of  crude  oil 
were  very  high.  The  price  of  crude  since  the  l)eginnin2;  of  1895  has  aver- 
aged $L05  a  barrel.  *That  is  very  close  to  the  general  average  price  of  crude 
for  the  last  four  years.  I  will  not  say  that  is  within  a  fraction  of  a  cent, 
but  it  is  very  close  to  the  average.  During  the  ten  years  prior  to  that  the 
average  i)rice  of  crude  oil  was  below  80  cents,  and  that  was  entirely  an 
tinpiofitable  price.  *considering  the  entire  industry.  Men  could  not  produce 
oil  and  ret  cost  for  it,  and  maintain  their  production  generally.  While  some 
men  could,  yet  the  general  industry  could  not  do  that  at  the  price  that  pre- 
vailed for  ten  years  prior  to  1895.  So  I  say  that  the  effect  of  the  trust  upon 
the  producer  of  the  raw  material  has  been  to  compel  him  to  take  an  un- 
remunerative  price  for  his  product.  You  might  ask  why  he  did  not  sell  his 
product  elsewhere.     For  the  reason  that,  you   understand,   when  the  oil  is 


*BIack  faced  type  Indicates  matter  omitted,    in   the  course   of  editing,    from    the 
official  report. 


J.  W.  LEE,  PRESIDENT  PURE  OIL  TRUST.  103 

produced  at  the  well,  the  pipe  line  runs  to  the  well,  the  oil  is  taken  into  the 
pipe  line,  and  as  they  had  the  absolute  control  of  thd  entire  refinery  busi- 
ness, or  almost  so,  they  were  able  to  fix  the  price  at  \.hich  they  would  take 
that  oil.  There  were  no  outside  purchasers  of  that  oU.  If  they  purchased 
it  they  would  have  no  place  to  put  it. 

Q.  (By  Representative  LIVINGSTON.)  The  pipes  ^aid  to  the  wells  were 
connected  also  with  the  refineries  of  the  Standard  Oil  Company?     A.  Yes,  sir. 

Q.  And  you  had  no  other  connections?  A.  They  Jiad  no  other  connec- 
tions. There  were  some  few  independent  I'efiners,  but  they  bought  all  their 
crude  from  the  Standard  Oil  Company  and  paid  them  twenty  cents  local 
pipage  rate,  *and  they  were  the  only  individual  purchasers  who  purchased 
it  at  the  well   and   ran   it  into  the   line. 

Q.  Prior  to  1895,  for  ten  years,  you  say  the  oil  averaged  about  eighty 
cents?     A.  Less  than  eighty  cents. 

Q.  And  since  then  $1.05?     A.  And  since  then  $1.05. 

Q.  What  had  over  production,  or  under  consumption,  to  do  with  those 
prices  during  that  period?     A.  Nothing. 

*Q.  No  over  production?  A.  No,  sir;  there  was  a  time  when  there  was 
an  over  production.  In  1881  the  Bradford  field  was  opened  with  a  very 
large  production.  It  averaged  in  the  year  1881  very  close  to  81,000  barrels 
a  day  in  McKean  County,  Pa.,  known  as  the  Bradford  field.  That  created 
quite  a  heavy  stock  of  oil  until  in  August,  1884,  there  wfere  39,000,000  barrels 
of  oil  in  stock. 

Q.  That  must  have  depressed  the  price?  A.  No,  sir,  the  price  of  oil 
was  higher  in  1884,  as  you  will  see  by  the  tables,  than  it  was  subsequently 
when  the  stock  was  reduced  one-half.  Take  the  yeai  1884,  and  average 
it  with  the  year  1887. 

Q.  The  year  1880  it  was  $1.24,  and  in  1884  it  was  $1.12,  was  it  not?  A. 
*Well,  $1.24  in  1880  was  the  highest,  and  86%  cents  was  the  lowest;  an 
average  between  these  two  would  put  it  fully  at  $1  in  1880.  In  1884  the 
highest  price  was  $1.15%,  and  the  lowest  75  cents;  there  was  as  high  average 
in  1884  as  there  was  in  1880.  The  production  was  noc  as  great  in  1887 
as  it  was  in  1884. 

Q.  But  yet  the  price  was  lower?  A.  The  average  price  in  1887  was  66 
cents  a  barrel.  I  think  the  stock  then  was  31,000.000  barrels,  and  it  had 
been  39,000.000  in  1884,  and  the  production  was,  I  thinK,  about  the  same 
in  1887,  as  it  was  in  1884.     I  can  tell  in  a  minute  by  looKlng  at  it. 

Q.  (By  Professor  JENKS.)  Was  there  not  an  efforc  made  to  restrict 
the  production  about  that  time  when  the  Producers'  Protective  Association 
was  formed?  A.  There  was  an  effort  made  to  accomplish  a  lessening  of  the 
production  by  the  producers  in  conjunction  with  the  Standard  Oil  Company 
in  1887,  the  producers  purchasing  from  the  Standard  Oil  Company  6,000,000 
barrels  of  oil  at  a  fixed  price  of  62  cents,  which  was  then  the  current  price, 
and  shutting  in  their  production  to  the  amount  of  17,500  barrels  a  day. 
The  men  all  signed  the  contract. 

Q.  (By  Vice-chairman  PHILLIPS.)  Reducing  it  that  much?  A.  Yes, 
sir,   that  was   done. 

Q.  (By  Representative  LIVINGSTON.)  I  would  like  tt  bring  your  at- 
tention to  the  production  of  1870 — $4.90  a  barrel.  In  1890  you  got  $1.07, 
highest,  and  72  cents,  lowest.  What  had  entered  into  the  cost  of  production 
and  transportation,  or  what  was  it  that  enabled  the  producers  of  that  oil  to 
live  at  $1.07  in  1890,  when  in  1870  they  got  $4.90,  almost  $4  difference  on  a 
barrel?  Was  the  cost  of  producing  it  so  lessened  that  they  could  live,  or 
what  was  it?     A.  In  1870  producers  of  oil  made  very  large  money. 

*Q.  Had  a  monopoly  of  the  business?  A.  They  had  entirely  a  competitive 
market.  People  would  come  into  the  field  and  seek  the  producer  and  buy 
oil  directly  from  him  and  pay  him.  Some  days  it  would  go  up  half  a 
dollar  a  barrel  when  there  was  competition.  In  fact,  many  of  the  people 
were  getting  it  for  the  purpose  of  sending  it  to  independent  refiners,  and 
they  would  ride  up  Oil  Creek  and  meet  a  producer  and  say:  "How  much 
oil  have  you?"     "Well.  I  have  a  thousand  barrels."     "We  will  give  you  $4 


♦Black  faced  type  indicates  matter  omitted,    In   tlie  course   of  editing,    from    the 
official  report. 


104  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

for  all  of  them."  They  would  make  the  contract  right  under  a  tree  or  some- 
where, and  there  was  a  general  open  competition  for  the  oil  that  made 
that  price. 

Q.  Has  there  been  a  very  great  lessening  in  the  cost  of  production 
since  then?  A.  Yes,  sir,  they  are  drilling  wells  now  at  a  very  much  less 
cost  than  they  drilled  them  in  1870. 

y.  'Ihe  pipe  system  reduces  the  cost  of  transportation?  A.  No,  sir, 
the  cost  of  transporiation  has  not  lessened. 

Q.  I  mean  from  the  line  out.  A.  Thf  line  runs  to  the  well.  The  price 
of  local  transportation  has  never  been  changed  since  the  Standard  Oil 
Company  introduced  their  lines.  At  the  fme  they  laid  their  lines,  pipe  was 
worth  about  thirty-five  *to  forty  cents  a  foot.  Last  year  it  was  worth  about 
six  cents  a  foot.  They  charged  twenty  c-nts  then,  and  they  charge  twenty 
cents  now.  They  charge  the  same  price  There  has  never  been  any  de- 
crease in  the  cost  to  the  producer,  or  to  any  one  who  desires  to  have  oil 
transported    by    local   pipe    lines. 

Q.  What  is  the  surplus  in  barrels  curried  over  now?  A.  The  surplus 
in  round  numbers,  is  a  little  over  11,000,000  barrels  in  Pennsylvania  oil, 
and  about  14,000,000  in  Lima  oil.  A  while  ago  Lima  oil  had  about  22,000,000 
barrels  surplus.  Pennsylvania  has  incr  ;ased  her  surplus  about  2,000,000 
barrels  in  the  last  year. 

Q.  Then  the  market  is  not  glutted  with  oil?  A.  No,  sir;  the  stock  of 
oil  now  is  not  more  than  should  be  carried  for  safety.     It  is  not  so  great. 

*Q.  (By  Vice-chairman  PHILLIPS.)  Have  you  finished  all  that  you  de- 
sire  to  say  on  the  "Effect  on  the  Producer?"  A.  I  want  to  say  one  thing  in 
regard  to  the  producers.  I  have  been  intimately  acquainted  with  them  since 
I  was  a  boy.  I  have  lived  among  them,  they  have  been  my  clients,  I  have 
been  familiar  with  their  business,  and  I  have  never  known  a  more  energetic, 
able  and  determined  lot  of  men  than  the  producers  of  petroleum;  and  yet, 
as  a  body,  they  have  not  grown  rich,  but  are  poor.  There  are  some  instances 
of  producers  becoming  wealthy,  and  many  of  them  do.  They  were  engaged 
in  speculative  business  in  which  there  are  always  chances  of  certain  per- 
sons becoming  rich.  I  believe  that  the  great  body  of  producers  have 
put  money  into  the  industry  rather  than  taken  it  out. 

Q.  (By  Representative  LIVINGSTON.)  What  was  the  total  product 
of  the  wells  in  1870  and  the  total  product  in  1890?  A.  The  production  of 
Pennsylvania  oil  in  1890  was  about  35,000,000  barrels.  The  production,  I 
think,  in  1870,  was  not  over  5,000,000;  that  is  from  recollection.  .1  may  be  a 
little  away  from  the  exact  fact,  but  not  far.  I  was  putting  the  production 
at  90.000  barrels  a  day  in  1890.  I  think  it  was  90,000  barrels  a  day  in  1890. 
In  1891  it  ran  up  to  an  average  of  over  100,000  barrels  a  day  by  the  discovery 
of  the  McDonald  field — a  very  prolific  field. 

Q.  I  want  to  get  a  basis  for  an  opinion  as  to  what  produced  this  rapid 
decline  from  1870  to  1890.     A.  It  was  entirely  arbitrary. 

*Q.  Was  there  not  a  difference  of  30,000.000  barrels  in  the  production? 
A.    But  there  was  so  much  wider  market  for  it. 

Q.  Has  the  consumption  increased  in  proportion  to  the  increase  in  the 
production?     A.  I  think  the  consumption  has  kept  pace  with  the  production. 

Q.  Is  there  any  way  of  showing  that?  A.  The  export  tables  will  show 
that  that  is  true  as  to  export  oil,  and  I  think  it  is  certainly  true  as  to  home 
consumption. 

Q.  (By  Mr.  FARQUHAR.)  How  do  you  account  for  the  abnormal  prices 
in  1876  and  1877?  A.  There  was  an  open  competitive  market  and  the  Stand- 
ard Oil  Company  was  not  really  a  factor  in  it  yet,  and  those  prices  were 
the  effect  of  speculation  in  the  open  exchanges.  *The  certificates  were  sold 
on  the  open  market,  1,000  barrels  each,  and  they  were  taken  up  by  people 
who  thought  the  oil   was  cheap  and   invested   in    it  and   held    it. 

Q.  You  mean  to  say  those  prices  were  entirely  speculative  prices,  and 
not  the  product  prices?  A.  They  were  the  real  prices  when  people  bought 
the  oil  for  those  prices  for  manufacturing  as  well. 


*Black  faced  type  Indicates  matter  omilied,    hi   the  course   of  editing,    from    the 
official  report. 


J.  W.  LEE,  PRESIDENT  PURE  OIL  TRUST.  105 

Q.  (By  Vice-chairman  PHILLIPS.)  Did  not  the  discovery  of  fourth 
sand  oil  under  the  third  sand  deposit,  have  something  to  do  with  lowering  the 
prices  very  materially  in  1873,  and  about  that  time?  Was  this,  or  was  it  not, 
somewhat  of  a  reaction  from  that  large  output  of  oil  from  that  new  dis- 
covery? A.  I  think  the  discovery  of  Butler  County,  a  new  and  a  very 
prolific  field  of  oil,  had  something  to  do  with  lowering  the  prices  in  1873, 
1874  and  1875,  and  this  was  a  reaction  from  that.  Oil,  in  my  recollection, 
went  as  low  as  forty-six  cents  in  1873  or  1874. 

Q.  (By  Vice-chairman  PHILLIPS.)  I  have  known  it  to  be  sold  at  forty 
cents.     A.  Yes,  sir. 

Q.  (By  Representative  LIVINGSTON.)  You  stated  a  minute  ago  in 
your  opening  remarks,  that  the  refiners  fixed  the  price  of  the  raw  material? 
A.  Yes,  sir. 

Q.  Isn't  that  true  of  all  manufactures?  Take  glass,  or  cotton,  or  hemp, 
or  anything  you  please,  and  the  manufacturer  of  the  raw  material,  in  its 
last  analysis,  controls  the  price  of  the  raw  product  just  as  these  refiners 
control  the  price  of  the  oil  in  its  crude  state?  A.  But  if  there  are  a  great 
many  persons  interested  in  the  manufacture,  there  is  competition  between 
them  and  that  fixes  the  price. 

Q.  Provided  there  is  no  combination  there?  A.  Yes,  sir,  but  where 
there  is  a  combination,  then  it  is  fixed  arbitrarily  by  one  person,  and  there 
is  no  competition.  There  is  nothing  to  raise  the  price;  the  combination 
simply  fixes  the  price  and  the  producers  must  take  it. 

Q.  If  these  producers  could  refine  their  own  oil,  what  would  be  the 
result?  A.  Then  they  would  have  to  meet  the  Standard  Oil  Company  in 
the  refining  market. 

Q.  Would  the  Standard  Oil  Company  have  to  go  out  of  existence  if  the 
producers  should  refine  their  own  oil?  A.  If  they  should  refine  it  all,  cer- 
tainly,  but  the   Standard   Oil  Company  also  produces   oil. 

Q.  (By  Mr.  NORTH.)  To  a  considerable  extent?  A.  Yes,  sir,  I  would 
say  they  produce  about  twenty-three  or  twenty-five  per  cent  of  the  entire 
production. 

Q.  (By  Representative  LIVINGSTON.)  How  many  Independent  wells 
or  producers  are  there?  A.  I  think  there  are  over  60,000  wells  in  existence — 
50,000  or  GO, 000 — and  over  one-half  the  production  is  owned  by  men  who  own 
less  than  ten  barrels  a  day  apiece,  so  you  can  see  the  extent  of  the  inde- 
pendent production. 

Q.  Is  there  no  way  for  those  independent  producers  to  refine  their  own 
oil?  A.  They  are  attempting  to  do  that  in  the  company  that  I  represent; 
attempting  to  transport  it.  and  through  the  independent  refineries  to  refine 
it.  The  stock  of  the  Producers'  Oil  Company,  Limited,  the  Producers  and 
Refiners'  Oil  Company,  Limited,  the  Pure  Oil  Company  and  the  United  States 
Pipe  Line  is  owned  chiefiy  by  independent  producers. 

*Vice-Chairman  PHILLIPS.  I  will  say  to  Colonel  Livingston  that  that 
ground  was  pretty  well  covered  in  the  morning,  early  in  the  day,  with  regard 
to   the   independent   efforts. 

Representative  LIVINGSTON.  Excuse  me,  I  did  not  know  that  you 
did  anything  on  the  part  of  the  independent  miners  to  refine  their  own  oil. 

Vice-Chairman  PHILLIPS.  Yes,  sir,  they  are  doing  that  now;  they  are 
attempting  to   do   it. 

Q.  (By  Mr.  KENNEDY.)  It  seems  to  me  this  independent  question  is 
becoming  a  little  mixed.  When  you  say  "independent  producers  of  oil,"  do 
you  include  these  individual  companies?  A.  I  include  all  companies  that 
are  not  under  the  control  of  the  Standard  Oil  Company. 

Q.  Then  you  say  the  Standard  Oil  Company  produces  only  about  twenty- 
five  per  cent  of  the  oil  that  is  produced?  A.  Twenty-three  to  twenty-five 
per  cent. 

Q.  That  is,  these  independent  producers  produce  fifty  per  cent  of  the 
oil?     A.  Probably  seventy-five. 


*Black  faced  type  indicates  matter  omitted,    in   tiie  course   of  editing,    from    ihe 
ofRcial  report. 


106  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

Q.  (By  Mr.  FARQUHAR.)  In  what  form  were  your  first  exports  to 
Europe?  Was  it  refined  petroleum  or  crude?  A.  They  exported  both  re- 
fined and  crude  to  Europe. 

Q.  In  what  year  was  oil  exported  first?  A.  I  think  they  exported  oil  to 
Europe  as  early  as  1870.     Probably  prior  to  that. 

Q.  What  effect  does  this  export  trade  in  oil  have  on  the  home  market? 
A.  It  gives  a  market  for  just  the  quality  of  oil  that  they  use  abroad  and  to 
that  extent  widens  the   market. 

Q.  (By  Mr.  NORTH.)  Do  you  get  a  drawback  on  tin  plate  used  in  the 
independent  refineries?  A.  We  do  not  use  any.  We  have  never  transported 
any  oil  in  cans. 

Q.  Is  oil  transported  in  cans  by  the  Standard  Oil  Company?  A.  To 
some  extent,  but  I  think  they  are  largely  supplying  their  eastern  trade  now 
from  Russia  and  making  their  tin  cans  *abroad. 

Q.  The  drawback  has  at  one  time  been  a  large  source  of  revenue  to 
them?  A.  It  has  enabled  them  to  manufacture  all  the  cans  here  and  get  a- 
drawback  on  the  tin  they  use  in  the  manufacture. 

Q.  (By  Mr.  FARQUHAR.)  Suppose  you  were  in  a  measure  restricted 
to  prices  that  you  would  not  call  living  prices,  would  you  not  have  the  export 
market  in  Europe,  that  as  you  claim  has  equality  in  prices,  even  if  the  whole 
American  product  was  put  into  that  market  against  the  Standard  Oil  Com- 
pany? A.  You  could  not  live  if  you  had  to  sell  sixty  per  cent  of  your 
product  at  a  loss,  and  get  some  profit  on  the  other  forty  per  cent.  You 
might  do  it  until  you  had  wasted  your  capital  but  that  would  not  take  a 
great  while. 

Q.  So  that  both  the  producer  and  refiner  must  be  just  as  dependent 
upon  the  home  market  as  on  the  European?  A.  I  think  the  foreign  markets 
do  help  the  independent  interests  to  maintain  their  foothold,  and  the  Stand- 
ard Oil  Company  seems  to  have  gi-eater  facilities  in  crowding  out  the  inde- 
pendents in  America  than  it  has  abroad. 

Q.  Does  this  foreign  market  tend  to  maintain  .the  domestic  price?  A. 
I  think  it  does. 

Q.  Does  not  this  foreign  consumption,  which  seems  to  be  enlarging 
all  the  time,  minimize  the  idea  of  a  monopoly  by  the  Standard  Oil  Company 
which  only  produces  twenty-five  per  cent  of  the  whole  product  of  America? 
A.  While  they  only  produce  twenty-five  per  cent  of  the  oil,  they  virtually 
control  absolutely  another  fifty  per  cent,  because  they  fix  the  price  of  that 
additional  fifty  per  cent,  and  therefore  I  do  not  think  that  the  foreign  mar- 
ket does  minimize  the  danger  from  the  Standard  getting  a  monopoly. 

Q.  You  wish  to  state  unequivocally  that  the  producers  of  this  country 
do  not  receive  a  fair  price  for  their  product?  A.  They  certainly  do  not;  I 
do  not  think  that  the  counties  which  have  produced  oil  are  as  well  ott  as 
they  would  have  been  if  they  had  never  produced  a  barrel  of  oil,  and  yet 
they  have  already  taken  out  of  these  counties  in  the  neighborhood  of 
800,000,000  barrels  of  oil. 

Q.  (By  Mr.  KENNEDY.)  At  an  average  cost  of  what?  A.  I  think 
they  have  determined  that  the  average  cost  has  been  about  $1  and  for  ten 
years  they  got  very  much  less  than  that. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Perhaps  you  might  explain  to  the 
commission  why  the  production  could  keep  up  under  those  circumstances — 
*about  the  difference  in  the  flow  of  the  wells  and  the  richness  of  some  of 
the  fields — why  some  could  live  and  others  could  not?  A.  The  reason  they 
could  at  all  keep  up  the  production  was  because  it  is  a  speculative  business; 
one  man  may  go  in  and  drill  a  well,  and  he  may  get  a  thousand-barrel  well 
and  get  rich.  The  result  of  that  incentive  was  that  a  great  deal  of  money 
came  in  and  they  kept  drilling  for  these  wells  and  made  a  large  loss  as  they 
did  not  find  them.  There  was  more  money  put  into  the  business  in  10  years 
than  was  taken  out  of  it,  *but  there  was  always  that  incentive  that  some  one 
would  strike  these  wells.  There  was  the  prospect  of  large  returns;  it  was 
like  a  lottery  in  that  regard.  If  honestly  conducted,  some  one  drew  a  prize, 
while  the  others  did  not.  That  enabled  them  to  keep  on  and  then  these  large 


♦Black  faced  type  indicates  matter  omitted,    In   the  course    of   oditing,    from    tlie 
offlcial   report. 


J.  W.  LEE,  PRESIDENT  PURE  OIL  TRUST.  107 

fields  were  struck,  and  in  such  as  the  McDonald  field  some  people  made 
money  even  though  the  price  was  very  low.  They  had  wells  that  produced 
as  high  as  15.000  barrels  a  day,  and  of  course  a  man  who  had  a  well  of  that 
kind  would  make  a  large  amount  of  money. 

Q.  (By  Professor  JENKS.)  I  want  to  see  if  we  can  have  made  clear  the 
causes  for  three  or  four  of  the  most  important  fluctuations.  I  understood 
you  to  say  that  the  South  Improvement  Company  was  formed  in  1872,  and 
that  within  the  next  two  years  there  was  a  great  fall  in  prices.  What  influ- 
ence did  the  South  Improvement  Company  have  in  the  way  of  forcing  these 
prices  down,  if  any?  A.  I  think  it  had  the  effect  of  forcing  the  prices  down 
because  they  had  a  combination  with  the  railroads  to  control  transportation 
to  a  very  great  extent,  and  the  producers  became  frightened  and  would  sell 
their  oil  and  get  rid  of  it,  and  in  1873  was  also  the  panic  year.  You  remem- 
ber the  panic  had  some  effect  on  prices.  *The  man  who  owed  debts  for  drill- 
ing and  had  to  pay  up  had  to  sacrifice  his  oil  and,  to  get  out,  threw  the  oil  on 
the  market. 

Q.  *Did  any  new  discoveries  have  anything  to  do  with  it  at  that  time? 
A.  At  that  time  also  there  was  a  new  discovery  in  Butler  county,  which 
looked  as  if  they  had  a  very  prolific  and  large  field,  which  they  had. 

Q.  Those  two  factors  worked  together?    A.  Yes,  sir. 

Q.  Then,  in  1876  and  1877  there  was  a  decided  increase  in  the  price;  you 
said  you  thought  that  was  partly  due  to  speculation?  A.  Partly  due  to  spec- 
ulation, and  partly  to  the  fact  that  the  Butler  oil  field  had  been  largely 
drilled  out.  *and  they  could  not  find  such  prolific  wells,  and  the  Bradford 
had  not  yet  been  opened. 

Q.  Then  in  the  year  1883  there  was  quite  a  decided  rise.  Do  you  remem- 
ber about  that?  A.  There  was  quite  a  decided  rise,  yet  it  was  limited.  I 
think  the  highest  price  was  $1.24%. 

Q.  It  was  not  so  high  as  it  had  been  before?  A.  Oh,  no,  sir;  it  was  not 
so  high. 

Q.  (By  Mr.  FARQUHAR.)  $1.2434  in  1883?  A.  Yes,  sir,  $1,243^;  what 
time  was  that  in  the  year? 

Q.  (By  Professor  JENKS.)  I  don't  know;  it  was  the  average  for  the 
year  that  you  gave. 

O.  (By  Mr.  FARQUHAR.)  A  fluctuation  of  27  cents.  A.  That  was 
largely  due  to  the  giving  out  of  a  field  known  as  the  Cherry  Grove  field.  It 
had  come  in  in  July.  1882,  and  the  wells  were  very  large,  but  they  did  not 
last  a  great  while,  and  in  the  fall  of  1882  they  commenced  to  decline  and  the 
price  went  up  on  account  of  that  decline. 

Q.  (By  Vice-chairman  PHILLIPS.)  Did  or  did  not  the  Bradford  decline 
about  the  same  time?  A.  *Very  materially;  a  great  many  people  thought 
the  Bradford  was  going  to  quit.  *and  sold  their  property  in  Bradford  and 
went  into  the  Cherry  Grove  field.  1  think  that  was  owing  to  the  decline  of 
the  Cherry  Grove  field  and  also  probably  to  the  decline  in  the  Bradford  field. 

Q.  (By  Vice-chairman  PHILLIPS.)  In  the  years  1888,  1889  and  1890 
there  was  quite  a  decided  rise  again.  I  understand  that  that  came  very 
.largely  from  the  limitation  of  the  production  by  the  Standard  and  the  inde- 
pendents coming  together?  A.  My  recollection  is  that  the  stock  of  oil  was 
reduced  from  31.000.000  of  barrels  in  August,  1887,  to  about  nine  or  ten  mil- 
lions in  1889.  That,  of  course,  would  account  for  that  rise,  although  it  ought 
to  have  s'one  very  much  higher. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Now,  there  was  another  decided 
increase  in  1895. 

Q.  *(By  Mr.  FARQUHAR.)  Take  that  low  price  of  1892.  A.  Yes.  sir; 
in  1892  there  was  quite  a  low  price.  The  McDonald  field  came  in  and  the 
production  of  that  field  was  as  high  as  81,000  barrels  a  day  at  one  time  in 
1891,  and  that  caused  quite  a  reduction  in  price.  That  was  a  natural  reduc- 
tion. 

O.  (By  Professor  JENKS.)  Then  in  1894  the  prices  were  953^  cents 
highest,  and  80%  cents  lowest,  and  in  1895  it  went  up  to  $2.60.  That  was  a 
tremendous  rise.     A.  That  was  entirely  arbitrary.     The  Standard  advanced 


*Black  faced  type  indicates  matter  omitted,    in   the  course   of  editing,    from    the 
ofHcial  report. 


108  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

the  price  25  cents  a  day  for  a  period  of  about  seven  days,  running  the  market 
from  $1.12  to  $2.60. 

Q.  Was  that  helpful — that  arbitrary  rise?  A.  It  helped  the  producers 
who  had  oil  on  hand  to  sell.    *l  don't  think  that  was  the  object. 

Q.  But  still  in  the  succeeding  year  it  only  went  down  to  $1.50.  A.  It 
went  lower  than  that. 

Q.  $1.50  was  the  highest  and  $1.05  the  lowest.     A.  That  is  right. 

Q.  (By  Mr.  NORTH.)  Are  we  to  infer  from  your  testimony  that  the 
Standard  Oil  Company  arbitrarily  fixed  the  price  of  the  crude  oil  at  a  figure 
which  it  knew  to  be  below  the  cost  of  production  at  a  profit?  A.  Certainly, 
that  is  undoubtedly  true,  for  in  1887  they  maintained  the  price  of  65  cents 
for  months  when  everybody  knows  that  it  could  not  be  produced  for  that. 
That  is  away  below  the  cost  of  production.     *l  say  that  unhesitatingly. 

Q.  (By  Vice-chairman  PHILLIPS.)  That  is  as  a  whole?  A.  Yes,  sir; 
as  a  whole  it  could  not  be  produced  for  that. 

Q.  (By  Mr.  NORTH.)  Will  you  state  to  the  commission  your  judgment 
as  to  the  cost  of  the  production  at  the  present  time?  A.  It  will  be  an  opin- 
ion, of  course.  I  think  that  it  could  be  produced  now,  and  the  amount  of 
production  probably  maintained,  anywhere  from  $1  to  $1.20  per  barrel,  but 
without  much  profit. 

Q.  The  cost  varying  according  to  local  conditions?    A.  Yes,  sir. 

Q.  (By  Representative  OTJEN.)  And  the  flow  of  the  well?  A.  Yes,  sir; 
over  one-half  of  the  wells  now  being  operated  produce  less  than  half  a  barrel 
of  oil  a  day. 

Q.  *(By  Mr.  NORTH.)  Is  that  possible?  A.  Yes,  sir;  over  25,000  we'.ls 
being  operated  to-day  produce  less  than  half  a  barrel  of  oil  a  day. 

Q.  *(By  Mr.  FARQUHAR.)  That  does  not  include  all  abandoned  wells? 
A.   No,  sir;   that  just  includes  the  wells  they  are  working  every  day. 

Q.  (By  Mr.  NORTH.)  Are  not  all  these  wells  producing  at  a  loss?  A. 
No,  sir;  in  some  fields  where  they  couple  them  up  in  shallow  territory,  one 
man  will  pump  .30  or  40  wells,  and  there  is  some  little  profit  at  the  present 
price  of  oil,  but  very  little.  In  some  cases  they  operate  them  at  a  loss.  Some 
men  keep  accurate  statements  of  the  different  productions  and  I  have  looked 
at  these,  and  men  have  shown  me  that  they  were  operating  certain  wells  at 
a  loss.  I  asked  why  they  continued  to  do  so,  and  they  said  in  the  hope  that 
the  prices  would  advance,  so  that  the  wells  might  become  profitable. 

Q.  (By  Professor  JENKS.)  The  prices  that  you  gave  are  prices  at  the 
wells  and  not  at  the  refinery?    A.  At  the  wells,  of  course. 

Q.  You  said  the  price  of  piping  is  still  20  cents?  A.  Yes,  sir;  local 
pipage. 

Q.  Could  you  give  any  estimate  as  to  what  you  think  the  cost  of  pipage 
is.  now  that  the  pipe  is  so  low?  How  would  you  estimate  it?  A.  I  think  the 
cost  of  pipage  would  be  between  seven  and  eight  cents  a  barrel. 

*Q.  That  includes  interest  on  the  capital  invested?  A.  No,  sir;  that 
would  simply  be  the  cost  of  pipage;  all  of  the  entire  cost. 

Q.    (By   Mr.    FARQUHAR.)      That  does   not  carry  fixed   charges,   does    it? 

Professor  JENKS.     No,  sir;   no  fixed  charges. 

Mr.  FARQUHAR.     That  is  what  I  want  to  get  at. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Senator  Lee  has  referred  several 
times  to  what  was  called  the  "shut-in"  movement,  or  limiting  production,  in 
the  oil  country,  and  it  may  be  of  interest  to  this  commission  if  he  would 
state  what  led  up  to  that  "shut-in"  movement  and  what  action,  if  any.  was 
taken  in  regard  to  the  labor  employed  throughout  the  oil  fields  at  that  time. 
A.  I  will  do  that  briefly.  The  price  all  producers  and  the  Standard  Oil  Com- 
pany realized  on  oil  was  below  the  cost  of  production  during  the  year  18S7. 
The  average  price  of  that  year  was  about  66  cents  a  barrel.  The  Standard 
Oil  Company  said  they  wanted  to  treat  the  producers  fairly,  but  they  said 
they  had  an  excessive  stock  of  oil  on  hand,  that  it  was  deteriorating  in  value 
and  becoming  worthless,  and  that  in  order  to  have  a  better  price  the  produc- 
tion must  be  decreased,  so  that  they  could  use  up  that  stock  of  oil  and  take 
it  off  the  market  and  save  loss  upon  it  by  wastage.    A  number  of  the  leading 


*Black  faced  type  indicates  matter  omitted,    in    the   coiir.'-e    of   editing,    from    the 
ofRcial  report. 


J.  W.  LEE,  PRESIDENT  PURE  OIL  TRUST.  109 

producers  met  a  number  of  the  Standard  people  at  Niagara  Falls  and  after 
discussing  the  subject  the  producers  agreed  to  limit  their  production  in  order 
to  have  that  excessive  stock  of  oil  manufactured,  which  at  that  time  was 
31,000,000  barrels.  I  met  with  them  and  I  drew  the  contract  by  which  the 
producers  purchased  from  the  Standard  Oil  Company  6,000,000  barrels  of  oil 
to  compensate  them  and  the  labor  which  they  employed,  for  limiting  this 
production;  because  it  would  cut  off  their  revenue  and  the  revenue  of  the 
men  who  were  engaged  in  that  industry.  Mr.  Phillips,  who  was  in  that 
movement,  insisted  that  they  should  set  aside  2,000,000  barrels  of  oil  to 
compensate  the  laboring  men  engaged  in  the  industry,  who  would  be  thrown 
out  of  employment  by  cutting  off  the  drilling  of  the  wells. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Was  it,  or  not,  the  executive  board 
of  the  Producers'  Protective  Association  that  took  that  action?  A.  Yes,  sir; 
the  executive  board  of  the  Producers'  Protective  Association  took  that  action, 
and  the  reason  for  doing  it  is  well  expressed  in  the  preamble  to  this  contract, 
it  is  on  page  09  of  that  same  book  (the  report  of  the  Committee  on  Manu- 
factures of  1888),  (reading): 

"Whereas,  There  has  accumulated  in  the  past  years  an  excessive  stock 
of  crude  petroleum,  which  is  deteriorating  in  quality,  and  a  portion  of  which 
each  year  becomes  sediment,  valueless  for  any  purpose,  and  the  carrying  of 
which  excessive  stock  requires  the  expenditure  of  vast  sums  annually;  and 
whereas,  in  consequence  of  the  existence  of  said  stock,  the  price  of  crude 
petroleum  has  for  the  past  year  been  largely  below  the  cost  at  which  the 
same  was  produced;  now,  in  order,  as  far  as  possible,  to  preserve  the  said 
stock  from  further  waste,  and  to  conserve  the  public  interest  and  our  own, 
this  agreement  witnesseth:" 

And  the  producers  agreed  to  reduce  their  production  17,500  barrels  a 
day  and  to  purchase  6,000.000  barrels  of  oil  from  the  Standard  Oil  Company 
at  62  cents.  They  were  to  give  the  profit  of  2,000,000  barrels  of  that  to  the 
well  drillers  and  pumpers  who  would  be  thrown  out  of  employment,  and  to 
keep  the  profit  on  4.000,000  barrels  of  oil  so  sold  separately,  and  the  laboring 
men  actually  realized  about  $.50,000  more  profit  out  of  their  2,000.000  than 
the  producers  did  out  of  their  4,000,000. 

Q.  (By  Vice-Chairman  PHILLIPS.)  How  was  that  money  distributed? 
A.  It  was  distributed  through  their  organization,  the  Well  Drillers'  Union. 
They  were  allowed  $1  a  day  for  the  time  they  were  out  of  employment  by 
reason  of  this  movement. 

Q.  (By  Professor  JENKS.)  The  Standard  Oil  Company  was  itself  in 
this  movement?  A.  The  Standard  Oil  Company  put  up  a  million  barrels  and 
the  independent  producers  put  up  a  million  to  be  distributed  among  the 
laborers. 

*Q.  (By  Vice-chairman  PHILLIPS.)  They  joined  equally  in  that  move- 
ment?    A.  They  did. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Have  you  anything  further  to  say 
in  regard  to  production?  A.  No.  I  have  not.  I  believe  if  there  had  been  50 
concerns  engaged  in  the  manufacture  of  petroleum  just  as  wide  markets 
would  have  been  obtained  for  the  article,  and  while  the  consumer  might  not 
have  paid  any  more  for  his  oil.  the  producers  would  have  realized  a  much 
better  price  and  have  had  a  handsome  profit,  which  I  think  they  have  not 
realized. 

Q.  (By  Representative  LIVINGSTON.)  Where  is  the  balance  of  that 
money  now?  A.  I  think  the  Standard  Oil  Company  can  explain  that.  I 
think  they  have  realized  in  the  neighborhood  of  $500,000,000  in  profits,  or 
more. 

Q.  (By  Professor  JENKS.)  Will  you  explain  to  us  briefly  the  nature  of 
the  pipe  line  certificate?  What  use  the  producers  can  make  of  them  in 
securing  ready  market?  A.  The  oil  is  gauged  by  gangers  who  run  it  into 
the  line  for  the  oil  company.  The  producer  is  given  a  ticket  showing  the 
amount  of  oil  that  is  run  into  the  line  that  day,  and  that  is  telegraphed  to 
the  pipe  line  office.  They  keep  books  showing  the  amount  of  oil  due  each 
producer,  and  any  day  a  man  can  walk  into  the  pipe  line  office  and  sell  what- 


*Black  faced  type  indicates  matter  omitted,    In   the  course   of  editing,    from    the 
official  r<?port. 


110  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

ever  amount  of  oil  stands  on  the  books  to  his  credit  at  the  price  that  the 
pipe  line  company  fixes.  If  he  desires,  when  he  gets  a  thousand  barrels  he 
can  take  out  a  certificate  showing  that  he  is  entitled  to  1,000  barrels  of  crude 
oil  from  such  and  such  a  line. 

Q.  (By  Mr.  NORTH.)  That  certificate  is  negotiable?  A.  That  certifi- 
cate is  negotiable  and  it  can  be  sold  on  the  open  exchange. 

Q.  (By  Professor  JENKS.)  Then  that  practically  allows  each  producer 
every  day  to  receive  cash  for  what  he  has  put  in?  A.  Certainly,  and  if  he 
has  put  any  in  he  can  get  it  at  any  minute.  That  is  true  of  all  pipe  lines. 
They  must  buy  whatever  is  offered  to  them  on  any  given  day;  not  by  law, 
but  as  a  custom  of  the  business. 

Q.  (By  Mr.  KENNEDY.)  Have  the  independent  companies  followed  the 
Standard  Oil  Company  into  all  foreign  markets?  A.  No,  sir;  only  in  a  very 
little  way.  The  independents  have  not  sold  oil  to  any  extent  in  India,  China, 
South  America  or  Africa. 

Q.  The  Standard  Oil  Company  has  worked  up  the  markets  in  all  those 
countries,  has  it  not?  A.  They  have  sold  and  do  sell  oil  in  all  those  coun- 
tries; yes,  sir.  That  is  so  far  away  from  home  that,  with  a  limited  amount 
of  oil,  it  would  be  unsafe  to  enter  into  competition  with  them  there. 

Q.  (By  Mr.  FARQUHAR.)  Do  you  care  to  say  anything  about  the  New 
York  Oil  Exchange  influence?  A.  No,  sir;  I  guess  not.  When  the  exchanges 
did  business,  Oil  City  always  fixed  the  prices. 

Q.  (By  Vice-chairman  PHILLIPS.)  What  has  been  the  effect,  if  any, 
upon  the  producers  and  production  of  oil  by  the  Standard  entering  into 
the  producing  field  in  recent  years?    A.  What  effect  upon  production? 

Q.  (By  Vice-Chairman  PHILLIPS.)  Upon  producers  and  production.  A.  I 
think  it  has  tended  to  reduce  the  prices  of  crude  because  they  were  very 
able  competitors,  and,  by  means  of  their  money,  they  could  go  into  very 
difficult  fields  to  drill,  and  drill  very  big  wells,  and  keep  the  production  high. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Have  they,  or  have  they  not, 
monopolized  a  large  amount  of  prospective  oil  territory  under  leases?  A. 
They  h'^'^e  leased  it  in  very  large  blocks  in  West  Virginia,  paying  an  annual 
rental  ann  IiolcMng  it  for  future  development. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Has  that  in  any  material  way  pre- 
vented producers  from  obtaining  leases?  A.  Undoubtedly,  to  whatever 
extent  they  secured  the  territory  and  kept  others  from  going  into  it,  and 
with  their  large  means  they  have  been  able  to  secure  and  hold  very  extensive 
blocks  of  territory. 

Q.  (By  Mr.  NORTH.)  Are  you  familiar  with  the  wages  paid  the  work- 
ingmen  at  the  wells?    A.  Yes,  sir. 

Q.  Will  you  tell  the  commission  how  their  wages  compare  to-day  with 
the  wages  prior  to  the  organization  of  the  Standard  Oil  Company?  A. 
I  do  not  think  wages  are  as  high  as  they  were  before  the  Standard  Oil  Com- 
pany began  business,  but  I  do  not  think  it  is  owing  to  that  fact.  It  was  a  new 
industry  and  in  a  new  industry  of  that  kind  wages  are  always  high,  and  they 
have  paid  and  do  pay  good  wages. 

Q.  The  Standard  Oil  Company?  A.  Yes,  sir;  but  not  any  better  than  the 
independent  producers  pay,  and  in  some  cases  not  so  good.  I  want  to  do 
justice  to  them  in  that  regard  and  I  think  they  do  pay  good  wages. 

Q.  (By  Mr.  RATCHFORD.)  The  claim  has  been  made  for  the  Standard 
Oil  Company  that  they  pay  the  highest  rate  of  wages  to  all  branches  of  labor 
employed,  including  pipe  line  men,  traveling  salesmen  and  so  forth.  Is  this 
claim,  in  your  judgment,  correct  or  otherwise?  A.  I  think  they  pay  a  certain 
class  of  men  in  their  employ  very  high  wages.  Men  that  are  looking  after 
the  departments  of  their  business,  I  believe,  they  pay  very  high  salaries.  To 
the  ordinary  labor,  I  think,  they  pay  just  what  the  independent  producers 
and  others  engaged  in  the  same  industry  pay. 

Q.  Traveling  salesmen?  A.  Traveling  salesmen?  I  have  no  knowledge 
on  that  subject. 


J.  W.  LEE,  PRESIDENT  PURE  OIL  TRUST.  Ill 

*Q.  (By  Vice-Chairman  PHILLIPS.)  If  I  understand,  the  commission 
has  not  entered  upon  the  third  inquiry.  As  regards  the  "Effect  of  trusts  upon 
the  producers,"  if  there  are  no  questions  to  ask  upon  that,  the  next  question 
is,  "How  do  trusts  affect  laborers?" 

Q.  (By  Mr.  A.  L.  HARRIS.)  Can  you  furnish  this  commission  with  a  list 
of  the  independent  refiners  now  doing  business?     A.  Yes,  sir. 

Q.  And  substantially  the  amount  of  their  output?     A.  Substantially. 

Q.  You  have  not  that  list  now?    A.  No,  sir. 

Q.  Can  you  furnish  the  commission  with  a  list  of  the  refineries  now 
operated  either  by  or  with  the  Standard  Oil  Company?  A.  No,  I  cannot  do 
that. 

Q.  What  change,  if  any,  has  been  made  since  April,  1888,  as  you  find  on 
page  350  of  that  book?t  A.  Do  you  mean  what  refineries  have  gone  over 
to  the  Standard? 

*Q.  This  is  the  list,  as  given  in  1888,  of  companies  owned  entirely  or 
partially  by  the  Standard  Oil  Company.  The  statement  is  made  that  the 
Standard  Oil  Company  has  a  monopoly  of  the  output  and  is  therefore  forcing 
the  price  of  refined  oil.  The  object  I  have  is  to  get  facts  which  can  be  used 
by  this  commission  in  showing  the  amount  of  the  output  of  the  independent 
companies  as  well  as,  if  possible,  the  output  of  the  Standard  Oil  Company  in 
this  country.  Now,  of  course,  this  list  has  been  changed  very  materially 
since  1888.  My  object  on  getting  this  opinion  is  this:  Under  the  anti-trust 
law,  the  Supreme  Court  of  the  United  States  has  decided  what  a  monopoly 
is,  and  it  is  for  the  purpose  of  showing  to  what  extent  the  Standard  Oil  Com- 
pany is  controlling  the  output  and  has  in  fact  a  monopoly  of  refined  oil.  A.  I 
think  they  control  90  per  cent,  of  all  the  manufactured;  90  per  cent,  of  all 
the  crude  oil  in  the  United  States.  If  they  do  that  there  is  only  10  per  cent, 
left  for  others,  and  controlling  90  per  cent.,  they  can  absolutely  control  the 
price,  *because  they  can  put  their  90  per  cent,  in  as  against  the  10  per  cent., 
and  make  these  people  sell  at  a  loss  until  they  have  driven  them  out  of  the 
business,  and  they  have  done  that  repeatedly. 

*Q.  But  what  I  desire  is  the  statistics  to  show  that  that  condition  actual- 
ly exists.  In  a  recent  decision  I  think  an  opinion  was  given  by  Chief  Justice 
Fuller,  in  which  he  says  that  if  there  is  a  tendency  to  monopoly  it  will  be 
sufficient. 

Q.  (By  Representative  LIVINGSTON.)  Suppose  that  I,  as  an  individual, 
manufactured  90  per  cent,  of  all  the  crude  oil  produced  in  the  United  States, 
would  not  1  just  as  emphatically  control  the  price  as  the  Standard  Oil  Com- 
pany controls  it?    A.  Yes,  sir;  no  doubt. 

Q.  Then  it  is  not  so  much  that  it  is  in  the  hands  of  a  combine,  but  the 
trouble  is  that  they  manufacture  the  crude  oil?     A.  Yes.  sir. 

Q.  I  am  not  discussing  whether  they  use  unfair  methods  to  get  crude  oil 
into  their  hands  or  not.  The  simple  fact  that  they  manufacture  90  per  cent., 
whether  they  are  in  the  combine  or  out  of  the  combine,  gives  them  the  abso- 
lute power  to  fix  the  price?  A.  Yes,  sir;  but  I  think  I  would  rather  compete 
against  an  individual  owning  90  per  cent,  than  against  a  trust  owning  90  per 
cent.,  for  the  reason  that  when  a  trust  does  anything  wrong,  there  is  always 
some  other  wicked  person  that  does  it  and  not  the  person  who  is  caught.  If 
you  were  doing  it,  you  would  have  to  be  responsible  individually  for  what- 
ever was  done.  In  a  large  combination  of  that  kind  you  can  never  reach  the 
person  who  does  the  wicked  thing;  it  is  always  some  one  else. 

Q.  They  would  have  a  decided  advantage  to  me  if  I  should  be  attacked, 
and  the  United  States  courts,  I  should  think,  would  find  who  was  the  "some- 
body else."  A.  I  will  try  to  give  you  the  list  of  the  independent  companies, 
and  you  probably  can  get  the  list  of  the  Standard  Oil  Trust  from  some  other 
source. 

Q.  (By  Mr.  C.  J.  HARRIS.)  This  gives  it  from  the  Standard  Oil  Com- 
pany. Mr.  Archbold  gave  this  list  in  1888.  I  think  it  came  from  an  outside 
source,  but  he  gave  it  in  1888.    A.  Yes,  sir. 


*Black  faced  type  indicates  matter  omitted,    in   the  course   of  editing,   from    the 
official  report. 

tReport  of  tlie  Committee  on  Manufactures. 


112  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

Q.  (By  Mr.  NORTH.)  Do  you  regard  the  production  of  90  per  cent,  of 
refined  oil  as  constituting  a  practical  monopoly  of  that  industry?  A.  Yes, 
sir;  that  is  the  manufacture  of  90  per  cent.;  they  only  produce  about  25  per 
cent. 

Q.  Then  you  think  the  Standard  Oil  Company  is  a  monopoly  in  restraint 
of  trade?    A.  I  do,  undoubtedly. 

Q.  And  that  it  exists  in  defiance  of  the  laws  of  the  United  States?  A. 
Yes  sir. 

Q.  (By  Mr.  A.  L.  HARRIS.)  You  said  that  in  1895  the  Standard  Oil  Com- 
pany simply  hung  out  their  price?    A.  Yes,  sir. 

Q.  I  desire  to  know  whether  the  independent  companies  made  any 
effort  to  increase  the  price  that  was  fixed  by  the  Standard  Oil  Company?  A. 
The  companies  with  which  I  am  connected  have  at  times  paid  from  one  cent 
to  nine  cents  a  barrel  more  than  the  Standard  Oil  Company  was  paying.  At 
times  they  have  paid  the  same  price.  I  think  they  never  paid  less,  except  by 
accident  one  day.    For  half  a  day  we  paid  one-half  a  cent  less,  I  think. 

Q.  Did  that  have  anything  to  do  with  the  price  of  the  Standard  Oil 
Company?  A.  I  think  they  had  a  better  price;  I  don't  know  what  brought 
it  about. 

Q.  If  it  made  no  impression  upon  the  price  that  very  day  it  is  very  good 
evidence  that  they  controlled  the  price,  of  crude  oil  at  least.  A.  They  would 
hold  their  prices  at  a  fixed  point  no  matter  what  we  paid. 

Q.  (By  Mr.  FARQUHAR.)  You  said  in  the  morning  session  that  the 
Standard  Oil  Company  had  been  able  to  secure  discriminating  rates  from 
railroads  in  the  transportation  of  their  product.  Can  you  state  to  the  com- 
mission any  one  or  more  cases  that  have  been  proved  in  open  court  showing 
that  they  have  received  discriminating  rates  from  the  railroads?  A.  Yes, 
sir;  in  the  case  of  the  Bill  in  Equity  filed  in  the  Supreme  Court  of  Pennsyl- 
vania. On  page  191  of  the  report  of  the  Committee  on  Manufactures,  1888, 
you  will  find  the  testimony  of  Mr.  Cassatt. 

Q.  Was  that  a  sporadic  case,  or  was  it  general?  A.  It  continued  vir- 
tually until  the  Standard  wiped  out  all  the  refineries  between  Titusville  and 
Pittsburg. 

Q.  How  long  did  that  last?    A.  It  lasted  probably  a  year. 

Q.  Would  you  say  that  at  the  present  time  they  receive  discriminating 
rates  from  the  railroads?  A.  That  I  have  no  proof  of,  but  I  was  attorney  in 
a  case  brought  against  the  Pennsylvania  Railroad  by  Logan,  Emery  & 
Weaver,  when  the  general  freight  agent  said  there  had  been  no  discrimina- 
tion: the  president  of  the  road  said  there  had  been  no  discrimination,  as  did 
a  number  of  their  chief  officers.  But  when  we  subpoenaed  their  auditors, 
they  came  and  testified  that  there  had  been  discriminations,  and  those  dis- 
criminations ran  from  three  cents  a  barrel  to  28  cents  a  barrel.  In  one  year, 
as  opposed  to  Logan,  Emery  &  Weaver,  they  amounted  to  something  over 
$24,000,  and  they  were  testified  to  by  their  auditors  and  they  brought  in  the 
auditors'  statement  showing  the  exact  amount. 

Q.  (By  Professor  .lENKS.)  When  was  this?  A  That  suit  was  tried, 
according  to  my  recollection,  in  1889  or  1890.  They  compromised  the  suit 
and  paid  $30,000  for  those  discriminations. 

Q.  (By  Mr.  FARQUHAR.)  Do  these  independent  companies  own  tank 
cars?  A.  Yes,  independent  refiners  own  tank  cars.  The  Producers'  Oil 
Company,  Limited,  own  48  tank  cars. 

Q.  Has  there  been  any  discrimination  on  the  part  of  the  railroads  in 
hauling  these  cars?    A.  Yes,  sir. 

Q.  As  between  the  independents  and  the  Standard  Oil  Company?  A. 
Yes,  sir. 

Q.  Will  you  state  now  where  it  has  occurred  and  when?  A.  It  has 
occurred  on  nearly  all  the  roads.  These  questions  are  in  litigation.  The 
Interstate  Commerce  Commission  assessed  against  the  Pennsylvania,  and 
other  roads,  a  sum  equal  to  $86,000  and  suits  brought  by  the  independent 
refiners  against  the  railroads  for  the  recovery  of  that  money  are  now  pend- 
ing in  the  Circuit  Court  of  Pittsburg. 


J.  W.  LEE,  PRESIDENT  PURE  OIL  TRUST.  113 

Q.  You  spoke  some  time  ago  about  a  rebate.  Can  you  state  the  average 
price  of  the  crude  oil  when  the  80-cent  rebate  was  given?  A.  It  fluctuated, 
of  course,  but  it  was  from  $1.50  to  $2.50  a  barrel. 

Q.  (By  Mr.  A.  L.  HARRIS.)  What  was  the  character  of  the  rebates  at 
the  time  you  speak  of  in  the  Pennsylvania  oil  district?  What  I  mean  to  say 
is  this:  What  is  the  amount  of  the  rebate,  and  where  did  that  rebate  go  to 
sometimes?  A.  That  rebate  was  in  the  shape  of  checks,  I  suppose,  or  cash, 
and  it  has  been  estimated  to  have  amounted  to  $10,000,000.  It  went  to  the 
Standard  Oil  Company,  chiefly,  of  course,  I  do  not  know  how  it  was  divided. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Is  the  amount  given  and  the  length  of 
time  it  was  received  shown  in  the  testimony  of  Mr.  Cassatt?  A.  Yes,  sir;  it 
is  in  the  testimony  on  pages  242  and  243  of  the  work  on  trusts. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Can  you  give  the  commission  the 
exact  ahiount  in  dollars?  A.  It  is  estimated  here  to  be,  from  October  17, 
1877,  to  March  31,  1879,  $10,155,218. 

Q.  (By  Vice-Chairman  PHILLIPS.)  For  how  many  months  or  years? 
A.  From  October  17,  1877,  to  March  31,  1879;  a  year  and  six  months. 

Q.  (By  Vice-chairman  PHILLIPS.)  What  was  the  rate  the  independ- 
ent company  paid  to  the  railroad  and  did  any  of  that  come  back  to  the 
Standard  Oil  Company?  A.  The  independent  shipper  would  ship  his  oil  and 
pay  the  open  rate,  and  they  would  pay  80  cents  of  the  amount  of  the  freight 
that  he  paid  over  to  the  Standard  Oil  Company.  They  paid  not  only  on  the 
oil  that  the  Standard  Oil  Company  shipped,  but  the  oil  that  he  shipped  to 
anyone.  The  Standard  Oil  Company  got  the  rebate  on  that.  I  don't  say  that 
80  cents  is  the  amount,  but  they  did  that  in  some  instances.  *l  know  in  Ohio 
they  charged  55  cents  to  some  of  the  independent  men,  and  after  paying  that 
they  paid  25  cents  to  the  Standard  Oil  Company. 

Q.  (By  IVlr.  FARQUHAR.)  Was  that  a  matter  of  proof?  A.  It  was 
stated  in  testimony.  That  was  done  in  the  case  of  the  receivership  in  Mari- 
etta, and  the  court  removed  the  receiver  on  that  ground. 

Q.  (By  Mr.  A.  L.  HARRIS.)  The  case  is  here,  and  the  petition  was  made 
by  the  receiver?     A.  Yes,  sir. 

Mr.  A.  L.  HARRIS.  The  correspondence  begins  on  page  575.  (Refer- 
ring to  the  report  of  the  Committee  on  Manufactures.) 

Q.  (By  Professor  JENKS.)  Governor  Harris  asked  you  if  you  could 
furnish  a  list  of  the  refineries  that  are  in  your  company.  Would  you  be  will- 
ing to  add  to  the  list  of  those  establishments  also  the  capital  stock  of  each 
one,  and  their  market  value  before  they  came  in,  as  near  as  you  can  get  it? 
A.  As  near  as  I  can  get  it. 

Q.  I  presume  it  may  be  a  matter  of  record?    A.  Yes,  sir. 

Q.  And  the  capital,  in  case  of  firms?     A.  Yes.  sir. 

Q.  Had  any  of  them  bonds?    A.  No,  I  think  they  were  out  of  debt. 

Q.  So  that  there  would  be  no  bonds  to  put  into  a  list  of  that  kind?  A. 
No,  sir. 

Q.  Did  any  of  them  have  preferred  as  well  as  common  stock?  A.  No,  I 
think  not;  not  any  of  the  refining  companies. 

Q.  Would  you  be  willing  to  give  all  details  in  reference  to  their  stocks 
and  bonds?  A.  I  think  they  would  be  entirely  willing  to  give  them — the 
matter  to  be  submitted  to  the  commission. 

Q.  You  said  this  morning  that  there  were  a  number  of  refineries  you 
knew  of  that  had  been  purchased  by  the  Standard  Oil  Company  and  dis- 
mantled? 

*Mr.  C.  J.  HARRIS.     We  went  over  those  this  morning. 

Professor  JENKS.  That  was  ten  years  ago.  I  thought  possibly  some 
more  might  be  added. 

A.  There  have  been  three  within  the  last  four  years. 

Q.  You  might  perhaps  submit  some  list  of  that  kind?     A.  Yes.  sir. 

Q.  (By  Mr.  FARQUHAR.)  It  may  be  of  assistance  to  the  commission  if 
you  would  give  practical  reasons  why  these  plants  were  dismantled?  What 
are  the  usual  reasons  for  dismantling  a  plant?  A.  The  only  reason  that  I  can 
conceive  was  that  those  plants  were  under  contract  with  the  Producers  & 

♦Black  faced  type  indicates  matter  omitted,  in  the  course  of  editing,  from  the 
official  report. 


114  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

Refiners'  Oil  Company,  Limited,  to  take  oil  from  them,  and  they  were  dis- 
mantled for  the  purpose  of  destroying  them  and  preventing  them  from  being 
in  the  trade  as  competitors,  and  to  injure  the  Producers  &  Refiners'  Oil 
Company,  Limited,  because  they  declined  to  sell  any  of  the  material  to  the 
other  independent  refiners.  They  paid  large  prices  for  these  refineries  and 
wasted  the  material,  at  least  dismantled  them  and  refused  to  sell  them  to 
other  independent  refiners. 

Q.  The  question  may  come  up  when  the  Standard  Oil  Company  people 
come  to  give  the  commericial  business  reasons  why  the  dismantling  was 
done?  A.  I  think  it  was  done  for  the  purpose  of  injuring  the  only  competitor 
that  was  in  the  field.  I  know  of  no  other  reason.  They  were  good  plants, 
and  well  located,  and  there  would  certainly  be  no  reason  for  paying  a  high 
price  for  a  plant  and  immediately  tearing  it  down  at  a  great  loss  unless  there 
was  some  object  of  that  kind. 

Q.  (By  Representative  LIVINGSTON.)  As  75  per  cent,  of  this  oil  is 
produced  by  independent  companies  outside  of  the  Standard  Oil  Company, 
if  they  should  by  common  consent  and  agreement  reduce  the  production  one- 
half,  what  effect  would  that  have  on  the  independent  companies?  Would  it 
very  largely  increase  the  price  of  crude  oil?  A.  They  did  enter  into  an 
agreement  to  reduce  the  production  17,500  barrels  a  day,  and  it  did  not  have 
the  effect  of  largely  increasing  the  price  of  crude,  although  they  reduced  the 
stock  from  31,000,000  to  9,000,000. 

Q.  It  did  not?  A.  It  did  not  have  the  effect  of  largely  increasing  the 
price.    It  increased  it  to  some  extent,  but  not  to  the  anticipated  extent. 

Vice-Chairman  PHILLIPS.  Do  any  other  gentlemen  wish  to  ask  any 
further  questions?  If  not,  we  will  proceed  to  the  third  topic:  "How  do 
Trusts  Affect  Labor?" 

Q.  (By  Representative  LIVINGSTON.)  Do  you  mean  to  say  that  it 
lessens  the  price  of  labor  or  makes  it  more  difficult  for  labor  to  live?  Is  that 
the  idea?  A.  I  am  not  speaking  so  much  of  what  has  been  done  by  trusts 
exactly,  but  my  opinion  is  that  when  all  the  people  that  are  skilled  in  any 
branch  of  industry  come  to  be  employed  by  a  single  concern,  and  there  is 
no  place  else  to  go  to  seek  that  kind  of  employment,  they  are  largely  under 
control  of  that  one  institution  both  as  to  their  wages  and  everything  else, 
and  that  is  hurtful  to  labor,  because  there  is  no  other  occupation  then  for 
labor  in  that  given  line.  Suppose  all  the  men  that  are  skilled  in  refining  oil, 
lor  instance,  are  employed  in  one  institution,  and  a  man  is  discharged  by 
that  institution,  probably  for  some  fanciful  reason,  there  is  no  place  for  him 
to  go  to  get  employment.  I  think  that  is  a  positive  injury  to  labor;  whereas, 
if  the  business  was  being  done  by  50  concerns,  if  one  man  for  any  reason 
ceased  to  be  employed  by  one  institution,  he  could  go  to  another.  If  there 
is  only  one  employer  that  man  is  driven  out  of  that  industry  altogether,  and 
must  seek  something  new.  Maybe  he  has  attained  such  an  age  that  he  can- 
not go  into  a  new  business,  and  that  man's  labor  is  lost  to  the  world,  and  he 
cannot  be  as  profitable,  either  to  himself  or  the  public  in  any  new  capacity, 
as  he  would  be  in  the  capacity  in  which  he  is  highly  skilled.  I  know  an 
instance  where  a  trust  discharged  a  man  because  he  had  some  difficulty  with, 
we  will  say,  the  general  manager  of  a  particular  plant,  and  the  manager  im- 
mediately reported  that  man  to  all  the  other  institutions,  and  said: 
"This  man  is  not  to  receive  employment."  For  a  year  the  man  I 
have  in  mind  (I  do  not  mean  to  give  names)  was  out  of  employment 
and  could  not  get  it.  That  was  his  business.  He  knew  it  and  had 
been  in  the  business  for  10  years  and  he  could  not  get  employment 
in  any  other  institution  connected  with  that  trust.  I  think  that  all 
these  questions  come  in.  and  that  the  trust  is  always  hurtful  to  labor, 
because,  just  as  it  controls  the  price  of  the  crude  product,  it  will  absolutely 
control  the  labor  in  that  given  industry.  Suppose  you  have  a  trust  in  regard 
to  all  the  industries.  Then  there  is  no  place  for  a  man  to  go.  If  he  is  thrown 
out  of  employment  where  will  he  go  to  get  labor?  Every  man  ought  to  be 
able  in  this  country,  as  laree  as  it  is,  to  have  a  chance  for  employment. 
There  is  employment  enough  for  everybody  when  business  is  good.  So  I 
think  in  that  way  it  affects  labor.  In  another  way,  we  know  it  makes  men 
subservient;    it  destroys  their   manhood   to   some  extent;    they  are  not  the 


J.  W.  LEE,  PRESIDENT  PURE  OIL  TRUST.  115 

same  independent  class  of  Americans  that  they  would  be  if  they  felt  that, 
if  they  were  discharged  by  this  employer,  they  could  go  to  some  other  and 
get  employment.  It  belittles  men  and  injures  them  in  every  way.  Therefore 
I  think  trusts  are  hurtful  to  labor. 

Q.  (By  Mr.  KENNEDY.)  Do  you  believe  that  combinations,  such  as  you 
have  been  talking  about,  make  organizations  of  labor  more  logical  and  neces- 
sary to  the  welfare  of  the  workingman?  A.  If  they  do  not  organize,  and 
keep  organized,  I  do  not  know  what  will  become  of  them. 

Q.  (By  Representative  OTJEN.)  Are  the  men  employed  in  the  oil  indus- 
tries generally  organized?  A.  There  is  an  organization  known  as  the  Pro- 
ducers' Protective  Association,  organized  for  the  purpose  of  protection. 
They  have  not  had  any  meetings  in  recent  years  because  they  have  devoted 
their  time  to  the  business  part,  the  advance  of  their  industry,  and  have  not 
had  any  time  to  look  after  anything  else. 

Q.  (By  Mr.  NORTH.)  Are  the  employes  of  the  Standard  Oil  Company 
organized  into  trades  unions?  A.  I  do  not  know  how  that  is.  I  want  to  say 
for  the  employes  of  the  Standard  Oil  Company,  that  as  far  as  I  know  them 
they  are  competent,  polite  and  a  good  class  of  men.  So  far  as  the  producers 
are  concerned  they  have  no  fault  to  find  with  the  class  of  men  they  emploj^ 
to  do  their  business,  because  they  are  really  good  men.  They  have  to 
employ  that  class  of  men. 

Q.  (By  Mr.  KENNEDY.)  Is  it  a  fact  that  the  Standard  Oil  Company 
employes  are  comparatively  well  paid  and  well  treated  and  they  are  always 
loyal  to  the  Standard  Oil  Company?  A.  I  know  nothing  about  the  question 
of  loyalty.  I  have  never  attempted  to  inquire  into  that,  but  I  think  they  are 
reasonably  well  paid. 

Q.  (By  Mr.  RATCHFORD. )  It  is  claimed  by  a  great  many  laboring 
organizations,  that  a  trust  which  controls  a  number  of  establishments,  by 
reason  of  that  large  control  of  industry,  is  able  to  close  down  one  or  more 
of  them,  in  order  to  reduce  wages  or  lengthen  the  hours  of  labor,  or  to  bring 
about  some  undesirable  conditions  for  the  working  people,  and  at  the  same 
time  suffer  no  loss  in  their  products,  because  they  can  transfer  their  busi- 
ness to  some  other  establishment  for  the  time  being.  What  is  your  opinion 
of  that  phase  of  the  question?  A.  I  should  think  that  would  be  true,  for  the 
rea.son  that  if  they  have  a  complete  monopoly  of  the  business  it  does  not 
make  any  difference  what  their  output  is.  They  can  close  half  their  estab- 
lishments and  put  out  half  the  product  and  double  the  price  on  it.  They  can 
put  the  price  where  they  please  and  there  is  no  power  to  control  them  any- 
where. 

Q.  Have  you  known  of  any  instances  in  which  that  took  place  or  in 
which  there  is  reasonable  evidence  to  believe  that  that  was  the  cause  of  the 
trouble?  A.  No,  I  do  not  recollect  any  at  present  because  trusts  have  not 
been  long  in  existence  except  in  a  few  instances.  It  was  necessary  for  those 
trusts  to  have  the  good  will  of  their  employes  and  they  have  paid  them 
fairly  good  wages  and  have  not  been  in  much  trouble  with  their  labor,  if  any. 

Q.  It  is  claimed  by  the  friends  of  the  trusts  pretty  generally  that  they 
treat  their  workmen  better  and  pay  them  higher  wages  and  grant  more 
agreeable  conditions  generally  than  do  individual  employers  or  smaller  com- 
panies.   What  is  the  truth  of  that  claim?     A.   I  think  there  is  nothing  in  that. 

Q.  Generally  speaking?  A.  Generally  speaking.  Taking  them  all  into 
consideration  I  do  not  believe  it  is  true. 

Q.  (By  Mr.  FARQUHAR. )  Is  there  not  usually  more  stable  employment 
with  a  trust  than  there  is  with  individuals  or  smaller  corporations?  A.  I 
think  the  period  they  have  been  in  existence  has  not  been  long  enough  to 
determine  that  question.  I  know  a  great  many  individual  companies  that 
have  had  employes  for  10  and  15  and  20  and  30  years,  and  trusts  have  not 
been  in  existence  so  long  a  period  as  that. 

Q.  Is  it  not  usual  amon°;  the  employes  of  the  Standard  Oil  Company  to 
say:  "As  long  as  you  behave  yourself  and  attend  to  your  business,  you  will 
stay?"  Is  not  that  always  an  inducement  held  out  to  foremen  and  others  in 
the  Standard  Oil  Company  to  keep  their  men  when  they  are  good  men?  A. 
They  follow  the  business  rule  and  wnen  the  exigency  of  the  business  re- 
quires it.  they  cut  off  their  employes  without  giving  much  reason  for  it.  I 
do  not  know  that  they  do  that  arbitrarily.     I  do  not  charge  them  with  that. 


116  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

Q.  (By  Mr.  C.  J.  HARRIS.)  When  they  dismantle  a  refinery  what  be- 
comes of  the  men  that  work  in  it?  Do  they  hunt  for  a  new  job.  A.  They 
find  some  other  employment,  if  they  can. 

Q.  (By  Mr.  RATCHFORD.)  To  what  extent,  if  any,  does  the  operation 
of  trusts  displace  men — traveling  salesmen,  foremen  or  superintendents,  or 
labor  of  any  kind?  A.  I  think  it  very  largely  displaces  labor,  but  I  do  not 
know  that  it  decreases  the  cost,  because  I  think  they  add  to  the  salaries  of 
men  that  are  in  charge.    They  pay  very  high  salaries  to  leading  men. 

Q.  Skilled  men?  A.  Yes,  sir;  and  I  think  that  the  liberal  payments 
instead  of  being  given  to  a  number  of  men  are  given  to  one  or  two,  and  they 
get  the  laboring  forces,  I  think,  as  cheap  as  possible.  I  think  they  could  do 
away  with  a  great  many  traveling  men  because  the  trusts  can  fix  their  own 
prices  and  people  must  come  and  pay  them. 

Q.  Do  you  feel  pretty  positive  that  labor  is  displaced  by  the  operation 
•of  the  trusts?    A.  I  have  not  a  bit  of  doubt  of  that. 

Q.  (By  Representative  LIVINGSTON.)  Has  the  Standard  Oil  Com- 
pany been  reducing  wages  in  the  years  gone  by?  A.  During  the  depressed 
period's  they  reduced  wages. 

Q.  During  what  periods?  A.  During  the  panic  of  1893  and  subsequent  to 
that.    Probably  not  more  than  others.    But  I  do  not  know  about  that. 

Q.  (By  Professor  JENKS.)  Do  the  four  different  companies  of  your 
■organization  work  together  in  harmony?    A.  Yes,  sir. 

Q.  Have  you  been  able,  in  your  organization,  since  you  came  together 
in  harmony,  to  dispense  with  the  services  of  many  of  your  high-priced  men — 
of  your  traveling  men.  A.  We  have  never  employed  any  traveling  men  in 
this  country.  The  refineries  are  all  independent.  The  refineries  are  not  at 
all  connected  with  our  company.  Each  refinery  is  entirely  an  independent 
concern.  They  simply  buy  oil  from  us  and  we  buy  oil  from  them  just  as  we 
would  buy  it  from  anybody  else. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Do  they  own  stock  in  these  pipe 
lines?  A.  They  do  own  stock  in  the  various  pipe  lines  and  also  in  the 
Pure  Oil   Company. 

Q.  (By  Vice-Chairman  PHILLIPS.)  And  while  they  are  owners  of  stock 
they  own  their  own  plant  for  instance?  A.  There  are  the  Independent,  the 
Penn.  the  Continental,  the  Germania.  the  Crystal,  the  American,  the  Emery 
Manufacturing  Company,  the  Columbia  and  the  A.  L.  Confer.  They  all  own 
their  plants  and  sometimes  there  will  be  two  or  three  persons  in  a  company, 
and  a  number  of  others  in  another,  one  or  two  persons  in  a  firm,  and  they 
are    all    independent. 

O.  (By  Mr.  C.  J.  HARRIS.)  Your  companies  do  not  pretend  to  be  a 
trust?  A.  Oh,  no,  sir;  we  are  trying  to  keep  away  from  the  trusts  as 
far  as   we   can. 

Q.  (By  Representative  LIVINGSTON.)  If  I  understand  you.  these  inde- 
pendent companies  own  stock  in  the  general  company?  A.  Yes.  sir.  in  the 
United  States  Pipe  Line  Company.  They  also  own  stock  in  the  Producers' 
and    Refiners'    Oil    Company,    Limited. 

Q.  And  you  view  that  Pipe  Line  Company  as  the  agent  of  those  other 
independent  companies?  A.  It  is  an  independent  company  in  which  stock  is 
independently  owned  by  persons,  and  it  stands  on  its  own  footing  and 
pays  its  own  expenses  and   dividends  when  it  earns   them. 

Q.  Who  pays  the  expenses  of  this  pipe  line  company?  A.  The  company 
itself.  It  charges  fifteen  cents  for  local  pipage  to  the  refiners.  They  have 
fifteen  cents  pipage,  out  of  which  they  pay  the  expenses,  and  if  there  is 
anythinsT   left  it  is  their   profit. 

O.  (Pv  Vice-Chairman  PHILLIPS.)  Is  there,  or  not,  a  movement  now 
to  unite  the  various  pipe  line  companies  and  the  refineries?  A.  There  have 
been  su^^^estions  of  that  kind.  They  will  be  stronger  if  united  in  one 
organization  *and  the  stock  all  owned  bv  one  company. 

Q.  (Bv  Representative  LIVINGSTON.)  *You  have  a  monopoly  of  some 
of  the  piping,  have  you  not?  You  charge  fifteen  cents  for  piping  and  out 
of  that  you   pay  all  your  current  expenses?     A.  Yes.  sir. 


♦Black  faced  type  Inrlloates  matter  omitted,    In    the  course    of  editing,    from    the 
ofHclal  report. 


J.  W.  LEE,  PRESIDENT  PURE  OIL  TRUST.  117 

Q.  You  have  a  monopoly  on  that?  That  is  a  kind  of  trust,  is  it  not?  A. 
No,  the  Standard  is  competing.  It  is  in  the  fields  we  are  in  and,  of  course, 
they  rob  us  of  that  feature.  I  think  ten  per  cent  could  hardly  be  claimed  to 
be  a  monopoly,  and  we  are  not  ten  per  cent  even — we  are  about  five  per  cent. 

Q.  (By  Vice-Chairman  PHILLIPS.)  If  these  various  companies  become 
united,  will  you  be  willing  as  an  officer  in  each  of  the  four  to  have  a  thorough 
investigation  of  the  books,  accounts  and  the  profits  that  such  organizations 
have  made?  A.  *We  would.  We  would  be  very  glad  if  the  government  would 
inspect  us  and  everybody  else.  We  would  be  glad  to  suffer  an  inspection 
in  order  to  have  some  other  people  inspected. 

Q.  (By  Mr.  FARQUHAR.)  How  do  these  independent  companies  put 
their  burning  and  lubricating  oils  on  the  American  market?  A.  Each  refin- 
ing company  markets  its  own  oil.  They  get  orders  and  some  of  them  have 
stations.  For  instance,  one  company  I  know  of  has  a  station  at  Rock 
Island.  Illinois,  and  one  in  Chicago,  and  through  these  stations  it  sells 
part  of  its  refined  product. 

Q.  Have  these  independent  companies  permanent  agencies  for  the  sale 
of   their   oil?     A.  Some   of  them    have. 

Q.  Or  do  they  drum  for  custom?  A.  Some  of  them  have  permanent 
agents  located  in  certain  places  and  have  their  facilities  for  storing  oil. 

Q.  Do  you  know  whether  the  greater  part  of  their  product  is  put  on  the 
market  through  their  own  agents,  or  through  other  oil  houses  in  those  cities? 
A.  I  presume  that  the  greater  part  of  their  product  that  is  marketed  in  the 
United  States  is  sold  through  merchants  and  others  who  are  in  the  business. 

Q.  That  being  the  case,  the  Standard  Oil  Company  and  your  independent 
companies   come  into  open  competition  for  a  market?     A.  Certainly. 

Q.  Do  you  knov/  of  any  other  qualifications  for  the  sale  of  oil,  inde- 
pendent of  monopolies,  than  the  quality  of  the  oil  and  the  price?  A.  The 
quality   undoubtedly   should   affect   the   price. 

Q.  The  Standard  Oil  Company  coming  in  with  a  better  quality  of  oil 
and  selling  at  an  equal  price  with  the  other,  would  ultimately  affect  the 
value?    A.  If  they  made  a  better  quality  of  oil. 

Q.  I  said,  presuming  they  do.  I  put  the  question  in  that  way.  A.  Well, 
they  do  not. 

Q.  Is  it  not  a  fact  that  no  company,  whether  a  monopoly  or  not.  can 
hold  the  American  market  unless  it  sells  a  better  oil  at  an  equal  price? 
A.  No,  I  would  not  say  that  would  be  true  absolutely. 

Q.  You  said  this  morning  that  some  of  the  railroads  have  taken  the 
buying  of  lubricating  and  burning  oils  out  of  the  hands  of  the  purchasing 
agents  and  that  the  oil  is  now  bought  by  the  manager  or  one  of  the  vice- 
presidents  or  the  president  of  the  road.  Is  it  a  fact  that  in  the  economy  of 
the  equipment  of  the  road,  if  you  run  a  poor  lubricating  oil  you  lose  more 
on  it  than  the  little  cent  or  two  you  might  save  on  the  gallon?  A.  Un- 
doubtedly. 

Q.  Would  it  not  ultimately  ruin  the  machinery  and  ruin  the  road?  A. 
Undoubtedly. 

Q.  No  favorites  can  step  in,  in  a  business  matter,  between  those  people? 
A.  No,  I  would  not  say  that. 

Q.  Do  you  not  think  that  years  ago,  in  the  purchase  of  lubricating  oils 
by  railroads  and  many  large  consumers,  there  was  a  favoritism  and  a  large 
one,  while  now  the  economy  in  railroads  is  such  that  even  their  stationery 
and  printing,  where  it  used  to  be  left  with  local  agents  and  division  super- 
intendents and  others,  is  now  concentrated  under  one  head  in  the  manage- 
ment of  a  road,  and  isn't  that  so  with  the  purchase  of  oil?  A.  No,  I  think 
oil  is  made  an  exception. 

Q.  While  temporarily  an  advantage  may  be  gained  personally  to  the 
man  who  buys  oil,  or  to  the  company  that  offers  to  sell  the  oil,  in  the 
course  of  a  year  or  two  would  not  the  best  product  win  if  it  is  of  an 
equal  price  with  another?  A.  That  would  be  true,  if  they  were  looking 
solely  to  the  interest  of  the  road,  but  if  they  had  some  ulterior  purpose  in 
purchasing  it   would   not  be  true. 


*Black  faced  type  Indicates  matter  omitted.    In    the   course   of  editing,    from    the 
offl"ial  report. 


118  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

Q.  I  am  discussing  the  purely  business  proposition.  A.  As  a  purely 
business  proposition  that  would  be  true.  If  a  man  was  doing  it  for  himself, 
it  would   be  all  right. 

Q.  So  that  no  monopoly  can  be  held  in  any  product  of  the  United  States 
or  anywhere  else?  So  long  as  you  produce  a  better  article  and  charge 
an  equal  price  for  it  you  will  get  the  market?  A.  No,  I  do  not  think  that  is 
true. 

Q.  Isn't    it?     A.  No. 

Q.  Then  why  isn't  it?  Here  are  textiles  and  productions  of  that  kind 
in  this  country  that  will  hold  the  market  for  years  against  all  other  pro- 
ducers. A.  While  that  may  be  true  and  ought  to  be  true  always,  I  am 
afraid  it  is  not. 

Q.  (By  Representative  LIVINGSTON.)  Bring  that  out  more  particular- 
ly. Do  you  sell  your  oils  in  States  where  they  have  an  oil  inspector?  A. 
Yes,    sir. 

Q.  You  have  no  trouble  under  the  laws  of  Georgia,  where  we  have  an 
inspector,  and  you  sell  your  oils  there  without  let  or  hindrance?    A.  Yes,  sir. 

Q.  So  does  the   Standard  Oil  Company?     A.  Yes,   sir. 

Q.  Both    stand    the    same    tests?     A.  Yes,    sir. 

Q.  They  all  have  to?  A.  I  think  with  the  general  public  they  are  on 
an  equal  footing.  So  they  are  to  a  large  consumer  who  is  purchasing  for 
himself,  but  in  the  case  of  an  officer  of  a  railroad  there  may  be  some  reason 
why  they  want  to  shade  it  in  his  favor. 

Q.  (By  Mr.  FARQUHAR.)  That  is  a  good  business  reason,  isn't  it? 
A.  No,  not  always.     I  am  afraid  not. 

Q.  L^usually?     A.  I   do   not   think   it   is  usually. 

Q.  Would  you  not  try  to  gain  the  European  market  and  to  shut  them 
out  of  it  by  putting  down  the  prices  in  Europe?  A.  I  think  in  a  great 
many  cases  they  could  purchase  just  as  good  oil  for  one-half  the  price 
they  are  at  present  paying.  If  that  is  the  case,  your  proposition  would 
not    be    true. 

Q.  (By  Representative  LIVINGSTON.)  In  reaching  the  market  (I  use 
the  State  of  Georgia  to  illustrate)  in  Georgia,  what  facilities  or  advantages 
have  the  Standard  Oil  Company  over  the  independent  company?  Any?  A. 
Yes,    we    think    they    have. 

Q.  In    the    way    of    rebates?     A.  W^e    think    so. 

Q.  Can  you  establish  that?  A.  It  has  been  established  a  number  of 
times. 

Q.  Brought  to  your  attention?     A.  Not  in  Georgia,  no  sir. 

Q.  I  only  use  that  as  an  illustration.  Has  it  been  brought  to  the  atten- 
tion of  the  Interstate  Commerce  Commission?  A.  Yes,  and  they  have 
assessed   damages    for   that   very    discrimination. 

Q.  Have  they  collected  it?  A.  They  are  in  process  of  collecting  it 
ROW.     The  railroads  are  fighting  it. 

Q.  (By  Mr.  FARQUHAR.)  *l  asked  substantially  that  question  before 
and  Senator  Lee  called  attention  to  that  one  case  or  so.  I  think  the  com- 
mission would  like  to  know  positively  what  cases  have  come  into  court 
where  there  was  sworn  evidence  to  sustain  these  allegations,  where  they 
occurred,  the  defense  made  and  whether  cases  are  now  in  process  of  liti- 
gation.    A.  Yes.  sir. 

*Q.  I  will  tell  you  why.  Senator  Lee.  Because  a  charge  may  be  made 
by  any  witness,  but  if  the  testimony  is  to  be  strong  we  must  have  the 
positive  or  corroborative  evidence  before  the  commission,  as  our  findings, 
of  course,  must  be  based  on  something  tangible.  Of  course  we  are  very 
willing  to  take  your  opinion  now,  but  in  a  case  of  that  kind  with  a  serious 
charge  and  representing  the  remarkable  discrimination  that  you  have 
spoken  of,  the  commission  would  desire  very  much  to  have  the  exact  cases 
stated — the  year,  the  courts  that  they  have  been  in,  and  what  was  the 
disposition    of   them.     A.   Yes,    sir. 

Q.  (By  Vice-chairman  PHILLIPS.)  In  your  opinion  did  any  or  all  of 
these  independent  refineries  unite  to  secure  a  market  on  lubricating  oils  on 


*Black  f:irfd  type  indicates  matter  nmittPfl,    in    the  ronrse   of   rrliting.    from    the 
official  report. 


J.  W.  LEE,  PRESIDENT  PURE  OIL  TRUST.  119 

any  of  the  principal  railroads  of  the  United  States?  A.  They  do  not  now 
and  I  doubt  if  they  could  have  united.  I  think  that  is  a  very  doubtful 
question. 

Q.  (By  Mr.  KENNEDY.)  Is  it  your  belief,  judging  by  your  experi^ce, 
that  the  Standard  Oil  Company  would,  if  it  could  to-morrow,  purchase  all 
these  refining  companies,  paying  for  them  more  than  their  real  value? 
A.  I  do  not  know  whether  they  would  do  that  now  or  not.  They  have 
offered  to  do  it  in  the  past.  They  made  that  offer  in  the  fall  of  1894  and  in 
January,   1895. 

Q.  Do  you  believe  that  if  such  an  offer  should  be  made,  the  independent 
companies  would  refuse  it?  A.  *l  hope  they  would.  I  think  they  would. 
They  have  done  it. 

Q.  So  then,  the  popular  impression  must  be  that  the  independent  com- 
panies have  a  good  thing  in  the  way  of  business?  A.  No,  that  does  not 
follow.  The  people  who  are  interested  in  these  pipe  lines  have  a  very 
large  interest  at  stake  in  other  producing  properties.  The  independent 
people  own  about  seventy-five  per  cent  of  80,000  barrels  a  day.  In  other 
words,  60,000  barrels  of  oil  a  day — that  amounts  in  a  year  to  about  22,000,000 
barrels  of  oil.  They  believe  that  the  price  of  that  oil  is  largely  dependent 
upon  having  preserved  and  maintained  an  open  competitive  market  for 
refined  oil.  *Without  increasing  the  price  of  the  refined,  their  pipe  lines 
will  give  them  an  open  competitive  market,  and  therefore  they  are  still 
interested  in  keeping  an  open  and  competitive  market  for  refined  oil,  and 
they  would  not  sacrifice  them.  They  would  rather  have  their  pipe  lines 
wiped  out,  if  they  must  be.  In  other  words,  we  were  at  a  point  where  we 
expected  them  to  be  wiped  out,  and  we  were  willing  to  suffer  that  rather 
than  to  sell  them.  We  did  not  go  in  to  sell  them,  and  we  passed  an  act 
of  the  Legislature  providing  that  we  could  not  sell  them,  nobody  could  sell 
them,  and  they  got  that  repealed,  and  immediately  purchased  an  inde- 
pendent   pipe   line. 

*Q.  Can  you  state  what  that  law  was?  A.  That  law  was  passed  in  1883 
at  the  same  time  the  free  pipe  line  law  was  passed,  *which  prohibited  inde- 
pendent pipe  lines  from  consolidating,  and  that  continued  to  be  a  law  until 
1895,  when  the  Standard  Oil  Company  secured  its  repeal.  They  had  secured 
its  repeal  two  years  before  but  the  Governor  of  Pennsylvania  then  vetoed 
that  bill.  They  got  the  repeal  bill  through  again  in  1895  and  the  Governor 
signed  it.  The  independent  people  who  secured  the  passage  of  this  law 
were  like  Cortez  when  he  went  to  Mexico;  they  were  willing  to  burn  their 
ships,  they  would  stay  and  make  the  oil  and  fight  it  out  or  fail. 

Q.  (By  Professor  JENKS.)  Did  I  understand  you  to  say.  Senator  Lee, 
that  about  seventy-five  per  cent  of  the  producing  capacity  of  the  Pennsyl- 
vania oil  wells  is  in  your  organizations?  A.  No,  sir,  it  is  not.  The  inde- 
pendent producers  are  not  united  or  associated  in  any  way  with  our  com- 
panies.    Some  of  them   are  not  our   stockholders.      *They  are    independent. 

Q.  About  what  per  cent  of  the  oil  producing  field  do  you  have  in  your 
organizations?     A.  1  think  possibly   about  forty  or  fifty  per  cent. 

Q.  (By  Vice-chairman  PHILLIPS.)  That  is  stockholders  in  your  line? 
A.  Stockholders   in  our   line. 

Q.  (By  Vice-Chairman  PHILLIPS.)  But  the  lines  themselves  do  not 
own  anything?     A.  No,   sir,   the  lines  themselvqs   do   not. 

Q.  (By  Mr.  RATCHFORD.)  Speaking  of  the  advantages  of  the  larger 
concern,  we  will  suppose  that  A  has  oil  wells  producing  ten  barrels  a  day, 
and  B  producing  10.000  per  day.  How  can  A  compete  with  B  in  the  open 
market  *and  do  the  business  at  the  same  prices?  A.  He  cannot,  but  he 
ought  to  have  an  equal  chance  for  that  very  reason. 

Q.  The  cost  of  developing  a  well,  boring  a  well,  is  about  the  same 
whether  it   flows  or  is   dry?     A.  Yes,   sir. 

Q.  I  want  to  know  if  the  advantage  of  B  over  A  is  not  correspondingly 
as  great  as  the  advantage  of  the  Standard  Oil  Company  over  B? 

^Representative  LIVINGSTON.  That  is  not  a  parallel  case  because  one 
manufactures   and   the   other   does   not. 


*BIack  faced  type  indicates  matter  omitted,    in   the  course   of  editing,    from    the 
ofRcial  report. 


120  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

*Q.    (By  Mr.  RATCHFORD.)     I  prefer  you  to  answer  the  question. 

The  WITNESS.     State   it  again,   please, 

Q.  (By  Mr.  RATCHFORD.)  Presuming  that  A  produced  ten  barrels  per 
day  and  B  10,000,  are  the  advantages  of  B  over  A  correspondingly  as  great 
as  the  advantages  of  the  Standard  Oil  Company  over  B,  who  is  the  larger 
producer  of  the  two?  A.  Well,  that  is  a  comparison  that  I  don't  see  how 
you  can  make,  for  you  are  comparing  two  entirely  different  cases.  You 
are  comparing  a  manufacturer  with  a  producer  and  one  producer  with 
another. 

Q.  The  point  I  wish  to  bring  out  is  simply  this:  inasmuch  as  the  cost 
of  boring  a  well  is  the  same,  or  nearly  the  same,  it  is  the  individual  or 
company  fortunate  enough  to  make  a  great  strike  that,  with  a  few  additional 
laborers  can  handle  10,000  barrels  as  cheaply,  perhaps,  as  a  man  who 
handles  ten  barrels  or  a  hundred  barrels.  Because  of  the  Increased  produc- 
tion of  the  crude  oil  they  can,  if  they  will,  sell  at  a  smaller  margin  of  profit. 
A.  They  can,  but  the  price  is  usually  fixed  by  the  man  who  produces  the 
smaller  quantity,  for  this  reason:  if  he  does  not  get  a  price  that  remuner- 
ates him,  so  that  he  can  at  least  get  the  cost  of  producing  it,  he  must  quit, 
so  that  a  price  must  be  fixed,  if  it  is  fixed  arbitrarily,  that  will  enable 
him  to  live.  If  it  will  enable  the  man  who  produces  ten  barrels  to  live,  the 
man  who  produces  10,000  barrels  is  making  a  very  large  fortune.  *lt  depends 
upon  the   number  of  wells  he   is  producing   it  from,  of  course. 

Q.  I  understand  you  to  say  that  the  small  producer  fixes  the  price?  A. 
No,  sir,  but  the  price  must  be  maintained  so  that  he  can  produce,  because 
if  you  cut  off  the  wells  that  are  producing  half  a  barrel  a  day,  you  would 
take  off  one-half  of  the  entire  production. 

Q.  Is  not  the  price  fixed  by  mutual  arrangement?  A.  No,  sir.  it  is 
fixed    arbitrarily   by    the    Standard    Oil   Company. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Is  it,  or  is  it  not,  an  ascertained 
fact  that  the  greater  part  of  production  is  coming  from  the  small  wells,  and 
there  are  a  great  number  of  small  producers?  A.  That  is  right.  The  ma- 
jority of  all  production  is  from  wells  that  produce  less  than  half  a  barrel 
a  day. 

*Q.  (By  Mr.  RATCHFORD.)  In  this  comparison  that  1  wanted  to  bring 
out,  you  stated  that  I  was  comparing  the  producer  with  a  manufacturer.  I 
understood  you  to  say  earlier  in  the  session  that  the  Standard  Oil  Company 
produced   twenty-five  per  cent.     A.  Yes,   sir. 

Q.  That    is    all,    sir?     A.  Yes,    sir. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Now  the  last  question:  "What 
remedy  can  be  applied."  We  will  proceed  to  the  remedy.  A.  That  is  a 
very  difficult  question,  and  I  want  to  be  understood  as  simply  giving  my 
own  view  of  it.     The  most  difficult  thing  is  to  find  a  remedy  for  the  evil. 

Q.  (By  Representative  LIVINGSTON.)  It  is  no  trouble  for  a  man  to 
know  he  is  sick?  A.  No.  You  can  diagnose  a  case  a  great  deal  better 
than  you  can  apply  the  remedy,  but  I  suppose  the  real  evil  ought  to  be 
reached.  The  real  evil  is  not  so  much  the  aggregation  of  capital.  No  one 
objects  to  a  man  being  rich.  If  he  has  money,  and  has  acquired  it  honestly, 
that  is  all  right.  I  do  not  object  to  his  engaging  in  business,  if  he  wants 
to.  only  so  far  as,  by  the  use  of  unfair  advantages,  he  drives  out  others  who 
are  entitled  to  be  in  business.  No  one  objects  to  large  aggregations  of  capi- 
tal being  engaged  in  business,  if  they  are  willing  to  enter  into  a  fair,  honest 
competition. 

*Q.  You  mean  by  that  to  say  if  they  do  not  abuse  power?  A.  If  they 
do  not  abuse  power.  The  way  I  would  do  would  be  to  try  to  prevent  them, 
if  possible,  from  abusing  power  and  I  would  in  a  few  words  say  that  any 
person  or  corporation  that  engages  in  destructive  competition  shall  be 
guilty  of  a  misdemeanor  to  be  punished  with  both  fine  and  imprisonment. 

Q.  (By  Mr.  F.'\RQUHAR.)  You  mean  that  as  a  National  or  a  State  law? 
A.  You  could  not  apply  it  as  a  National  law.  except  as  to  interstate  com- 
merce. It  would  have  to  be  a  State  law  where  it  concerns  the  commerce 
within   the    State. 


♦Black  faced  type  indicates  matter  omitted,    in    the  course   of  editing,    from    the 
official  report. 


J.  W.  LEE,  PRESIDENT  PURE  OIL  TRUST.  12L 

Q.  How  would  you  define  "destructive?"  A.  I  would  leave  that  to  the 
courts  and  juries.  They  will  find  a  way  out  by  dealing  with  the  intent, 
and  that  always  enters  into  criminal  evidence.  If  a  man,  knowing  the 
market,  starts  to  sell  a  product  for  a  low  price,  not  for  his  own  profit  but  to- 
drive  somebody  else  out  of  the  business  so  that  he  will  get  their  trade, 
that  is  destructive  competition  and  I  would  let  the  jury  find  that  from  the 
evidence.  Let  them  find  it  from  the  price,  if  you  please.  If  the  price  is 
away  below  cost  and  they  maintain  that  price  for  a  long  period,  not  just  for 
a  single  sale,  it  is  destructive  competition  *and  I  would  make  that  a  penal 
offence.  It  is  a  crime  and  one  of  the  highest  crimes.  There  is  nothing  in 
this  country  that  has  done  so  much  damage  in  recent  years  as  destructive 
competition,  planned  so  that  it  is  one  of  the  most  deliberate  offences  that 
can  be  committed,  and  no  man  should  be  engaged  in  it.  He  can  easily 
avoid  the  penalty  by  avoiding  the  crime.  That  is  one  way.  If  I  had  the 
power  I  would  never  charter  a  corporation,  except  for  public  purposes,  with, 
over  a  million  dollars  of  capital.  That  is  large  enough  for  any  business 
to  secure  the  perfect  division  of  labor,  and  I  think  it  ought  to  be  limited 
to  a  million  dollars  capital.  There  is  not  much  danger  in  this  country  with 
a  million  dollars  capital.  *lt  is  only  where  they  have  excessive  capital. 
One  man  said  to  me:  "This  is  our  business;  we  can  lose  $100,000  from 
15,000,000  and  not  feel  it.  Your  company  cannot  lose  $100,000.  You  have 
not  it  to  lose,  and  we  will  drive  you  out  of  business." 

Q.  (By  Mr.  A.  L.  HARRIS.)  Would  you  include  transportation  com- 
panies in  your  limit  of  capital?  A.  No,  sir,  I  would  call  them  public  or 
quasi  public  corporations.  I  would  put  all  telegraph,  traction  and  electric 
light  companies,  in  cities  where  they  deal  directly  with  the  public,  under 
severe  regulations.  We  can  regulate  the  prices  of  those  companies  because 
they  have  a  fixed  unit  that  they  furnish  to  the  public.  In  the  case  of  gas 
companies,  we  have  a  right  to  regulate  the  prices.  A  traction  company 
carries  passengers  and  you  can  limit  the  fare.  You  have  a  way  of  getting 
at  them  but  you  have  no  way  of  getting  at  commercial  companies,  and  if 
you  can  limit  their  capital  to  $1,000,000  you  would  reach  a  good  remedy, 
but  if  you  do  not  do  that  you  have  to  do  something  else,  unless  the  country 
is  to  be  ruined  by  these  large  aggregations  of  capital. 

Q.  Would  you  reach  the  remedy  for  this  trouble  by  what  are  commonly 
called  the  anti-trust  laws,  or  would  you  do  it  through  the  corporation 
acts  of  the  different  States?  A.  They  would  have  to  be  real  anti-trust 
laws.  You  would  say  that  no  company  should  have  over  $1,000,000  capital. 
*You  can  make  it  a  penal  offence  for  them  to  have  more  than  that  if  you 
want  to  drive  them  out  and  make  them  begin  over  again  and  do  away 
with  the  trusts  altogether.  No  commercial  company  should  have  more  than 
that.  You  can  have  a  perfect  division  of  labor  with  $1,000,000  capital, 
and  all  political  economists  say  that  is  all  that  is  desired  by  the  aggregation 
of  capital.  But  that  is  not  what  the  trusts  desire.  The  trusts  desire  to  get 
in  a  position  to  squeeze  somebody  out  of  business,  to  drive  somebody  out 
of  business,  to  obtain  a  monopoly  whereby  they  can  levy  tolls  upon  the 
public  generally.     That  is  what  the  trusts  are  after.     They  are  all  after  that. 

Q.  (By  Representative  LIVINGSTON.)  You  recommend  such  laws  for 
controlling  or  regulating  trusts.  What  would  you  recommend  us  to  do  with 
the  State  of  New  Jersey  to  start  with?  A.  Well,  I  do  not  know  what  you 
could  do  with  the  State  of  New  Jersey.  I  do  not  suppose  any  legislation 
can  be  secured  in  New  Jersey,  but  this  will  probably  bo  reached  at  last 
by  securing  a  healthy  public   sentiment  first. 

Q.  If  one  State  is  allowed  to  issue  charters  as  it  pleases,  and  those 
charters  are  to  be  operative  in  all  of  the  other  States,  how  are  you  going 
to  remedy  it  by  State  legislation?  A.  You  can,  we  will  say,  provide  that 
no  trust  can  do  business  in  the  State  of  Georgia. 

*Q.  We  have  an  iron-bound,  rock-ribbed  law  there  now.  A.  And  that 
no  trust  nor  corporation  can  do  business  with  a  capital  over  $1,000,000.  If 
a  dozen  States  would  pass  laws  of  that  kind  that  would  enable  independent 
companies  to  come  in  those  States  and  do  business  on  those  lines. 


*Black  faced  type  indicates  matter  umitted,    in    the  cour.se    of   editing,    from    ttie- 
official  report. 


122  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

*Q.  If  a  corporation  comes  into  my  State  to  sell  goods  with  $500,000  or 
$500,000,000  capital  and  does  not  use  unfair  methods,  does  not  attempt  to 
destroy  competition,  why  not  let  it  have  $500,000,000  as  well  as  $1,000,000? 
A.  I  do  not  object  to  the  capital,  but  to  the  amount  of  it. 

*Q.  I  do  not  see  the  object  of  limiting  it  to  $1,000,000,  because  a  rascal 
can  be  a  rascal  with  $1,000,000  just  as  easy  as  with  $100,000,000.  A.  I  only 
limited  it  to  $1,000,000  because  a  company  with  $1,000,000  capital  cannot 
engage  extensively  in  destructive  competition. 

*Q.  He  can  to  that  extent;  on  a  smaller  scale  it  would  be  just  as  mean? 
A.  It  might  be  mean  but  as  much  damage  could  not  be  done  by  a  company 
of  $100,000  or  $500,000  of  capital.  A  company  with  $500,000,000  of  capital 
can  drive  out  everybody  else  in  the  industry  and  when  they  do  it  they 
want  to  secure  a  monopoly.  That  is  all.  I  am  afraid  they  will  do  it  and 
there  is  no  way  of  curbing  their  power  except  to  take  their  capital  away 
from  them;   not  allow  them  to  have  that  capital. 

Q.  Have  we  any  import  duty  on  oil?  A.  Yes,  sir,  there  is  an  import 
duty  of  ten  cents  a  barrel  on  it. 

Q.  How  does  that  help.     A.  There  is  no  oil  imported  into  this  country. 

*Q.  It  don't  make  any  difference  if  there  is  not?  A.  It  don't  help  any- 
body  because  there   is   no  oil   imported. 

Q.  It    does    not    keep    anybody    out?     A.  No,    sir. 

Q.  Why  was  it  put  on?  A.  I  do  not  know;  for  fear  that  they  might 
get  large  fields  and  the  fear  of  such  fields. 

*IVlr.  FARQUHAR.  It  was  put  on  for  protection  from  Canadian  fields, 
and   legitimately,  too. 

Q.  (By  Mr.  A.  L.  HARRIS.)  In  addition  to  the  large  aggregations  of 
capital,  is  not  the  public  also  in  danger  by  over  capitalization?  A.  Oh,  un- 
doubtedly. Having  over  capitalized  these  trusts  they  will  want  to  show  an 
earning  power  to  the  holders  of  their  stocks,  and  in  order  to  do  that  they 
must  collect  extortionate  prices  from  the  consumers,  if  they  have  a  monopoly. 

Q.  (By  Representative  LIVINGSTON.)  Do  not  all  over  capitalized  cor- 
porations tend  to  bankruptcy,  and  inevitably  must  they  not  go  into  the 
hands  of  the  receiver?  A.  Yes,  sir.  I  think  that  will  be  true  of  a  great 
many   of   those   trusts. 

Q.  (By  Mr.  RATCHFORD.)  What  effect,  in  your  judgment,  has  the 
organization  and  operation  of  the  trusts,  large  moneyed  corporations,  upon 
personal  ambition  and  individual  enterprise  among  the  American  people?  A. 
I  think  it  is  very  rapidly  stifling  them;   very  rapidly. 

Q.  In  your  judgment,  are  large  numbers  of  individuals  kept  out  of 
business  by  this  reason?     A.  There  is  no  question  about  that. 

Q.  You  are  satisfied  about  that?     A.  No  doubt  about  it. 

Q.  You  speak  of  destructive  competition.  Can  you  conceive  of  any 
way  in  which  that  destructive  competition  can  be  brought  about  more  forc- 
ibly and  more  wholly  than  by  tearing  down  and  destroying  rival  enter- 
prises? A.  No,  I  do  not  know  a  more  fiagrant  means  of  destroying  compe- 
tition than  by  paying  exorbitant  prices  for  competing  plants  in  good  condi- 
tion, and  tearing  them  down  in  the  face  of  their  competitors.  That  is  a 
notice  to  everybody  that  they  do  not  propose  to  have  competition. 

Q.  That  practice  surely  works  great  hardships  to  the  communities  in 
which  these  plants  are  torn  down?  A.  Undoubtedly.  It  is  a  waste  of 
that  large  capital  that  it  has  taken  years  to  build  up.  If  a  man  burns 
his  own  house  he  is  guilty  of  arson.  I  do  not  know  why,  if  he  destroys  a 
new  plant  out  of  mere  animosity  or  desire  to  injure  somebody  else,  he 
should   not    be   guilty   of   a   criminal   offence. 

Q.  (By  Representative  LIVINGSTON.)  Instead  of  preventing  large  ac- 
cumulations of  capital  from  entering  into  a  combine  of  over  $1,000,000  as 
you  have  suggested,  suppose  you  were  to  levy  an  income  tax  of  fifty  per 
cent  on  their  profits?     A.  I  am  afraid  they  would  lie  about  it. 

Q.  Would  not  that  be  a  fair  way  to  do  it?  A.  I  would  be  willing  to 
do  anything  to  wipe  them  out  and  give  the  people  a  fair  chance.  Yes,  sir, 
I    think   that   would   do   if   you   could   enforce  it. 


♦Black  facGd  type  Indicates  matter  omitted,    in   the  course   of   editing,    from    the 
offlciai  report. 


J.  W.  LEE,  PRESIDENT  PURE  OIL  TRUST.  123 

Q.  (By  Mr.  FARQUHAR.)  Would  any  State  court  regard  that  as  con- 
stitutional, or  any  European  court?  A.  I  have  no  hostility  to  any  individuals 
but  I  would  simply  like  to  see  some  limitation  put  upon  the  power  of  trusts 
in  the  interest  of  the  people  themselves. 

Q.  (By  Representative  LIVINGSTON.)  It  would  not  be  class  legisla- 
tion if  Congress  should  tax  all  trusts  and  combines  with  an  income  tax  of 
fifty  per  cent  on  their  profits?  A.  I  would  dislike  to  see  any  law  passed 
that  would  recognize  their  legal  existence. 

*Q.  Would  that  be  class  legislation  if  all  combines  were  taxed?  A.  I 
should   not  think  it  would   be,  sir;    I   should  not  think  it  would. 

Q.  (By  Vice-chairman  PHILLIPS.)  What  would  you  think  of  an  in- 
heritance tax.  upon,  we  will  say,  large  wealth;  upon  wealthy  people  in  pro- 
portion to  their  wealth?  *A.  Well,  the  trouble  is  they  would  give  it  to  their 
daughters  before  they  die,  and  they  would  go  abroad  and  marry  foreign 
lords  and  noblemen.  That  is  where  a  great  deal  of  the  wealth  of  America 
is   going. 

Q.  (By  Representative  OTJEN.)  Then  it  would  not  reach  corporations, 
would  it?  A.  No,  I  am  afraid  that  would  not  reach  the  end.  1  am  afraid 
it  would  be  open  to  *Mr.  Farquhar's  objection  unless  it  was  uniform,  and  if 
it  were  uniform,  would  it  not  be  avoided  very  largely  by  people  making 
gifts    prior   to   death? 

Q.  (By  Mr.  FARQUHAR.)  Are  these  the  only  remedies  you  have  to 
offer?  You  mentioned  a  remedy  as  to  destructive  competition  and  the 
question  as  to  limitation  of  capital.  Have  you  any  other  remedy?  A.  Gov- 
ernment inspection  might  alleviate  the  evils  of  all  business  concerns,  but 
that  would  only  result  in  publicity  and  they  do  not  seem  to  care  much  about 
that.     They  are  largely  defying  public  opinion. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Would  you  be  in  favor  of  govern- 
ment inspection  of  corporations?  A.  Yes.  sir.  I  think  that  ought  to  be 
done.  In  England  the  power  of  visitation  was  a  common  law  right  of  the 
founder  of  a  corporation.  He  had  the  power  of  visitation,  and  as  the  State 
creates  the  corporation  they  certainly  ought  to  have  the  power  of  visitation. 
They  have  undoubted  right  to  it. 

Q.  (By  Representative  OT.JEN.)  You  would  make  destructive  compe- 
tition a  criminal  offence?     A.  Yes,  sir. 

Q.  How  would  you  enforce  the  penalty  against  corporations?  A.  I 
would  make  it  apply  to  any  person,  corporation  or  agent  of  the  corporation 
you  could  find.     You  cannot  imprison  a  corporation,  of  course. 

Q.  You  would  simply  have  to  enforce  the  penalty?  A.  To  enforce  the 
penalty  of  imprisonment  against  the  individual.  Make  all  the  officers  of 
the  corporation  guilty  of  the  offence.  They  are  willing  to  violate  any  moral 
obligation  or  rule  but  there  is  one  thing  they  do  not  like  to  do.  They  do 
not    like   to    take    any   risk   of   imprisonment. 

Q.  It  would  be  competent  to  fine  the  corporation  that  would  be  found 
guilty  of  destructive  competition?     A.  Yes,  sir. 

Q.  But  would  it  also  be  competent  to  imprison  the  president  and  direc- 
tors? A.  Yes,  sir,  you  could  say  that  all  the  officers  and  all  the  agents  and 
employes  connected  with  a  corporation  that  engaged  in  destructive  compe- 
tition should  be  guilty  of  misdemeanor  and  upon  conviction  be  fined  $5,000 
and  undergo   imprisonment   of  one  or  two  years. 

Q.  (By  Mr.  RATCHFORD.)  Do  you  believe  that  the  law  should  define 
exactly  what  "destructive  competition"  means?  A.  I  would  leave  that  to 
the   courts.     They   would   soon   settle   that. 

Q.  The   courts?     A.  Or   the  juries. 

Q.  (By  Mr.  A.  L.  HARRIS.)  You  have  no  doubt  made  a  study  of  what 
is  known  as  the  Sherman  Anti-Trust  law?     A.  I  have  studied  it  some. 

Q.  Have  you  any  suggestions  to  make  as  to  amendments  to  make  the 
Sherman  Anti-Trust  law  more  effective  than  it  is  now?  A.  I  have  not  at 
this  time.     I  would   like  to  look  that  over  again. 

Q.  Will  you  please  do  that  and  see  whether  it  can  be  made  a  basis 
for  future  remedy?     A.  I  think  the  law  has  had  some  good  effect. 


♦Black  faced  type  indicates  matter  nmittod,    in    the  course   of   editing,    from    the 
oflicial  report. 


124  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

6 

Q.  Is  it  possible  to  bring  it  under  the  jurisdiction  of  the  Interstate 
Commerce  Commission?  A.  That  is  a  pretty  difficult  question.  That  is  a 
question  a  good  many  people  have  considered. 

*Q.  Suppose  you  have  given  it  some  thought?  A.  I  have  been  thinking 
of  these  questions  probably  thirty  years.  I  have  been  brought  in  pretty 
close  contact  with  them  for  that  period. 

Q.  (By  Professor  JENKS.)  Do  you  export  any  oil  to  Canada?  A.  We 
sell  a  great  deal  of  oil  to  Canada. 

Q.  Have  you  come  in  conflict  there  with  the  Standard  Oil  Company  in 
regard  to  discriminations  in  railroad  rates  on  oil?  A.  There  has  been  quite 
a  conflict  there,  yes,  sir.  I  think  there  has  been  some  trouble  about  railroad 
rates  recently. 

Q.  Has  your  own  establishment  and  the  Standard  Oil  Company  con- 
flicted there?  A.  Yes,  sir,  we  have  run  into  conflict  with  them  to  some 
extent. 

Q.  Can  you  give  any  facts?     A.  No,  sir. 

Q.  That  was  all.  I  wanted  to  know  about  that  fact,  if  you  had  that 
history.     A.  No,   sir. 

On  motion  of  Mr.  Livingston  the  commission  tendered  a  vote  of  thanks 
to  the  witness  for  the  "able  discussion"  of  the  questions  considered. 


CHAPTER  VIII. 

TESTIMONY  OF  MR,  THEODORE  B.  WESTGATE, 
A  Director  of  the  Pure  Oil  Trust. 

Mr.  Theodore  B.  Westgate  appeared  before  the  commission  June  9,  1899, 
He  was  carefully  questioned  by  Vice-Chairman  Phillips,  his  associate  in 
the  oil   business. 

Mr.  Westgate  made  a  very  strange  admission  in  his  testimony.  He  said 
that  he  sold  his  oil  to  his  customers,  and  they,  in  turn,  sold  it  under  any 
name  they  saw  fit.  He  said  they  could  name  it  after  the  Standard  Oil 
Company  if  they  cared  to  and   that  that  made  no  difference. 

"But  we,  however,"  he  said,  "have  no  names  of  the  Standard  Oil  in 
competition  in   Northern   New   York." 

This  testimony  sounds  very  strangely  when  taken  in  connection  with 
Mr.  Westgate's  charge  that  the  Standard  Oil  Company  had  copied  his  brand. 
This  copying,  it  was  claimed,  was  by  putting  their  oil  in  yellow  barrels. 
Mr.  Archbold  testified  that  the  Standard  Oil  Company  had  used  such  bar- 
rels in  the  locality  to  which  Mr.  Westgate's  complaint  referred  long  before 
he  had  entered  it.  Mr.  Westgate  said  that  his  oil  was  not  sold  under  the 
names  of  the  Standard  Oil  Company  in  competition  in  Northern  New  York. 
No  one  asked  him  whether  it  was  sold  in  that  way  in  any  other  part  of  the 
country. 

The  official  report  of  Mr.  Westgate's  testimony,  when  compared  with 
the  stenographic  report,  shows  changes,  the  reason  for  which  is  not  clear, 
and  which  do  not  seem  to  be  authorized  by  any  of  the  rules  for  editing 
testimony  which  were  adopted  by  the  commission. 

It  is  not  known  that  the  commission  at  any  time  decided  that  it  would 
eliminate  testimony  showing  that  evil  affects  result  from  severe  competi- 
tion. Yet  the  following  question  and  answer  do  not  appear  in  the  official 
report  of  the  testimony: 

Q.  (By  Mr.  KENNEDY.)  Has  not  competition  been  the  curse  of  the 
workingman;  has  it  not  bred  the  sweating  system  and  many  other  evils 
that  the  workingman  of  this  country  suffers  under?     A.  I  suppose  it  has. 


•Black  faced  type  indicates  matter  omitted,    in   the  course   of  editing,    from    the' 
official  report. 


THEODORE  B.  WESTGATE. 


125 


The  following  was  also  eliminated. 

Q.  (By  Professor  JENKS.)  If  there  is  any  cutting  of  price,  it  comes 
from  the  other  side,  and  you   follow   down?     A.  Yes,   sir. 

Mr.  Westgate  testified  that  the  Standard  Oil  Company  keeps  in  close 
touch  with  its  business,  and  he  regarded  the  fact  that  they  "know  what 
they  are  doing"  as  "one  reason  why  they  are  such  a  success."  No  one  could 
criticise  refiners  for  keeping  in  close  touch  with  their  business  and  knowing 
what  they  are  doing,  but  in  the  ofl[icial  report  he  is  quoted  as  saying  that 
they  keep  in  close  touch  with  the  business  and  that  they  "know  what  we 
(the  "independents")   are  doing." 

The  question  as  to  the  cutting  of  prices  in  the  marketing  of  oil  is  not 
brought  out  in  the  official  report  of  the  testimony  as  forcibly  as  it  was  in  the 
actual  testimony.  It  will  also  be  seen  that  Mr.  Westgate  seemed  to  think 
that  men  who  buy  oil  from  him  show  "patriotism  or  independence."  but 
that  opinion  does  not  appear  in  the  official  report.  The  following  extracts 
of  testimony  as  actually  given  and  as  oflJicially  published,  show  these 
changes. 

Speaking  of  the  Standard  Oil  Company  cutting  the  prices  of  oil  at 
places  in  which  the  witness  came  in  competition  with  them  to  any  consider- 
able extent,  he  said: 


STENOGRAPHIC  REPORT. 

They  keep  in  close  touch  witn 
their  business,  and  that  is  one  rea- 
son why  they  are  such  a  success;  be- 
cause they  know  what  *they  are  do- 
ing. I  have  suffered  competition  at 
times  so  severe  that  I  have  been 
obliged  to  sell  oil  under  cost  to  cer- 
tain customers  in  order  to  protect 
them.  If  it  is  a  special  customer,  it 
is  certainly  to  my  advantage  to  pro- 
tect that  customer  so  long  as  I  can. 
We  are  very  cautious,  however,  about 
that,  because  so  many  times  custo- 
mers whom  we  have  protected  for 
six  months  or  a  year  finally  lose 
their  previous  patriotism  or  inde- 
pendence, and  they  turn  us  down,  the 
Standard  having  made  some  arrange- 
ment for  handling  their  oil. 


OFFICIAL    REPORT    (pp.    366-367.) 

They  keep  closely  in  touch  with 
the  business.  That  is  one  reason  why 
they  are  such  a  success,  because 
they  know  what  *we  are  doing.  I 
have  found  severe  competition  at 
times,  so  severe,  indeed,  that  I  have 
been  obliged  to  sell  oil  under  cost  to 
certain  customers.  That  is,  after  a 
customer  has  proved  to  me  that  he 
is  an  established  customer,  it  is  cer- 
tainly to  my  advantage  to  endeavor 
to  protect  him  just  as  long  as  I  can. 
We  are  very  cautious,  however,  about 
that,  because  we  have  so  many 
times  finally  lost  customers  whom  we 
have  protected  for  six  months  or  a 
year.  They  turn  us  down,  and  the 
Standard  makes  some  arrangement 
for  the  handling  of  their  oil. 


I  have  demonstrated  this,  how- 
ever, to  my  satisfaction,  if  not  to 
yours,  that  if  I  sell  a  limited  amount 
of  oil,  very  limited,  say  a  tenth  of 
the  consumption  in  Syracuse,  there 
are  nine  chances  in  ten  that  the 
ferent  if  I  attempt  to  get  one-third  or 
prices  will  not  be  cut.  But  it  is  dif- 
one-half  of  the  trade,  as  I  did  have 
in  Auburn.      *      *       * 


I  have  demonstrated  this,  perhaps, 
to  my  satisfaction,  if  not  to  yours; 
that  is,  if  I  sell  a  limited  amount  of 
oil,  very  limited,  say  one-tenth  of  the 
consumption  in  Syracuse,  I  would 
endeavor  to  sell  it  at  the  price  the 
Standard  Oil  Company  are  selling 
it;  if  I  maintain  that  position,  nine 
chances  in  ten  the  prices  will  not  be 
cut.  If  I  attempt  to  get  one-third  or 
one-half,  the  trade  I  did  have  in  Au- 
burn would  be  gone  after.      *      *      * 

In  introducing  the  witness  to  the  commission  Mr.  Phillips,  his  associate 
in  the  oil  business,  took  occasion  to  speak  of  him  in  complimentary  terms, 
saying: 

*"l  will  state  to  the  gentlemen  of  the  commission  that  Mr.  Westgate  has 
been  a  long  time  engaged  in  the  refining  industry  in  the  Pennsylvania  oil 
fields.  His  residence  is  at  Titusville,  and  he  is  thoroughly  posted  in  regard 
to  the  refining  industry.  It  affords  me  pleasure  to  introduce  Mr.  Westgate 
to  the  commi?;'5ion." 


*Black  faced  type  indicates  matter  omitted.    In   the   course   of  editing,    from   the 
official  report. 


126  REVIEW   OF   TESTIMONY— INDUSTRIAL    COMMISSION. 

Mr.  Westgate  said  he  had  been  an  oil  refiner  for  thirteen  years  and  was 
also,  to  a  small  extent,  a  producer  of  crude  oil.  His  refinery  was  at  Titus- 
ville.  Pa.  He  said  he  was  a  manager  of  the  Producers  &  Refiners'  Oil 
Company,  and  a  director  in  the  Pure  Oil  Company. 

Mr.  Westgate  was  asked  to  give  any  information  he  could  in  regard  to 
the  competition  in  New  York  City,  Philadelphia,  and  other  places,  between 
the  Standard  Oil  Company  and  the  Pure  Oil  Trust.  He  said  that  when  the 
Pure  Oil  Company  opened  up  an  agency  in  New  York  City,  the  price  of  oil 
was  immediately  dropped  by  the  Standard  Oil  Company  without  any  cor- 
responding decline  in  crude  oil. 

He  said:     "There  was  quite  a  little  drop." 

Q.  (By  Vice-Chairman  PHILLIPS.)  So  much  so  as  to  take  the  profit 
from  the  oil?  A.  Yes,  sir;  it  was  sold  at  a  loss  by  the  Pure  Oil  Company  in 
New  York  City. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Do  they  still  continue  that  sale  at 
a  loss?     A.  Yes,  sir;  it  is  still  sold  at  a  loss  there. 

He  said  that  when  the  Pure  Oil  Company  became  a  competitor  of  the 
Standard  Oil  Company  in  Philadelphia  the  prices  also  went  down  until  the 
former  company  was  selling  at  a  loss. 

The  witness  being  asked  to  explain  the  different  qualities  of  oil  that  he 
markets,  together  with  their  prices,  said  that  his  highest  grade  was  Sunlight, 
double  refined,  worth  in  bulk,  at  the  refinery,  when  he  testified,  four  and  a 
half  cents  per  gallon.  The  next  lower  grade  was  Headlight  oil,  one-quarter 
of  a  cent  less  per  gallon.  His  next  grade  was  Diamond  Safety,  one-quarter 
of  a  cent  less  than  the  Headlight  oil;  then  came  Silver  Star,  a  prime  wh'"3. 
The  first  three  grades  named,  he  said,  were  water-white,  155°  fire  test,  the 
Silver  Star  being  prime  white,  150°  fire  test.  He  said  he  made  120°  water- 
white  oil,  which  was  worth  four  cents  per  gallon.  The  export  oil  was  worth, 
when  he  testified,  .0390  cents  per  gallon. 

There  were  30  or  40  different  brands  that  could  be  placed  upon  the  same 
grade  of  oil.  and  he  branded  his  different  grades  of  oil  to  suit  his  customers. 

Q.  (By  Professor  JENKS.)  How  about  the  branding  of  these  oils  for 
sale  to  customers?  Do  you  vary  the  brands  at  all  to  suit  the  whims  of  the 
individual  customers,  when  the  oils  are  of  the  same  grade?  A.  We  do,  yes, 
sir;  that  is  to  say  I  don't  sell  my  Sunlight,  double  refined,  my  high  grade 
oil,  under  the  brand  of  Diamond  Safety;  neither  do  I  sell  my  Diamond  Safety 
oil  under  the  brand  of  Sunlight.  One  customer  in  Northern  New  York  may 
want  his  special  brand  put  upon  my  Sunlight,  double  refined  oil;  he  may  call 
it  Arc  Illuminator  or  he  may  call  it  Silver  Star.  A  man  in  Massachusetts 
might  want  to  call  it  Starlight.  There  are  30  or  40  different  brands  that  can  be 
placed  upon  the  same  grade  of  oil,  with  all  due  credit  and  due  justice  to  the 
refiner,  as  well  as  to  the  producer  and  consumer. 

Q.  So  in  that  way  you  vary  the  brand  to  suit  the  wish  of  the  individual 
customer?     A.  Yes,  sir. 

Q.  That  you  do,  although  you  do  not  expect  to  put  a  brand  on  that  will 
imply  a  high  grade  oil  upon  what  is  really  low  grade?  A.  No,  I  bill  it  out,  I 
name  it  Sunlight,  for  instance;  I  don't  take  his  brand.  I  simply  brand  it 
with  my  brand,  both  heads.  Sunlight,  double  refined. 

Q.  And  you  let  him  sell  it  by  whatever  name  he  pleases?  A.  Whatever 
name  he  chooses.  He  can  name  it  after  the  Standard  Oil,  *it  makes  no  dif- 
ference, but  we,  however,  have  no  names  of  the  Standard  oil  in  competition 
in  Northern  New  York.  My  Sunlight  double  refined  was  giving  entire  satis- 
faction, and  my  oil  was  put  in  yellow  barrels  with  my  own  brand,  American 
Oil  Works,  Limited.  Sunlight  double  refined,  150°  water-white  oil,  and  they 
immediately  began  to  copy  that  brand. 

Q.  You  say  "they?"  A.  They,  the  Standard  Oil  Company,  putting  their 
name  on  the  outside  of  the  circle.  I  do  not  think  I  lost  my  customers  by  it. 
It  only  went  to  show  that  I  was  giving  them  a  high  grade  of  goods,  and  any- 
thing that  is  worth  imitating  is  certainly  a  good  article.  So  it  was  not 
injurious  to  me. 


♦Black  faced  typo  indicates  matter  omitted,    in   the   cour.=c   of  editing,    from    the 
oftlcial  rcDort. 


THEODORE  B.   WESTGATE.  127 

Q.  Well,  was  their  oil  so  marked  as  good  as  yours?  A.  That  I  do  not 
know.  At  Pottsdam,  Ohio,  I  have  received  back  their  empty  barrels  that  my 
customers  had  picked  up  in  the  rush  of  business,  which  only  went  to  prove 
that  my  salesmen  were  not  incorrect  in  what  they  had  written. 

*Q.  That  they  were  imitating  your  barrels  and  taking  the  name  of  your 
brands  with  the  purpose  of  deceiving  customers?     A.   Yes,  sir. 

Q.  Will  you  give  us  any  further  information  with  reference  to  the  meth- 
ods of  competition  of  the  Standard  Oil  Company  by  which  they  have  tried 
to  get  your  customers?  A.  Sometimes  the  competition  is  very  agreeable  and 
runs  along  smoothly,  and  all  of  a  sudden  there  will  be  an  outbreak  in  some 
locality.  I  do  not  know  whether  that  is  occasioned  by  my  refinery  putting 
in  too  large  a  per  cent  of  the  oil  or  not.  I  wish  you  to  understand  that  I 
have  no  understanding  with  the  Standard  Oil  Company  as  to  how  much  I 
shall  put  in  in  any  of  their  districts,  but  they  keep  a  very  accurate  tabula- 
tion of  every  barrel  of  oil  that  the  independent  refiners  put  into  every  city, 
town  and  hamlet.  Their  traveling  men  have  to  report  each  night,  as  they 
call  upon  the  customers  in  every  town,  whether  they  are  their  customers  or 
not,  whether  they  buy  oil,  and  if  they  have  not,  why  not.  Also  whether  there 
is  any  independent  oil  there  on  hand.  They  keep  in  close  touch  with  their 
business,  and  that  is  one  reason  why  they  are  such  a  success; 
because  they  know  what  they  are  doing.  I  have  suffered  competi- 
tion at  times  so  severe  that  I  have  been  obliged  to  sell  oil  under 
cost  to  certain  customers  *in  order  to  protect  them.  If  it  is  a  special  cus- 
tomer it  is  certainly  to  my  advantage  to  protect  that  customer  so  long  as  I 
can.  We  are  very  cautious,  however,  about  that,  because  so  many  times  cus- 
tomers whom  we  have  protected  for  six  months  or  a  year  *finally  lose  their 
previous  patriotism  or  independence  and  they  turn  us  down,  the  Standard 
having  made  some  arrangement  for  handling  their  oil.     *     *     * 

I  have  demonstrated  this,  perhaps  to  my  satisfaction,  if  not  to  yours; 
that  is  if  I  sell  a  limited  amount  of  oil,  very  limited,  say  one-tenth  of  the 
consumption,  in  Syracuse,  I  would  endeavor  to  sell  it  at  the  price  the  Stand- 
ard Oil  Company  are  selling  it;  if  I  maintain  that  position,  nine  chances  in 
ten  the  prices  will  not  be  cut.  If  I  attempt  to  get  one-third  or  one-half,  the 
trade  I  did  have,  as  in  Auburn,  would  be  gone  after.     *     *     * 

*Q.  (By  Professor  JENKS.)  If  there  is  any  cutting  of  price,  it  comes  from 
the  other  side,  and  you  follow  down?     A.  Yes,  sir. 

Q.  Now,  if  you  can  give  us  the  one  or  two  examples  that  you  had  in 
mind?     A.  Yes,  sir. 

Q.  (By  Senator  MALLORY.)  The  witness  was  proceeding  to  give  his 
reasons  for  the  difference  between  Syracuse  and  Auburn.  A.  The  reason, 
perhaps  I  did  not  make  it  plain  was  because  I  was  selling  a  larger  percentage 
of  the  consumption  of  oil  in  Auburn  than  I  was  in  Syracuse. 

Q.  As  soon  as  you  passed  a  certain  limit,  then  there  was  a  cut?  A.  Yes, 
sir;  but  what  that  limit  is  I  don't  know.  I  have  established  it  in  my  own 
mind,  that  were  I  to  go  into  Albany  to-day  and  establish  a  tank  wagon  sys- 
tem, no  doubt  for  the  first  few  weeks  there  would  be  a  cut  in  price;  but  with 
the  first  advance  in  the  market,  if  I  maintained  the  price  at  a  normal  condi- 
tion and  desired  simply  to  put  out  enough  to  pay  running  expenses  and 
make  a  small  profit,  the  probabilities  are  that  the  prices  would  be  maintained 
at  an  advance  in  time. 

Q.  Has  that  been  your  experience  to  such  an  extent  that  you  can  put  it 
down  as  a  rule  to  govern  you  in  your  business?  A.  No.  sir;  there  are  no 
rules  in  the  oil  business.  I  wish  to  say  further  that  sometimes  even  one 
barrel  of  oil  will  precipitate  a  cut  by  the  Standard  Oil  Company.  A  friend 
of  mine  shipped  simply  one  barrel  of  independent  oil,  with  the  independent 
brand  on  it,  to  Salisbury,  Md.,  sent  it  there  as  a  present  to  a  friend.  His 
friend  told  him  that  they  were  not  getting  very  pure  oil  there.  The  oil 
arrived,  and  the  party  to  whom  it  was  shipped  had  just  bought  a  barrel  of 
oil,  and  had  it  on  tap.  He  was  a  consumer,  and  not  a  retailer,  and  to  get  rid 
of  it,  he  sold  it  to  an  old  darkey  down  there. t 


*Black  faced  type  indicates  matter  omitted,  in  the  course  of  editing,  from  the 
official  report. 

tThis  manner  of  disposing  of  the  independent  oil  did  not  indicate  that  the  con- 
sumer had  a  high  regard  for  its  (luality. 


128  REVIEW  OP  TESTIMONY— INDUSTRIAL  COMMISSION. 

Q.  That  is,  he  sold  this  oil  of  good  quality?  A.  The  good  quality  of  inde- 
pendent oil.  This  oil  the  old  darkey  put  on  his  wagon  and  went  to  peddling 
it  through  the  town  with  the  brand  end  out,  and  the  Standard  Oil  Company 
at  once  began  to  investigate  and  wondered  what  had  come,  and  they  imme- 
diately shipped  in  a  car  load  of  the  best  oil  that  the  citizens  said  had  ever 
arrived  in  Salisbury,  and  made  a  heavy  cut  in  its  price.  Of  course  it  soon 
blew  over,  because  that  was  all  there  was  to  it.  It  was  not  sent  there  to 
compete  with  the  Standard  Oil  Company,  but  they  are  so  alert  that  they  will 
■unquestionably  know  to-morrow  morning  all  my  shipments  of  to-day  from  my 
refinery.  They  know  in  New  York  City  where  that  oil  is  billed  to.  They 
can  not  get  it  at  the  Titusville  freight  office,  but  if  not  there  it  is  gotten  at 
the  junction  point,  either  Buffalo  or  one  of  the  other  junctions.  We  know 
that  because  our  customers  have  been  apprised  of  the  fact  by  some  Standard 
traveling  agent  who  has  approached  them  and  said'  "We  understand  there 
is  a  car  load  of  oil  on  the  way  for  you  from  Titusville,"  and  the  customer 
doesn't  know  it  is  on  the  way.  He  knows  he  has  ordered  it  but  he  has  not 
yet  received  the  invoice;  so  you  see  that  our  business  is  entirely  given  away 
by  some  one.  I  can  not  say  positively  that  it  is  the  railroad  company.  It  is 
not  the  men  in  my  office,  because  all  the  men  in  my  office  are  members  of 
our  firm.    Now,  you  wish  me  to  give  these  letters? 

Q.  (By  Professor  JENKS.)  To  give  one  or  two  specimens  that  you  had 
in  mind  showing  the  character  of  competition.  A.  You  understand  now, 
this  is  simply  my  side,  or  rather  my  customers'  side  of  this  business.  They 
haven't  the  evidence  here  fl  haven't  in  my  possession)  that  the  Standard  Oil 
Company  said  this,  or  that  the  Standard  Oil  Company  did  not.  I  believe, 
however,  that  they  did  say  it.  This  is  from  Shortsville,  from  one  of  my 
customers,  Thomas  &  Harrington.  They  say:  "One  of  the  merchants  here 
wrote  a  letter  to  Buffalo  in  answer  to  an  inquiry  from  the  Standard  people 
asking  why  there  was  not  more  Standard  oil  sold  here.  His  letter  was  sent 
to  New  York,  and  they  telegraphed  Buffalo  to  send  a  man  to  Shortsville  at 
once.  Their  agent  came  and  went  into  Mr.  Hall's,  whom  we  supplied  with 
oil,"  that  is  the  American  Refinery  oil 

Q.    (By  Vice-chairman  PHILLIPS.)     That  is  your  oil?     A.  Yes.  sir. 

"and  tried  to  get  him  to  take  some  in  the  car  load,  but  he  refused,  saying  he 
could  buy  it  of  us.  The  agent  made  the  following  reply:  'We  have  tried  to 
treat  Thomas  &  Harrington  right,  and  have  offered  them  oil  for  less  than 
they  can  buy  elsewhere,  but  they  still  refuse;  now  we  are  going  to  force 
them  to  buy  of  us.'  The  next  day  they  cut  the  oil  to  seven  cents.  We  have 
held  the  price  up  to  10  cents,  but  our  trade  is  leaving  us  and  we  must  meet 
them.  Now,  under  the  circumstances,  what  is  the  very  lowest  price  you  can 
put  in  a  car  load  of  Diamond  oil  for.     Answer  at  once. 

"Yours  respectfully, 

"THOMAS  &  HARRINGTON." 

Q.  (Bv  Senator  MALLORY.)  Did  you  furnish  him  with  oil  at  a  rate  to 
compete  with  the  Standard  Oil  Company's  reduction?  A.  I  furnished  him  oil 
so  that  he  would  not  lose  any  money,  but  there  would  be  no  profit  in  it 
*for  him.t     He  would  have  to  handle  it  free,  you  may  say. 

Q.  (By  Mr.  KENNEDY.)  And  no  profit  for  you  either?  A.  I  cannot 
tell  you  the  price  at  which  I  sold  it,  whether  it  was  a  quarter  of  a  cent  cut  or 
not.  My  opinion  is  it  was  a  quarter  of  a  cent.  We  figure  if  we  can  get  from 
one-eighth  to  three-eighths  of  a  cent  per  gallon  profit  on  our  product  we  are 
doing  a  fair  business,  probably  all  the  Standard  Oil  Company  will  let  us 
make,  so  that  customers  find  that  we  cannot  cut  prices  from  one-half  to  one 
cent  per  gallon  and  be  al)le  to  stand  it  without  a  loss.  It  is  the  magnitude, 
the  great  volume  of  the  business,  that  allows  us  to  run  on  such  small 
margins. 


*Black  faced  type  indicates  matter  omitted,  in  the  course  of  editing,  from  the 
official  report. 

tMr.  Lee  stated  in  his  testimony  that  seven  cents  a  gallon  would  have  "given 
a  very  handsome  profit"  both  to  the  "independent"  refiners  and  to  tiie  Pure  Oil  Com- 
pany in  New  York. 


THEODORE  B.  WESTGATE.  129 

Q.  (By  Professor  JENKS.)  If  under  the  pressure  of  competition,  you 
make  a  cut,  let  us  say  three-eighths  of  a  cent  a  gallon,  are  you  probably  tak- 
ing all  your  profit  away  under  your  ordinary  margin?  A.  Yes,  sir;  I  wish, 
you  would  understand  this,  however:  We  will  say  that  the  price  of  crude  oil 
is  three  cents  per  gallon,  and  refining  is  one-half  cent  per  gallon.  You  would 
say.  then,  not  being  acquainted  with  the  business,  that  if  I  sold  water-white 
oil  at  four  cents  per  gallon  I  would  be  making  one-half  cent  per  gallon  profit. 
You  must  take  into  consideration  that  there  is  a  waste  of  5,  6  or  7 
per  cent,  in  refining,  that  there  are  products,  such  as  tar,  that  to-day  is  worth 
two  and  three-eighths  cents  per  gallon  (it  has  been  as  low  as  three-quarters 
of  a  cent  per  gallon),  so  that  in  figuring  the  price  of  the  high-grade  goods, 
you  must  not  forget  that  there  are  low-grade  goods  of  very  inferior  value, 
and  even  less  than  crude  oil.  Benzine  a  year  ago  was  less  than  crude  oil. 
To-day  it  is  worth  more  than  water-white  oil.  It  is  the  most  valuable  product 
we  have  in  the  illuminating  oil  business — not  in  the  lubricating  oil  business. 
So  you  see  we  have  to  take  all  of  this  into  account. 

The  witness  gave  instances  of  what  he  considered  unfair  competition  at 
various  points  in  New  York  State  and  as  far  west  as  South  Bend,  Washing- 
ton. Mr.  Westgate  referred  to  a  complaint  made  by  one  of  his  customers  in 
Fulton,  N.  Y.,  whose  name  was  W.  S.  Crandall,  in  effect  that  the  Standard 
Oil  Company  had  put  another  retail  peddler  in  that  town  to  compete  with 
him,  although  they  already  had  a  peddler  there  for  a  year.  Crandall,  who 
was  himself  a  peddler  of  oil.  claimed  that  his  competitors  sold  oil  at  a  lower 
price  than  that  at  which  he  could  sell  it.  Crandall  claimed  that 
one  of  these  competing  peddlers  wanted  to  hire  one  of  his  peddlers  of 
oil  for  a  larger  salary  than  he  paid  him.  but  was  not  able  to 
induce  him  to  leave  Crandall's  employment.  The  witness  also  claimed  that 
the  Standard  Oil  Company  had,  in  a  round-about  way,  purchased  a  carload 
of  oil  from  him  while  he  did  not  know  to  whom  he  was  selling.  This  oil,  in 
Mr.  Westgate's  barrels,  arrived  in  Pulton  to  compete  with  a  man  who  was 
regularly  handling  his  oil.  The  witness  would  not  say  that  it  was  his  oil  in 
these  barrels,  but  he  inferred  that  that  was  undoubtedly  the  case.  This,  he 
thought,  was  a  part  of  the  plan  of  the  Standard  to  drive  the  man  handling 
his  oil  out  of  business. 

The  witness  instanced  another  case  in  which  he  said  that  George  C. 
Flanders,  special  agent  of  the  Standard  Oil  Company  at  Portland,  Ore.,  had 
written  to  a  merchant  in  South  Bend,  Wash.,  threatening  that  if  oil  was 
shipped  there  by  any  company  except  the  Standard,  it  could  not  be  sold 
unless  put  on  the  market  at  one-half  of  its  actual  cost.  According  to  this 
letter,  he  asked  the  merchant  to  whom  he  wrote  to  convey  this  idea  to  the 
young  man  who  had  received  oil  from  their  competitor,  who  was  Mr.  West- 
gate. 

The  witness  also  told  of  a  German,  named  Charles  Prey,  who  sold  his  oil  at 
Hoboken,  N.  J.,  in  the  "early  nineties,"  and  who  he  said,  "evidently  had  good 
Bismarck  blood  in  hirn"  by  the  way  he  defied  the  Standard  Oil  Company's 
agent  when  the  latter  'attempted  to  run  him  out  of  the  business.  This  Mr. 
Frey  had  threatened  the  competing  agent  that  he  would  blow  up  his  ware- 
houses with  dynamite  if  he  competed  with  him  in  a  way  to  make  him  lose 
his  money.  After  that,  the  witness  said,  the  Standard  did  not  cut  the  price 
of  oil,  as  he  said  their  agent  had  threatened  to  do,  and  Frey  had  continued 
to  sell  oil  from  the  refinery  of  the  witness. 

The  witness  said  the  Standard  had  bought  three  large  refineries  in  1895, 
two  in  Titusville  and  one  in  Reno,  not  to  get  the  refineries,  but  to  get  from 
them  the  stock  they  held  in  the  United  States  Pipe  Line  and  the  Producers 
&  Refiners'  Oil  Company,  Limited.  He  said  they  did  not  care  a  snap  for 
the  refineries,  that  they  had  made  that  statement;  and  that  they  made  a 
proposition  to  all  of  "us"  to  buy  out  all  the  refineries  if  "we"  would  put 
our  pipe  line  stock  in.  He  said  the  Standard  dismantled  these  refineries, 
and  reduced  the  quantity  of  oil  that  ran  through  the  United  States  Pipe 
Line,  to  its  injury.  The  offer  to  buy  his  refinery  that  came  to  him  through 
the  three  refiners  who  had  sold  out,  and  the  price  offered  him  was  not  high, 
being  simply  a  construction  or  cost  priic. 


130  REVIEW  OF   TESTIMONY— INDUSTRIAL   COMMISSION. 

Professor  Jenks  asked  the  witness  to  state  what,  in  his  judgment,  were 
the  chief  reasons  for  the  decline  in  prices  of  refined  oil  compared  with  the 
prices  of  crude  oil  since  1870.  He  said  that  prior  to  1870,  20  per  cent,  of  the 
crude  product  was  lost  in  refining,  while  now  this  portion  of  the  oil  is  worth 
a  high  figure  when  manufactured  into  by-products.  He  said  also  that  illu- 
minating oil  and  gasoline  could  now  be  refined  for  one-half  a  cent  per  gallon, 
whereas  he  had  been  told  in  the  early  days  it  cost  about  two  and  a  half 
cents  a  gallon.  In  the  early  days,  barrels  in  which  oil  was  transported  were 
worth  from  $2  to  $3  each,  while  in  1898  they  were  worth  in  Titusville  88 
cents  apiece,  which  made  a  difference  in  the  cost  per  gallon  of  from  two  to 
four  cents.  He  said  that  when  oil  is  quoted  by  the  barrel  the  value  of  the 
barrel  is  included  in  the  quotation. 

The  witness  said  that  the  prices  used  by  Mr.  F.  B.  Thurber  on  the  chart 
he  exhibited  before  the  Industrial  Commission  when  he  testified  on  April  7, 
1899,  showing  the  fall  in  prices  of  refined  oil  since  1870  in  comparison  with 
the  price  of  crude  oil,  were  based  on  the  price  of  export  oil,  which  was  44 
per  cent,  of  the  crude  product,  and  that  they  did  not  correctly  represent 
prices  paid  by  consumers  in  this  country. 

Mr.  WESTGATE.  "I  believe,  hov.ever,  that  the  Standard  Oil  Company 
have  certainly  the  very  best  methods  of  manufacturing  their  brands,  the  very 
best  brands;  that  certainly  they  have  brought  forward  a  great  many  inven- 
tions in  refining.  *and  have  cheapened  in  many  ways  the  refining  of  crude 
petroleum.  Certainly  I  believe  that.  A  man  cannot  help  but  see  it,  and 
they  are  improving  every  day.  They  are  doing  a  great  deal  to  bring  out  the 
very  best  there  is  in  the  crude  oil  and  make  the  most  of  it.  That  is  their 
business,  and  they  probably  do  more  than  any  other  man  or  any  one  firm. 
Mr.  Van  Sickle,  who  was  a  refiner  in  the  sixties  and  seventies,  brought 
forth  more  original  ideas  at  that  time  that  are  still  being  used,  than  any  one 
refiner.    He  was  a  very  practical  man. 

Q.  (By  Professor  JENKS.)  You  are  inclined  to  think,  then,  that  on  the 
whole  this  decline  in  prices  that  has  come  from  improvements  in  methods 
of  prodrction  is  due  in  part  to  the  work  of  the  Standard  Oil  Company,  and 
in  part  to  the  inventions  of  independent  refiners,  and  that  the  honors  may 
fairly  be  distributed  between  them?  A.  You  must  not  forget  that  with  this 
decline  in  price  of  refined  oil,  crude  oil  has  made  a  very  rapid  decline.  I 
think  testimony  was  drawn  out  on  that  this  morning.  Wells  are  bored  so 
much  move  cheaply,  and  the  handling  of  wells  is  so  much  cheaper. 
Originally  a  man  with  a  boiler  and  an  engine  would  pump 
one  well,  while  to-day  little  wells  doing  simply  a  half  or  a  quarter  of  a  barrel 
are  harnessed  up  to  one  big  driving  power,  and  20  or  30  or  even  40  wells  are 
run  by  it.     *Mr  Phillips  understands  that. 

Vice-Chairman  PHILLIPS.     In  some  places  I  think  they  are. 

The  WITNESS.  Yet,  the  one  pump  rigged  with  one  or  two  men  can 
look  after  them.  So  you  can  see  that  the  expense  of  operating  them  is  so 
greatly  reduced  that  the  cost  of  producing  has  become  nominal  to  what  it 
was  10.  20  or  30  years  ago. 

^  :J;  :);  :^  ;}:  :{:  H;  ^  ^  ^  -!^  ^  ^ 

Q.  (By  Vice-Chairman  PHILLIPS.)  Have  the  Standard  Oil  Company 
any  superior  method  of  refining  that  is  not  known  to  the  independents?  A. 
If  they  have,  we  don't  know  it.  Of  course  if  we  did  know  it.  we  would  use 
the  same.     They  don't  give  out  their  knowledge;  certainly  not. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Do  you  believe  that  you  can  get  out 
the  whole  value  and  make  as  good  oil  as  they,  having  the  by-products  and 
lefined  material?  A.  I  believe  that  the  independents  put  out  as  good  goods 
in  every  way  as  the  Standard  Oil  Company  do.  certainly. 

Q.  (By  Vice-Chairman  PHILTJPS.)  And  as  economically  in  proportion  to 
the  amount  they  do  put  out?    A.  I  believe  they  do;  yes,  sir. 

Q.  (By  Professor  .JENKS.)  The  question  of  freight  rates  and  apparent 
advantages  that  the  Standard  Oil  Company  has  been  able  to  secure  from  the 
railroads  in  these  rates  has  come  up  here  a  number  of  times.  Have  you 
any  information  that  you  can  give  us  in  regard  to  the  freight  rates  that  you 


♦Black  faced  type  indicates  matter  omitted,    In   the  course   of  editing-,    from    the 
official  report. 


THEODORE  B.  WESTGATE.  131 

secure,  and  the  apparent  influence  of  the  Standard  Oil  Company  upon  the 
railroads,  or  special  advantages  that  they  get  in  the  way  of  freight  rates. 

*THE  WITNESS.  Do  you  think  I  had  better  bring  out  this  (indicating 
a  paper) ? 

Professor  JENKS.  I  think  you  had  better  bring  out  everything  that  you 
have  that  is  complete  on  this  subject.  A.  I  have  no  reason  to  believe  that  we 
are  paying  any  higher  oil  rates  per  hundred  than  is  the  Standard  Oil  Com- 
pany. They  are  not  shipping  any  from  Titusville,  but  there  are  other  com- 
mon points,  such  as  Olean  and  Buffalo.  Buffalo  would  take  a  little  higher 
rate,  however,  but  I  believe  and  I  know  that  they  are  underbilling  their  cars. 
Since  the  establishment  of  the  Interstate  Commerce  Commission,  the  rail- 
roads, 1  believe,  have  been  very  careful  about  giving  rebates  on  oil.  They 
may  do  it.  I  do  not  know  whether  they  do  or  not,  but  I  have  seen  freight 
receipts  in  New  York  City  from  one  of  my  former  customers,  wherein  a  car 
of  seventy  to  seventy-two  hundred  gallons  was  billed  from  Olean  at  24,000 
pounds.  Now  that  car  weighed,  according  to  the  basis  we  have  to  figure, 
six  and  four-tenths  pounds  per  gallon,  44.800  to  46,080  pounds.  I  give  you  the 
weight  of  a  seven  thousand  or  seventy-two  hundred  gallon  tank  car  of  oil. 
Had  I  billed  that  car,  I  would  have  had  to  bill  it  at  its  actual  weight.  44,800 
or  46,080  pounds.  They  always  prepay  their  freight.  I  say  always;  I  should 
not  say  that,  for  I  don't  know,  but  my  customers  who  have  received  oil  from 
them  state  that  the  Standard  Oil  Company  prepays  all  freight  on  oil.  and  I 
believe  they  do.  You  see  what  a  difference  it  makes  if  this  oil  is  billed  at 
24,090  pounds.  They  may  be  paying  the  same  rate  per  hundi'ed,  but  you 
see  what  a  disadvantage  I  am  working  at  if  I  have  to  bill  my  oil  at  44.800 
pounds,  when  they  can  bill  it  at  24.000  pounds  and  get  it  through.  Now,  I 
have  seen  three  of  these  freight  receipts,  and  my  opinion  is  that  every  car 
that  goes  out  of  Olean  or  any  other  of  their  refineries,  is  billed  on  this  same 
basis,  and  I  believe  that  is  where  they  are  getting  their  great  help,  and  I 
believe  that  if  they  were  put  on  the  same  basis  as  I  am,  they  would  not  have 
the  means  to  make  such  cuts  that  the  new  people  have  to  overbill  or  get  out 
of  town. 

Q.  You  say  they  bill  at  24.000  pounds.  Why  do  they  not  bill  at  still  less 
than  that?  A.  Twenty-four  thousand  is  the  minimum  capacity;  minimum 
car  weight  in  billing. 

Q.  Then  you  believe  it  to  be  true  that  the  general  custom  that  is  followed 
is  for  cars  in  which  the  Standard  Oil  Company  ships  to  be  billed  at  the  least 
rate  allowable,  on  any  car.  although  the  car  itself  may  bo  very  much  heav- 
ier?   A.  The  least  weight:  yes,  sir. 

Q.  That  is,  the  least  weight.  I  mean.  A.  Yes.  sir.  I  know  of  one  or  two 
instances,  just  hearsay,  as  to  the  statements  I  made,  and  these  receipts  only 
confirm  what  I  am  about  to  say.  A  certain  party  in  New  York  bought  a  few^ 
tank  cars  of  crude  oil  from  the  Standard  Oil  Company  which  were  shipped 
from  Olean.  These  cars  arrived  and  the  freight  bills  were  presented  for  col- 
lection on  this  crude  oil,  because  they  were  buying  it  f.  o.  b.  Olean.  It  was 
certificate  oil  put  into  tank  cars.  It  w^as  not  refined.  The  freight  bills  were 
presented  to  the  buyer,  and  he  noticed,  to  his  surprise,  that  the  cars  were 
iDilled  24,000  pounds,  and  these  cars  held  from  sixty  to  sixty-six  hundred 
gallons,  which  would  be  38,400  pounds  on  a  6,000  gallon  tank. 

Q.  (By  Vice-chairman  PHILLIPS.)  The  difference?  A.  No,  sir;  that 
is  what  I  would  have  to  pay;  but  they  were  billed  at  24,000  pounds,  whereas 
they  actually  weighed  38,000  pounds  and  more.  A  few  days  or  a  week  later, 
this  buyer  got  a  corrected  bill  from  the  railroad  company,  billing  them  at 
actual  weight,  with  the  regular  rate,  which  he  paid,  of  course.  I  do  not 
believe  these  are  errors.  These  three  cars  I  speak  of  in  Central  New  York 
were  not  all  billed  at  the  same  time.  They  were  billed  at  different  dates,  and 
these  things  could  not  be  errors.  Every  railroad  company  has.  or  should  have, 
what  we  call  a  tank  car  book,  giving  the  number  and  the  initials  of  all  the  tank 
cars  in  the  United  States  and  Canada,  giving  the  gallonage  and  the  weight, 
figured  at  six  and  four-tenths  pounds  per  gallon.  So  I  say  these  things  can- 
not be  errors,  but  only  confirm  my  belief — it  is  my  belief,  of  course — that 


*BIack  faced  type  indicates  matter  omitted.    In   the  course   of  editing,    from    tiie 
official  report. 


132  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

they  are  getting  their  goods  put  through  when  in  tank  cars,  billed  24,000 
pounds,  when  I  am  paying  on  the  same  car  from  one-half  to  once  over  the 
weight  for  which  they  are  paying. 

He  said  the  above  underbilling  had  recurred  three  years  previously. 

Mr.  Westgate  read  letters  he  had  received  from  Mr.  W.  K.  Richards, 
commercial  agent.  New  York,  Chicago  &  St.  Louis  Railroad  Company,  at 
Pittsburg,  Pa.,  and  Mr.  F.  L.  Pomeroy,  general  manager  New  York  Central 
Fast  Freight  Lines,  Buffalo,  N.  Y.,  to  show  that  these  roads  did  not  care  to 
handle  oil.     Mr.  Richards  said: 

"I  regret  exceedingly  that  at  the  present  time  we  can  not  make  satisfac- 
tory rates  on  oil  from  Titusville  to  Vermont  points. 

"We  hope,  however,  to  be  able  to  do  so  in  the  near  future  and  will  advise 
you  just  as  soon  as  possible." 

Mr.  Pomery,  in  his  letter,  stated: 

"I  have  your  favor  of  the  2.5th  instant,  asking  for  rates  on  oil  in  tank 
cars  and  barrels  from  Titusville  to  Montreal,  P.  Q.,  and  in  reply  would  say 
that  oil  is  not  a  commodity  that  we  are  permitted  to  handle  by  our  fast 
freight  lines,  and  therefore  I  have  no  authority  to  make  or  discuss  rates  on 
this  commodity,  but  would  refer  you  to  Mr.  S.  Goodman,,  assistant  traffic 
manager.  New  York  Central  &  Hudson  River  Railroad,  New  York  City." 

The  witness  said  the  Boston  rate  on  oil  in  car  load  lots  from  Titusville 
was  231/^  cents  per  hundred;  in  less  than  car  lots  33  cents  per  hundred. 
Abington,  Mass..  took  the  Boston  rate,  but  he  was  prohibited  from  shipping 
there  in  tar  load  lots.  Abington  was  on  the  New  York.  New  Haven  &  Hart- 
ford Railroad.  That  occurred  about  three  years  ago.  when  the  New  York, 
New  Haven  &  Hartford  road  "came  into  certain  hands."  He  said  "we"  sup- 
posed it  was  controlled  by  the  Standard  Oil  Company.  He  said:  *"That 
is  simply  supposition;  I  am  not  giving  tinat  for  evidence,  but  it  goes  to  slnow 
that  our  limit  of  territory  is  being  narrowed  down  each  year  by  the  railroads, 
which  are  in  some  way  made  servants,  in  my  opinion,  of  the  Standard  Oil 
Company." 

He  also  complained  that  he  could  not  get  to  New  Haven  or  Providence 
on  the  Boston  rate,  and  that  the  railroad  rates  prevented  him  from  selling  oil 
In  Vermont. 

Q.  (By  Professor  JENKS.)  You  think  that  the  Standard  Oil  Company 
more  freely  gets  into  that  territory  from  their  shipping  points  where  the 
rates  are  so  much  more  available?  A.  It  must  be  so.  They  are  certainly  not 
paying  any  such  rates;  they  don't  countenance  any  such  thing  as  that.     *     * 

The  witness  said  that  a  few  years  ago  he  had  a  rate  to  the  Pacific  coast 
from  Titusville  on  oils  in  car  loads  of  I8V2  cents  per  hundred.  After  the 
establishment  of  the  Standard  Oil  Company  refinery  at  Whiting,  near  Chi- 
cago, the  freight  rates  from  Titusville,  Oil  City,  Warren  and  Pittsburg  to 
those  points  on  the  Pacific  coast  were  abrogated,  and  they  were  obliged  to 
ship  to  Chicago  at  17 1/^  cents  per  hundred  pounds,  and  thence  to  the  Pacific 
cots  at  78 V2  cents  per  hundred  pounds  in  a.ddition,  making  a  total  of  96 
cents. 

Mr.  Westgate  said  that  Mr.  Motheral,  the  confidential  man  of  the  Green 
Line  System  in  Oil  City,  gave  statistics  in  1888  before  the  Interstate  Com- 
merce Commission,  stating  that  there  was  greater  risk  of  fire  in  transport- 
ing oil  in  tanks  than  in  barrels.  He  thought  that  oil  transported  in  barrels 
and  tanks  should,  from  this  fact,  be  placed  on  the  same  basis. 

Up  to  last  fall,  he  said,  he  had  a  23-cent  rate  per  hundred  pounds  from 
Buffalo  to  Montreal,  P.  Q.  When  the  Standard  came  into  possession,  by  pur- 
chase or  lease,  of  the  refineries  in  Canada,  he  said  the  freight  rate  from  Buf- 
falo to  Canadian  points  was  immediately  advanced.  The  rate  from  Buffalo 
to  Montreal  advanced  from  23  cents  to  35  cents  a  hundred  pounds.  That 
advance,  he  said,  practically  cut  him  out  of  the  Montreal  trade.  The  railroads 
that  had  made  this  increase  in  the  rates  were  the  Grand  Trunk  Line,  running 
from  Buffalo  to  Montreal,  and  the  Michigan  Central,  pro-rating  with  the 
Canadian  Pacific  from  Buffalo  to  Montreal. 

He  thought  oil  should  be  classified  as  sixth  class,  but  if  shippers  had  a 
fifth-class  rate  on  their  oil.  thoir  rf^te  to  Boston  would  be  20  cents,  while 
they  are  now  paying  23  cents  a  h'.mdred. 


•Black  faced  type  Indicates  matter  omitted,    in   the   course    of   editing,    from   the 
ofRciaJ  report. 


THEODORE   B.   WESTGATE.  133 

In  reply  to  a  question  by  Vice-Chairman  Phillips,  the  witness  said  tHe 
Independent  Refiners'  Association,  of  Titusville  and  Oil  City,  in  1888  had  a 
hearing  before  the  Interstate  Commerce  Commission  with  the  railroads  and 
were  awarded  the  claims  they  demanded,  which  were  that  they  should  have 
the  same  rate  per  barrel  on  all  oil  shipped  in  a  package  that  the  Standard 
Oil  Company  or  they  were  having  on  a  barrel  of  oil  shipped  in  tank  cars. 
The  commission  decided  in  their  favor  and  their  awards  footed  up  to  some- 
thing like  $88,000.  They  had  been  trying  to  collect  this  money  for  11  years, 
and  had  a  case  bearing  on  this  question  soon  to  come  up  in  the  Circuit  Court 
of  the  United  States  for  the  Western  district  of  Pennsylvania,  in  Pittsburg. 

The  witness  stated  that  there  were  12  or  15  independent  oil  refineries  in 
Pennsylvania.  Nearly  50  per  cent,  of  their  product  goes  to  foreign  countries. 
Since  they  had  organized  their  Producers  &  Refiners'  lAne.  of  which  he  was 
a  director,  they  had  had  trouble  with  the  Standard  Oil  Company,  which  had 
bought  up  considerable  production  over  their  line.  He  said  the  Standard 
paid  good  prices  for  these  properties  which  was  a  good  thing  for  the  indi- 
vidual producer.  Prior  to  the  organization  of  the  Producers  &  Refiners' 
Pipe  Line,  these  refiners  were  buying  their  oil  from  the  Standard  Oil  Com- 
pany, paying  20  cents  per  barrel  pipage.  They  now  pay  15  cents  per  barrel 
pipaee  through  the  United  States  Pipe  Line. 

Q.  (By  Mr.  KENNEDY.)  Do  you  get  as  good  or  better  oil  than  when 
you  were  getting  it  from  the  Standard  Oil  Company?  A.  The  majority  of 
the  oil  is  all  right.  We  get  oil  from  one  district  near  Oil  City,  of  which  each 
refiner  has  to  take  his  portion,  that  is  a  very  inferior  oil.* 

Q.  And  does  that  go  through  the  Producers  &  Refiners'  line.  A.  Yes, 
sir;  it  does.    About  4.000  barrels  a  month  go  through  the  line. 

Q.  Is  it  mixed  with  the  other?  A.  No,  sir;  it  is  kept  straight — delivered 
straight. 

Q.  What  kind  of  oil  did  you  get  through  the  Standard  line,  the  United 
Pipe  Line?  A.  We  got  an  oil  that  was  not  as  rich  in  high  grade  illuminants 
as  we  are  getting  from  the  Producers  &  Refiners'  Line. 

Q.  And  you  paid  five  cents  per  barrel  more  for  pipage?    A.  Yes,  sir. 

Q.  And  the  oil  was  not  as  good  a  quality?    A.  No,  sir;  it  was  not. 

0.  (By  Mr.  KENNEDY.)  Can  you  state  what  percentage  of  the  oil  in 
Pennsylvania  is  refined  by  the  independent  companies?  A.  I  haven't  got 
actual  figures  or  data  at  my  hand,  but  I  should  say  about  one-tenth. 

Q.  About  one-tenth?    A.  Yes,  sir. 

Q.  The  Standard  Oil  Company  refines  all  the  rest  of  it,  90  per  cent,  of 
it?    A.  I  think  they  must  refine  it  or  ship  it  abroad. 

Q.  And  the  business  was  profitable,  I  suppose,  to  all  these  independent 
companies,  was  it  not?     A.  It  has  been  at  times. 

Q.  (Bv  Vice-Chairman  PHILLIPS.)  Will  you  state  to  the  commission 
what  method  the  Standard  Oil  Company  took  to  circumvent  your  markets 
abroad  after  the  laying  of  the  United  States  Pipe  Line  and  the  shipping  of 
oil,  refined  as  well  as  crude,  throueh  to  New  York?  A.  The  prices  in  our 
foreign  markets,  in  Germany  and  Holland,  were  cut  very  low,  so  that  we 
were  oblisred  to  sell  export  oil  to  about  the  only  buyer  we  then  had  in  the 
market,  Philip  Poth.  at  very  low.  and.  in  fact,  ruinous  prices.  It  was  only 
by  th<^  stricte'it  economy  that  a  number  of  the  refineries  were  kept  out  of  the 
sheriif's  hands,  during  that  crucial  time  that  we  had,  in  1893  and  1894,  I 
believe  it  was. 

Q.  (By  Vice-chairman  PHILLIPS.)  Did  Mr.  Poth  handle  your  oil  for  a 
considerable  length  of  time  abroad?  A.  He  handled  it  for  a  number  of 
years  until  a  short  time  after  the  Standard  had  purchased  these  three  large 
refineries  that  I  spoke  of  a  short  time  aeo,  then  I  understand  the  Standard 
officials  approached  him  and  told  him  that  we  were  on  our  last  lees  and 
that  he  had  better  get  the  money  out  of  his  stuff  when  he  could,  and  thev 
paid  him  a  good  big  price  for  his  plant,  and  it  was  turned  over  to  the  Stand- 
ard entirely.     His  two  sons-in-law,  I  believe  were  retained  in  the  business, 


'Second  Sand  oil. 


134  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

*but  the  shock  was  too  great  for  him.  He  had  promised  by  all  that  was  true 
and  good  to  stand  by  the  independent  refineries,  and  we  had  sold  him  oil 
away  below  the  cost  of  crude  oil.  *We  should  have  taken  stock  with  him,  I 
suppose.  That  was,  perhaps,  our  short-sightedness.  He  got  frightened  when 
the  Standard  Oil  Company  approached  him  in  that  way  and  he  sold  out,  and 
the  shock  was  so  great  that  he  died  within  two  weeks,  so  that  the  refiners 
and  producers  have  since  shipped  by  the  Pure  Oil  Company  and  have  been 
marketing  their  own  goods  in  Germany. 

Q.  (By  Vice-Chairman  PHILLIPS.)  In  addition  to  buying  Mr.  Poth  out 
did  they  also  buy  the  tankage  abroad,  so  that  it  was  very  difficult  to  get  any 
place  to  dispose  of  your  oil?    A.  They  did,  some  of  it;  yes,  sir. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Were  you  compelled  to  build  tank- 
age abroad  and  establish  stations  after  Mr.  Poth  sold  out  before  you  could 
market  your  oil  in  Germany?    A.  We  were  compelled  so  to  do. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Has  marketing  the  oil  in  Germany 
been  a  profitable  business  since  you  have  got  there?  A.  Our  returns  have 
been  somevrhat  satisfactory  in  Germany. 

Vice-Chairman  PHILLIPS.  But  there  was  practically  a  small  amount 
made,  or  pi'ofits  obtained  by  Mr.  Poth,  the  agent,  in  handling  the  oil.t 

The  Witness.     From  being  in  the  refining  business? 

*Vice-Chairman  PHILLIPS.  Yes,  sir;  that  is  marketing  in  Germany  and 
abroad. 

The  Witness.  You  see  we  sold  the  oil  f.  o.  b.  New  York.  We  didn't  have 
any  of  the  profits  that  he  made,  if  he  made  any  in  Germany,  certainly  not, 
but  profits  have  been  made  there. 

Q.  You  sold  a  great  many  cut  cargoes,  did  you  not?     A.  Yes.  sir. 

Q.  What  they  call  cut  cargoes,  even  below  cost?  A.  Below  the  cost  of 
the  crude. 

Q.  Have  you  sold  any  cut  cargoes  since  you  have  established  the  agency 
abroad  of  the  Pure  Oil  Company?    A.  No,  sir. 

Q.  It  lias  been  quite  imiformly  profitable?    A.  Quite  uniformly;  yes,  sir. 

Q.  (By  Mr.  KENNEDY.)  Are  you  acquainted  with  ex-Senator  Lee,  of 
Pennsylvania?    A.  Yes,  sir. 

Q.  Is  he  connected  with  your  company?  A.  He  is  connected  with  two 
of  the  companies  that  I  am  connected  with,  the  Pure  Oil  Company  and  the 
Producers  &  Refiners'  Oil  Company,  Limited,  and  the  Producers'  Oil  Com' 
pany.  Limited. 

Q.  The  Senator  said  before  the  commission  that  if  the  Standard  Oil 
Company  was  to  offer  the  independent  companies  a  price  far  l)eyond  the 
value  of  their  plants  they  would  still  refuse  to  sell  out  to  the  Standard  Oil 
Company.  Is  the  feeling  of  the  independent  companies  of  Pennsylvania  that 
they  would  not  sell  at  beyond  the  value  of  their  plants,  even  if  they  were 
offered  that  by  the  Standard  Oil  Company?  A.  Now,  if  you  will  define  that 
I  will  answer  you  directly.     Do  you  mean  $10  more  or  what? 

Q.  There  was  no  specific  sum  named.  He  just  said  that  they  would  not 
sell  to  the  Standard  Oil  Company,  even  if  the  Standard  offered  them  beyond 
the  value  of  their  plants.  A.  Well,  if  they  were  all  like  Senator  Lee  they 
would  not. 

Q.  (By  Vice-chairman  PHILLIPS.)  Have  they  made  any  attempt  to 
purchase  stock  in  any  one  of  the  independent  pipe  line  companies  in  any  way 
to  get  control  of  them.  A.  From  the  suits  that  have  been  in  progress  with 
John  .1.  Carter  and  the  Producers'  Oil  Company,  Limited,  it  would  seem  that 
that  was  v.hat  they  were  trying  to  do;  yes.  sir. 

Q.  (By  Vice-Chairman  PHILLIPS.)  How  much  stock  did  they  purchase 
in  the  Producers'  Oil  Company,  Limited?  Do  you  remember  the  capital 
stock  of  that  company?  A.  The  capital  stock  is  $C)00.000  Mr.  Carter  origin- 
ally owned  $.3,000  worth  of  the  stock  and  he  purchased  about  $300,000  worth 

♦Black  faced  type  indicates  matter  omitted,  in  tho  course  of  editing',  from  the 
official  report. 

tin  ttie  official  report  this  argument  by  Mr.  PiillliDS  is  changed  into  a  very 
proper  fiuesfion.  being-  as  follows:  "What  were  your  profits  while  Mr.  Poth  was 
acting  as  your  agent?"  ,.'■  • 


THEODORE   B.    WESTGATE.  135 

more.  I  believed  it  was  for  the  Standard  Oil  Company.  I  could  not  testify- 
that  it  was.  but  from  all  outward  appearances  it  looked  that  way. 

Q.  (By  Vice-chairman  PHILLIPS.)  Did  they  attempt  to  get  control  of 
this  independent  company  after  purchasing  this  stock?  A.  They  did,  be- 
cause having  a  majority  of  the  stock  they  attempted  to  elect  the  managers 
of  the  company,  but  in  Pennsylvania  the  special  act  of  1874,  which  is  called 
the  Limited  Partnership  Law  or  Act,  requires  that  he  should  be  voted  in  the 
Producers'  Oil  Company,  Limited,  by  a  majority  in  number  in  interest 
before  he  could  vote  that  stock,  and  our  people  declined  to  vote  him  in  and  he 
has  been  in  litigation  with  the  company  for  the  past  three  years  or  more, 
trying  to  get  in.  The  Supreme  Court  has  finally  decided  that  he  was  in 
error,  but  that  the  company  must  buy  his  stock  at  the  appraised  value  and 
an  appraiser  was  appointed  and  that  appraising  has  been  taking  place  for 
the  past  five  or  six  months.  They  are  getting  at  the  values  so  that  the  com- 
lany  has  to  buy  the  stock  that  Mr.  Carter  owns.  He  has  been  voted  into  a 
small  portion  of  it,  I  believe. 

*Q.    (By    Vice-chairman    PHILLIPS.)     A    small   portion?    A.  Yes,   sir. 

Q.  (By  Vice-chairman  PHILLIPS.)  Did  they  buy  any  stock  in  any  other 
independent  company?  A.  If  I  remember  correctly  they  have  secured  some- 
thing like  over  $400,000  in  the  United  States  Pipe  Line. 

Q.  (By  Vice-chairman  PHILLIPS.)  What  is  its  capital  stock,  and  how 
much  of  the  stock  has  been  sold?  A.  I  believe  the  capital  is  $2,000,000  and 
if  I  remember  correctly  the  stock  that  is  out  is  about  $1,200,000. 

*Q.  (By  Vice-Chairman  PHILLIPS.)  I  believe  that  is  correct.  A.  I 
think  that  is  it. 

Q.  (By  Vice-chairman  PHILLIPS.)  Did  they  attempt  to  get  into  the 
Board  of  Managers  of  the  United  States  Company?  A.  They  have  one  direc- 
tor in  the  United  States  Company. 

*Q.  (By  Vice-Chairman  PHILLIPS.)  Have  you  or  have  you  not  any 
doubt  that  the  Standard  Oil  Company  designed  to  control  both  the  United 
States  as  well  as  the  Producers'  Company,  Limited,  by  purchasing  the  stock 
in  these  two  companies.  They  did,  as  you  said,  get  the  control  of  the  first 
one.  Do  you  have  an  impression  that  they  designed  to  get  control  by  pur- 
chasing the  stock  of  the  United  States?     A.  Yes,  sir;    most  assuredly. 

Q.  (By  Vice-Chairman  PHILLIPS.)  That  is  a  general  form  of  law  and 
the  other  is  special?     A.  Yes,  sir. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Have  they  been  purchasing  any 
stock  in  the  United  States  Pipe  Line  of  recent  date?  A.  Not  to  my  knowl- 
edge. 

Q.  (By  Mr.  KENNEDY.)  That  would  be  a  legitimate  way  of  getting 
control  of  these  companies,  would  it  not,  Mr.  Westgate — the  purchasing  of 
that  stock?  A.  Yes,  sir;  it  is,  only  this:  Perhaps  you  or  I  would  not. care  to 
go  where  we  were  not  wanted.  That  is  the  only  way  I  look  at  It,  that  you 
don't  want  to  go  in  a  company  if  you  are  not  wanted,  usually. 

Q.  If  they  had  gotten  control  of  these  companies  do  you  have  any  idea 
that  they  would  have  run  them  at  a  profit  to  the  stockholders?  A.  If  they 
were  run,  I  believe  they  would  be  run  at  a  profit,  for  that  is  the  way  they 
usually  run  them;  yes,  sir. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Have  you  any  statement  you  desire 
to  make  that  we  have  not  covered,  or  that  the  commission  has  not  yet  cov- 
ered, as  to  any  questions?  A.  This  question  of  the  aggi'egation  of  capital, 
of  course,  is  a  large  question  for  a  small  man  to  handle,  but  I  do  not  fight 
the  Standard  Oil  Company.  It  is  not  my  business  to  fight  them,  but  I  do  not 
believe  that  the  Standard  Oil  Company,  with  their  millions  could  or  would 
drive  me  out  of  business  if  I  had  the  same  advantages — advantages  that 
every  citizen  should  have  from  the  transportation  lines — for  if  they  would 
not  have  that  great  advantage  in  transporting  that  they  are  having  over 
me,  and  I  do  not  care  how  large  the  company  is,  if  they  are  run  on  right 
lines,  it  matters  little. 


*Black  faced  type  indicates  matter  omitted,    in   the  course    of   editing,    from    the 
official  report. 


136  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

Q.  (By  Professor  JENKS.)  If  I  understand  you,  then;  you  believe  that 
if  the  Interstate  Commerce  Act  could  be  enforced  in  spirit  and  in  letter 
thoroughly,  the  chief  evil  that  comes  from  the  Standard  Oil  Company  would 
be  done  away  with?  A.  That  is  what  I  mean.  I  mean  that  oil  should  be 
listed  as  other  freight  is  and  classified,  and  my  opinion  is  that  it  would  be 
a  good  idea  to  have  a  railroad  examiner  as  you  have  a  bank  examiner  for 
your  National  banks.     *     *     *     * 

*Q.  (By  Mr.  KENNEDY.)  Has  not  competition  been  the  curse  of  the 
workingmen;  has  it  not  bred  the  sweating  system  and  many  other  evils  that 
the  workingmen  of  this  country  suffer  under?     A.   I  suppose  it  has. 


CHAPTER  IX. 
TESTIMONY  OF  MR.  M.  L.  LOCKWOOD. 

Mr.  M.  L.  Lockwood,  of  Zelienople,  Butler  County,  Pennsylvania,  ap- 
peared before  the  commission  on  June  17.  1899,  and  repeated  his  oft-told 
tale.  Mr.  Lockwood  has  long  entertained  a  fanaticism  through  which  he 
finds  more  pleasure  in  fighting  the  Standard  Oil  Company  than  he  does  in 
pursuing  the  oil  business  in  which  he  is  reported  to  have  made  a  comfort- 
able fortune.  He  probably  would  have  been  a  much  more  wealthy  man 
than  he  is  now,  had  he  devoted  the  time  he  has  spent  in  fighting  the  Standard 
Oil  Company  to  his  business  as  a  producer  of  oil. 

Mr.  Lockwood  told  in  his  testimony  how  he  struck  oil  in  such  quan- 
tities that  he  thought  he  was  a  millionaire,  and  how,  by  the  lowering  of 
the  price  of  that  commodity  so  that  the  people  of  the  country  might  have  it 
in  their  homes  at  small  cost,  the  vision  of  the  wealth  of  Croesus  passed 
from  him.  It  is  rather  a  pathetic  story  that  this  witness  told.  In  words 
he  painted  a  picture  of  Greed  about  to  secure  great  wealth,  while  at  the 
moment  the  hand  of  the  central  figure  was  about  to  clasp  the  treasure  it 
melted  away.  If  the  artist  were  to  successfully  portray  the  disappointment 
encountered  by  the  witness,  he  would  show  the  treasure  in  the  form  of 
Enormous  Profits  to  be  wrung  from -the  Litttle  Family  in  the  Cabin,  and 
he  would  show  that  at  the  moment  it  got  into  the  hands  of  Greed,  it  melted, 
and  in  small  quantities  flowed  back  into  these  little  cabins  in  the  form  of  a 
reduced  price  which  each  occupant  had  to  pay  for  illuminating  material. 

Of  course,  Mr.  Lockwood  will  have  the  sympathy  of  a  great  many  peo- 
ple, because  disappointment  generally  calls  forth  sympathy.  But,  when 
it  is  considered  that  the  millions  he  expected  to  secure  could  have  come 
to  him  in  no  other  way  than  from  these  same  cabins  of  the  poor,  any  sym- 
pathy that  goes  out  to  him  must  be  tempered  with  congratulation  that  the 
great  mass  of  the  people  escaped  the  taxation  which  he  would  have  been 
enabled  to  place  upon  them  had  the  price  of  oil  remained  at  the  high  point 
at  which  he  found  it  when  he  struck  his  bonanza. 

Mr.  Lockwood.  having  failed  to  become  a  millionaire,  by  waking  up 
before  his  dream  came  true,  henceforth  devoted  his  life  to  warfare  on  the 
enterprising  men  who  were  interested  in  the  Standard  Oil  Company,  and 
w'ho  sought  to  realize  a  profit  by  reducing  the  price  of  oil  to  the  consumers 
through  various  cheapening  processes  so  as  to  extend  its  sale,  instead  of 
monopolizing  it  in  the  bowels  of  the  earth  where  it  had  been  placed  by  a 
bountiful  Nature  for  all  mankind. 

The  witness  met  with  reverses  in  the  oil  industry  in  1878.  and  it  was 
rumored  that  his  failure  was  the  result  of  unfortunate  speculation  in  the 
open  market.  Many  a  man  has  shared  a  similar  fate,  and  it  was  fortunate 
for  Mr.  Lockwood  that  he  abandoned  the  field  of  stock-jobbing  and  devoted 
himself  to  his  business  as  an  oil  producer  with  sufl[icient  care  to  amass 
the  comfortable  fortune  he  is  now  said  to  enjoy. 


•Black  faced  type  indicates  matter  omitted,   In  the  course  of  editing,   from  the 
official  report. 


M.  L.   LOCKWOOD.  137 

The  attack  of  this  witness  on  the  character  of  Judge  Haight,  of  the 
Court  of  Appeals  of  New  York  State,  was  a  most  remarkable  outbreak  and 
was  followed  by  expressions  of  indignation  on  the  part  of  those  who  heard 
it  and  who  were  acquainted  with  this  distinguished  jurist  and  knew  of  his 
high  character.  Mr.  Lockwood  claimed  that  the  election  of  Judge  Haight, 
who  was  the  Republican  candidate,  to  the  Court  of  Appeals,  was  secured 
through  means  of  a  corruption  fund.  When  he  was  cross-questioned  he 
admitted  that  he  had  no  evidence  to  substantiate  this  charge,  but  that  it 
was  a  matter   of   "belief"   on   his   part. 

David  B.  Hill  was  at  the  head  of  the  defeated  Democratic  State  ticket 
in  New  York  the  year  that  Judge  Haight  was  elected  with  the  rest  of  the 
Republican  State  ticket.  The  day  after  Mr.  Lockwood  made  his  statement, 
Mr.  Hill  was  interviewed  at  Albany,  N.  Y.,  and  the  following  statement  by 
him  appeared  in  the  New  York  Herald  of  June  19,  1899: 

"Judge  Haight  was  elected  in  the  fall  of  1894.  At  that  election  I  headed 
the  Democratic  ticket  for  Governor,  leading  a  forlorn  hope.  The  Republi- 
cans needed  no  'immense  corruption  fund,'  either  from  the  Standard  Oil 
Company  or  anybody  else  to  elect  their  whole  ticket,  including  Judge 
Haight.  I  recollect  at  the  time  there  was  some  criticism,  principally  by  the 
coterie  of  Populists,  of  a  decision  which  Judge  Haight  had  once  made  as  a 
Supreme  Court  Justice  in  Buffalo,  but  it  attracted  no  particular  attention  in 
the  campaign,  and  was  regarded  by  myself  and  by  Democrats  generally  as 
unworthy  of  notice. 

"It  is  absurd  at  this  late  day  for  the  Pennsylvanian,  who  can  naturally 
have  no  personal  knowledge  of  the  matter  of  which  he  assumes  to  speak, 
to  assert  that  Judge  Haight  was  either  nominated  or  elected  in  New  York 
State  through  the  contributions  or  efforts  of  the  Standard  Oil  Company. 
He  was  elected  because  the  tide  of  that  year,  in  New  York  as  well  as  every- 
where else,  was  with  his  party,  and  he  was  nominated  because  of  his  high 
personal  character,  his  efficient  judicial  ability  and  unquestionable  integrity, 
conceded  by  the  whole  bar  and  people  of  the  State,  and  as  a  fair  political 
opponent  it  gives  me  pleasure  to  say  this  much. 

"The  people  of  New  York  are  satisfied  that  Judge  Haight  adorns  the 
highest  court  of  our  State  by  his  industry,  his  honesty,  his  learning  and 
his  entire  judicial  fitness." 

Vice-Chairman  Phillips  introduced  Mr.  Lockwood  to  the  commission  in 
the  following  language: 

*"l  will  state  to  the  members  of  the  commission  that  Mr.  Lockwood,  of 
Zellenople,  Butler  County,  Pennsylvania,  at  present,  formerly  a  resident  of 
Clarion  County,  an  ex-member  of  the  Legislature  of  Pennsylvania,  is  before 
us  this  morning  for  the  purpose  of  giving  a  statement  especially  In  regard 
to  the  Standard  Oil  Trust  and  his  connection  with  the  oil  industry.  Mr. 
Lockwood  is  thoroughly  familiar  with  the  oil  industry  from  its  earliest 
period  to  the  present  time,  and  I  will  state  that  he  is  a  person  very  well 
known  to   me  and  favorably  so." 

Vice-Chairman  Phillips,  when  asking  questions  of  witnesses,  appeared 
to  be  fond  of  referring  to  "The  Standard  Oil  Trust,"  although  he  persistently 
referred  to  the  United  States  Pipe  Line  Company  and  to  the  Pure  Oil  Com- 
pany by  their  names  or  as  the  "independents."  These  companies  have  been 
shown  to  be  conducted  on  an  iron-clad  Trust  basis.  The  Pure  Oil  Trust 
appears  to  be  "independent"  of  the  Standard  Oil  Company  just  as  the  Stand- 
ard Oil  Company  is  "independent"  of  the  Pure  Oil  Trust.  Why  the  Vice- 
Chairman  persisted  in  this  course  can  be  surmised  by  those  who  peruse 
the  testimony  in  which  he  appears  as  a  questioner. 

Mr.  Lockwood  testified  that  he  was  an  oil  producer  and  that  he  had 
been  in  that  business  continuously  since  1865. 

He  had  prepared  a  written  statement  which  began  with  a  recital  of  the 
following  extremely  interesting  narrative  concerning  his  ancestors: 


*Black  faced  type  indicates  matter  omitted,    in    the  course   of  editing,    from    the 
official  report. 


138  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

"Mr.  Robert  Lockwood  came  from  England  with  Winthrop  in  1630.  One 
hundred  and  forty-seven  of  his  descendants,  one  of  whom  was  my  great- 
grandfather, participated  upon  the  side  of  the  colonies,  in  the  War  of  the 
Revolution.  I  refer  to  this  that  there  may  be  no  question  as  to  my  Ameri- 
canism. It  seems  to  me  as  though  this  reference  possibly  may  be  proper 
from  the  fact  that  the  monopolistic  classes,  together  with  those  who  fawn 
for  favor  at  their  hands,  have  adopted  the  custom  of  stigmatizing  as  anar- 
chistic and  un-American  any  expression  or  remedy  antagonistic  to  the  pres- 
ent monopolistic  condition  of  affairs." 

As  in  the  case  with  nearly  all  of  the  testimony  of  the  men  who  appeared 
before  the  commission  in  opposition  to  the  Standard  Oil  Company,  Mr.  Lock- 
wood's  narrative  dealt  largely  with  conditions  that  prevailed  in  the  early 
days  of  the  oil  industry.  Alleged  freight  rate  discriminations  were  made 
by  him  to  play  the  part  of  "The  Old  Man  in  the  Woods."  who  brought  havoc 
to  the  men  in  the  oil  business  who  could  not  successfully  compete  with  the 
Standard    Oil    Company.     He   said: 

"Way  back  in  the  latter  part  of  the  sixties,  some  of  the  refinery  men  in 
the  oil  regions  who  did  not  have  the  favor  of  the  railroad  companies,  who 
did  not  have  the  ear  of  the  railroad  managers,  were  unable  to  obtain  freight 
rates  over  railways  that  would  enable  them  to  market  their  oil  at  a  profit 
in  New  York  and  the  seaport  towns,  and  those  refiners  were  obliged  to 
sell  their  oil  to  the  men  who  afterwards  helped  to  create  the  Standard  Oil 
Company,  for  even  at  that  early  date  these  men  seemed  to  have  an  advan- 
ta^^e  in  freight  rates  that  enabled  them  to  market  oil  at  a  profit  when  no 
one  else  could  market  it  at  a  profit. 

"Now  then,  the  facts  which  I  shall  present  to  you.  1  desire  not  to  be 
construed  as  against  men,  for  I  do  not  believe  that  the  Standard  Oil  Com- 
pany people  are  any  better  or  worse  than  any  other  set  of  men  would  be, 
armed  as  they  have  been  with  practically  exclusive  advantages  upon  the 
railways  of  the  country.  But  these  facts  which  I  shall  present  to  you,  I 
desire  to  be  construed  against  this  accursed  system  of  railway  discrimina- 
tion and  favoritism  which  has  made  this  great  curse,  the  Standard  Oil  Trust 
monopoly,  a  possibility;  against  this  system  of  railway  favoritism,  which 
has  enabled  the  Standard  Oil  people  to  drive  into  financial  obscurity,  bank- 
ruptcy or  servitude,  the  men  whose  energy,  and  enterprise  have  developed 
this  great  oil-producing  and  refining  industry  of  America.*  As  long  as  there 
were  open  and  equal  rates  over  the  railways  of  the  country,  many  pros- 
perous and  growing  refineries  were  built  at  every  favorable  point.  At 
Franklin,  Oil  City,  Reno.  Rouseville,  Petroleum  Center.  Pioneer,  Titusville. 
Warren,  Pittsburg,  Cleveland  and  Corry,  the  competitive  contest  in  the 
business  forced  hundreds  of  the  best  minds  to  the  study  of  better  ani  more 
economic  processes  in  refining,  and  the  most  rapid  strides  were  made  in 
the  betterment  of  the  product,  in  perfecting  and  cheapening  cost." 

In  the  above  Mr.  Lockwood  says  that  even  in  the  sixties  "these  men 
seemed  to  have  an  advanta2;e  in  freight  rates  that  enabled  them  to  market 
oil  at  a  profit  when  no  one  else  could  market  it  at  any  profit."  His  complaint 
here,  as  everywhere,  on  the  part  of  anti-Standard  Oil  witnesses  is  that  the 
Standard  Oil  Company  sold  oil  so  cheaply  that  competitors  could  not  meet 
their  prices.  Had  the  Standard  kept  the  price  up  and  made  the  people  pay 
move  for  their  nil,  they  would  have  created  a  delightful  condition  that  would 
have  pleased  many  a  competitor.  This  witness  also  gives  this  highly  in- 
teresting  testimony: 


*The  following,  of  no  impnrtanre  in  1  tsolf,  appears  in  the  official  reiiort,  but  is 
not   in  the  ptenographic  report  of  the  testimony: 

"For  before  the  blighting  curse  of  railway  discrimination  was  turned  against 
the  nil  refinery  mt-n  th<^'y  prospered  and  gr^-'w  rich  in  the  r'Hning  business.  They 
doubled  the  capacity  of  their  refineries,  adopted  new  and  bPtter  processes,  and  were 
going  forward  in  a  business  that  promised  much  for  themselves  and  their  descend- 
ants. 

"But  when  the  conspiracy  between  the  Standard  Oil  Company  people  and  the 
railways  was  consummated,  all  men  not  irrluded  within  the  favored  few  were 
condemned  to  financial  obscurity  or  ruin.  No  business  ability,  however  great,  no 
better  process,  however  superior,  could  Irii.miih  when  the  binhwavs  ov<='r  which  ycu 
must  go  to  market  were  closed  against  yc.u  and  manipulated  in  the  interest  of  your 
competitors." 


M.   L.  LOCKWOOD.  139 

"Man}'  refinery  men  made  many  buyers  of  crude  oil.  The  producer 
selling  his  oil  in  the  competitive  markets  was  enabled  to  obtain  a  fair 
share  of  the  profits  in  the  business  and  the  consumer,  buying  his  oil  from 
competitive  sellers,  was  enabled  to  obtain  the  advantage  of  each  and  every 
economy  in  the  process  of  producing  and  refining  petroleum." 

Mr.  Lockwood,  while  complaining  of  low  prices  of  oil,  here  outlines  his 
theory  that  many  refinery  men  made  many  buyers  of  crude  oil  to  the  ad- 
vantage of  the  producers,  and  that  the  consumer  buying  his  oil  from  com- 
petitive sellers,  secured  an  advantage  by  cheapening  prices  in  that  way. 
This  argument  would  have  been  a  substantial  one  had  the  complaint  of 
the  witness  been  that  the  price  of  refined  oil  had  gone  up,  but  it  becomes 
absurd  when  his  only  grievance  was  that  it  went  down  so  low  that  many 
refiners  could  not  do  business  at  a  profit  on  a  basis  of  the  low  prices  that 
prevailed. 

The  witness  recounted  the  so-called  contract  made  by  the  South  Im- 
provement Company  in  1872  and  dwelt  upon  this  contract  at  great  length. 
The  history  of  this  short-lived  contract  was  referred  to  by  previous  witnesses 
and  is  known  to  everyone  who  is  familiar  with  the  affairs"  of  the  oil  in- 
dustry. It  came  to  an  early  end  and  the  witness  very  readily  meets  this 
fact  with  the  assertion  that  everything  the  railroad  companies  had  con- 
tracted to  do  for  the  South  Improvement  Company  in  1872,  they  had  "since 
secretly  and  persistently  done  for  the  benefit  of  the  Standard  Oil  Company, 
which  I  will  prove  to  you,  and  prove  to  you  in  the  face  of  the  facts  that 
w'henever  any  of  the  Standard  Oil  Company  people  or  their  agents  who 
knew  the  inside  tracks,  or  whenever  any  of  these  railway  people  who  knew 
the  inside  tracks,  have  been  subpoenaed  to  testify,  that  they  almost  invar- 
iably have  refused  to  answer,  shielding  themselves  behind  that  provision 
of  law  which  provided  that  you  shall  not  force  a  man  to  testify  to  that  which 
will  co.nvict  him  of  a  crime." 

At  very  considerable  length  Mr.  Lockwood  re-told  the  story  previously 
told  before  the  Hepburn  Committee  of  New  York  regarding  rebates  alleged 
to  have  been  paid  the  Standard  Oil  Company,  saying  finally:*  "I  have  no 
data  but  men  who  have  studied  the  testimony  of  the  Hepburn  Committee,  the 
testirrony  taken  before  the  Hepburn  Committee,  hold  that  the  Sandard  Oil 
Company  people  received  from  the  five  trunk  railways  $11,000,000  in  rebates 
in  sixteen  short  months." 

Whenever  Mr.  Lockwood  found  his  purposes  thwarted,  from  whatever 
source  the  difficulty  he  experienced  might  come,  he  never  ceased  to  attribute 
his  reverses  to  the  Standard  Oil  Company.  If  a  rate  on  any  railroad  or  a 
regulation  did  not  suit  his  convenience  by  addina;  to  his  profits,  or  if  a  court 
decided  a  cape  in  opposition  to  his  wishes,  the  Standard  Oil  Company  "Old 
Man  of  +he  W^ods,"  arose  before  his  imagination  as  the  cause  of  his  trouble. 
The  following  pages  contain  some  choice  language  in  which  he  imputes  cor- 
ruption to  the  hi:rhest  court  of  Pennsylvania,  because  his  case  was  not  de- 
cided to  suit  him,  his  libellous  statements  in  regard  to  the  Matthews  case 
being  given  here  as  an  example  of  the  liberty  he  took  in  making  charges, 
and  the  character  of  evidence  he  considered  as  sufficient  on  which  to  base 
such    statements. 

The  witness  said  that  in  1879  the  Oil  Producers'  Council  which  was 
composed  of  men  who  were  elected  from  the  different  oil-producing  districts, 
betan  a  crin.inal  action  a'^ainst  the  Standard  Oil  Company  and  the  Penn- 
sylvania Raih'oad  Company  for  conspiracy  against  the  public.  This  case 
wa-^  l)ron9:ht  to  the  courts  of  Clarion  County,  Pennsylvania,  in  the  names  of 
Colonel  Vera  and  the  witness      He  said: 

"With  almost  a  certainty  that  with  the  evidence  at  hand  they  would 
be  convicted  and  sent  to  the  penitentiary  to  pay  the  penalty  of  their  crime, 
three  meipbers  of  the  Sunreme  Court  of  Pennsylvania,  tin  violation  of  the 
Constitution,  took  original  jurisdiction  in  this  case,  and  took  these  indicted 
conspirators  away  from  the  courts  of  Clarion  County  and  hung  the  case  up. 


*Mr.  Lee.  Mr.  Emery,  and  otherp  srive  very  exhaustive  testimony  before  the 
Industrial  Commission  concernins  ttils  matter  which  is  printed  elsewhere  in  full. 

tBlack  faced  type  indicates  matter  omitted,  in  the  course  of  editing-,  from  the 
official  report. 


140  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

"The  late  Franklin  B.  Gowen,  a  man  of  great  ability  and  integrity,  who 
was  a  member  of  the  Constitutional  convention  of  1873,  said  before  the 
Committee  of  Congress  here  in  Washington,  that,  'if  the  Constitutional  con- 
vention did  anything  effectually,  it  was  when  it  took  original  jurisdiction  in 
criminal  cases  away  from  the  Supreme  Court  of  that  State,'  and  yet,  when 
the  men  who  had  entered  into  a  conspiracy  to  monopolize  the  great  oil- 
producing  and  refining  industries  of  that  State  had  been  indicted  and  were 
before  a  jury  of  their  peers,  we  find  members  of  the  Supreme  Court  were 
found  ready  to  stretch — aye,  violate,  the  Constitution,  in  order  to  protect 
these  indicted  conspirators  from  just  punishment,  and  the  producers  and 
refiners,  impoverished  and  exhausted,  fighting  for  their  right  to  do  business 
in  this  free  country,  found,  not  only  that  the  railway  managers  were  in 
league  with  the  Standard  Oil  Company  against  them,  but  that  members 
of  the  Supreme  Court  were  ready  to  do  the  bidding  of  the  Pennsylvania 
Railroad  and  the  Standard  Oil  Company  and  protect  these  indicted  con- 
spirators from  just  punishment  for  their  crimes. 

"Read  the  record  of  the  Matthews  case  against  the  Standard  Oil  Company 
for  conspiracy  to  blow  up  his  refinery  and  ruin  his  business.  Read  all  of 
the  record.  Read  the  evidence  of  Matthews.  Read  the  evidence  of  his 
partner  whom  they  had  bribed  and  debauched  into  betraying  his  associate; 
this  man  whom  they  spirited  about,  the  Standard  Oil  Company  people  spirited 
him  about  from  the  Atlantic  to  the  Pacific,  keeping  him  under  cover,  under 
an  assumed  name  at  Boston  and  elsewhere,  keeping  him  under  cover  for 
four  or  five  years,  that  his  evidence  might  not  be  had  by  the  court.  They 
kept  him  until  the  crime  in  this  man's  heart  *for  what  he  had  done  aq.^i  ~t 
his  partner  became  too  great  for  him  to  bear  and  conscience  forced  him  to 
go  back  to  Buffalo  and  confess  to  Matthews.  *Read  the  evidence  of  it  all. 
Read  the  decisions  of  the  judge  in  refusing  to  admit  important  evidence. 
After  long,  long,  long,  long,  legal  contest,  a  part  of  these  conspirators,  two 
of  them,  were  convicted.  There  were  seven  long  months  of  a  delay  of 
sentence  and  finally,  $250  was  the  sentence.  A  fine!  A  hundredth  part  of 
what  Matthews  had  expended  to  bring  these  criminals  to  Judgment!  $250! 
An  atom  in  the  great  ocean  of  wealth  that  was  behind  these  conspirators. 
And  Matthews,  struggling  with  poverty,  yet  determined  that  justice  should 
be  done,  had  spent  the  few  remaining  thousands  he  had  left  in  these  litiga- 
tions, and  Matthews  and  his  little  refinery  were  forced  into  the  hands  of  a 
receiver,  and  he  was  financially  ruined,  *and  the  two  men  who  had  conspired 
to    ruin    him,   fined   $250. 

"That  is  not  all,  Mr.  Chairman.  Matthews  had  verdicts  against  the 
Standard  Oil  Company  people  for  civil  damages  for  $270,000  and  the  credi- 
tors of  Matthews  under  this  receivership  were  forced  *by  the  Judge  to  settle 
with  these  people  for  $17,300. 

"And  that  is  not  all.  These  great  monopolistic  combine'^;  *have  a  system 
of  award,  and  the  political  bosses.  *who  are  but  the  creatures  and  servants 
and  instruments  of  this  great  combine  of  corporate  capital,  secured  for 
this  judge  the  nomination  to  the  Court  of  Appeals  of  the  State  of  New  York, 
and  then  by  the  use  of  the  party  machinery  and  a  liberal  supply  of  corrup- 
tion funds  elected  him,  and  there  he  is,  way  up  there  in  the  Court  of 
Appeals  in  the  State  of  New  York  to  dispense  that  kind  of  justice  to  the 
American  people." 

*Q.    (By  Mr.  KENNEDY.)     Who  is  that  you  refer  to?     A.  Judge  Haight.f 

Q.  (By  Professor  JENKS.)  Can  you  give  us  the  citation  of  the  Matthews 
case  and  the  case  that  you  yourself  brought  and  that  was  taken  away  from 
the  lower  court  by  the  Supreme  Court?  A.  This  Matthews  case  was  on  the 
records  in  the  courts  of  Buffalo,  and,  of  course,  the  record  of  the  case  that 
was  brought  by  the  producers,  was  in  Clarion  County,  of  the  other  State. 

Q.  (By  Vice-chairman  PHILLIPS.)  What  year?  A.  It  was,  I  think, 
in   1878. 


*Black  fatod  type  IndicatPs  matter  omitted,  in  the  course  of  editing,  from  the 
ofTici  il  r^-port. 

■  Much  of  Mr.  T^ockwond's  rpferenc<>P  to  Judfjo  Tlaisjht  were  elimiriatfd  from  the 
official  report  as  an  unwarranted  attack  on   a   di-stinsuished   and   honorable  jurist. 


M.   L.   LOCKWOOD.  141 

*Q.  (By  Professor  JENKS.)  Can  you  furnish  us  the  exact  citation?  A.  I 
will   attend  to   that   if  you   will    make   a   memorandum   of  it. 

Q.  (By  Vice-chairman  PHILLIPS.)  You  will  furnish  the  data  of  both 
of  these  cases?  A.  I  will  furnish  the  data  of  everything,  from  end  to  end. 
No,  gentlemen,  Ihe  remedy  is  not  in  the  courts.  You  can't  reach  these 
fellows  in  the  court.  They  will  circumvent  you.  They  *broke  up  Matthews 
and  they  will  break  up  any  man  who  honestly  attempts  to  bring  them  to 
justice.  The  thought  is  fast  becoming  fixed  in  the  minds  of  the  common 
people  that  these  great  railway  combines,  extending  as  they  do  from  the 
Atlantic  to  the  Pacific  and  from  Canada  to  the  Gulf,  *in  conjunction  with  all 
of  the  power  of  the  trusts,  are  gradually  packing  *the  Supreme  Courtv  with 
men  that  will  do  their  bidding,  or  rather  with  men  who  are  in  sympathy 
with  the  present  monopolistic  condition  of  things. 

Now,  then,  in  1878,  the  producers  of  petroleum  in  Pennsylvania  had  all 
of  that  old  Anglo-Saxon  confidence  in  the  justice  of  the  court  and  in  the 
power  and  omnipotence  of  the  law-.  If  we  could  get  a  law  enacted  by 
Congress  prohibiting  railway  discriminations,  then  there  would  be  no  more 
railway  discriminations  and  no  more  trouble.  We  paid  a  retired  railway 
attorney  a  thousand  dollars  to  draft  us  an  anti-discrimination  railway  bill. 
The  conditions  were  that  it  should  be  such  a  bill  that,  when  enacted  into  a 
law,  the  railway  companies  could  not  drive  a  train  of  cars  through  it.  I 
shall  never  forget  the  report  which  that  committee  made  when  they  came 
back  after  bringing  that  bill  down  here  to  Washington.  They  found  Reagan, 
of  Texas,  chairman  of  the  Committee  on  Commerce,  and  they  took  that  bill 
to  him.  He  read  it  through,  and  after  he  had  got  through  reading  it.  he  said: 
";\Iy  Lord,  that  is  just  what  we  need  down  in  Texas,"  and  he  went  behind 
that  bill  and  stayed  there  for  eight  long  years  in  passing  it.  *We  spent  eight 
long  years  in  circulating  petitions,  getting  men  to  petition  Congress  to  pass 
this  bill.  We  all  thought  that  the  CuUom  amendments  in  the  Senate  very 
much  weakened  it,  but  finally  it  was  passed  after  many  years  and  we  had 
an  interstate  commerce  law.  But  do  you  know  that  these  great  railway  and 
trust  combinations  don't  seem  to  care  any  more  for  that  law  than  though  it 
was  not  upon  the  statute  books.  If  they  can  control  the  appointment  of 
attorneys-general  and  Supreme  Court  judges,  they  don't  care  what  the  law  is. 
They  have  become  *bigger  than  the  law;  bigger  than  the  government  itself. 
They  dare  lo  threaten  the  Interstate  Commerce  Commission  and  ignore  its 
orders,  for  this  great  government  seems  powerless  to  perform  the  duties 
provided  for  it  by  the  law  that  created  it.  *For  the  evidence  to  prove  the^e 
statements  I  desire  to  refer  the  commission  to  the  proceedings  before  the 
Interstate  Commerce  Commission  in  the  Titusville  and  Oil  City  independent 
cases,  pages  256  and  267.  See  also  complaint  of  the  Interstate  Commerce 
Commission  to  the  United  States  Circuit  Court  in  the  Cox  case.  Also  see 
contention  of  railroad  companies  in   Rice  case,  page  2  of  their  brief. 

Four  or  five  years  ago,  or  maybe  six  years  ago,  the  Atchison,  Topeka  & 
Santa  Fe  Railroad  Company  went  into  the  hands  of  a  receiver,  but  about 
the  first  thing  that  receiver  found  out  was  that  the  officers  of  that  road  had 
paid  out  in  a  short  time  prior — some  two  or  three  years — over  seven  millions 
of  dollars  in  rebates  to  trusts  and  monopolies  and  favorite  shippers.  While 
this  was  a  state's  prison  offence,  there  did  not  seem  to  be  any  disposition 
on  the  part  of  the  attorney  general  of  the  United  States  to  bring  these 
great  criminals  to  judgment.  These  great  railway  combines  and  monopolis- 
tic organizations  seemed  to  overshadow  the  government,  and  direct  and 
control  the  action  of  its  officials. 

Q.  (By  Senator  MALLORY.)  In  reference  to  the  action  on  the  part  of 
the  attorney  general,  wasn't  that  before  the  passage  by  Congress  of  the 
law  which  subjected  the  shipper  who  received  the  rebate  to  liability  under 
its  provisions  and  which  punished  all  parties  concerned  in  the  rebate  busi- 
ness?    A.  Now  really,  this  was  the  time  that  the  Santa  Fe  road  failed. 

*Q,  That  was  eight  or  nine  years  ago,  was  it  not? 


♦Black  faced  type  indicates  matter  omitted,  in  the  course  of  editing,  from  the 
official  report. 

tin  ly.e  official  report  "our  higher  courts"  appears  in  place  of  "the  Supreme 
Court." 


142  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

*Mr.    KENNEDY.      In   1893. 

Q.  Well,  that  was  before  the  passage  of  the  amendment  of  the  interstate 
commerce  law  which  exempted  one  of  the  parties  from  criminality  in  such 
proceedings.  A.  Now,  then,  behind  the  power  of  railway  discrimination, 
the  Standard  Oil  Company,  the  Sugar  Trust,  the  Steel  combination,  the  Big 
Four  Beef  combination  and  the  rest  of  these  organizations,  feel  so  secure 
in  their  power  to  throttle  competition  and  plunder  the  producers  and  con- 
sumers of  America,  that  the  stocks  of  some  of  these  companies,  from  fifty 
to  ninety  per  cent  water,  are  selling  to-day  at  from  two  to  four  hundred 
cents  on  the  dollar. 

Now  then,  Mr.  Chairman,  the  greatest  battle  on  the  record  of  time,  has 
been  fought  by  Mr.  George  Rice,  of  Marietta,  Ohio,  for  the  right  to  do  business 
in  this  free  country — for  the  right  to  do  the  business  of  his  choice. 

Now  then,  what  is  the  record  in  that  Rice  case?  In  the  latter  part 
of  the  seventies,  the  railway  managers,  to  cripple  Rice  in  the  interests  of 
the  Standard  Oil  Company  people,  doubled  the  rate  on  oil  out  of  Marietta, 
where  Rice's  refineries  were.  The  raise  was  only  on  oil — nothing  else.  No 
other  freight  was  raised,  and  only  out  of  Marietta.  Ten  miles  below,  on  the 
Ohio  river,  at  Parkersburg,  the  Standard  Oil  Company  had  a  refinery  and 
the  rate  was  not  raised  on  oil  from  there.  The  railroads  raised  the  rate  on 
Rice"s  oil  out  of  Marietta,  and  no  raise  was  made  anywhere  else. 

For  the  evidence  to  prove  this  statement.  *see  the  report  of  the  Com- 
mittee of  the  Ohio  Legislature  on  railroad  freights,  pages  5,  41,  42,  124,  141, 
162,  166  and  170.  What  further?  The  railroads  over  which  Rice  had  been 
shipping  oil  to  the  southern  markets  raised  the  rate  on  oil  from  twenty-nine 
to  212  per  cent  on  Rice's  shipments,  over  and  above  what  the  Standard  Oil 
Company  had  to  pay;  and  finally  they  refused  to  give  Rice  any  rates  at  all. 

*For  evidence  to  prove  this  statement  see  testimony  in  the  Rice  case 
before  the  Interstate  Commerce  Commission,  Nos.  51  and  60,  pages  147,  148, 
and  149;    also  see   Rice's  complaint,  page  6. 

What  further?  The  railroads  paid  rebates  to  the  Standard  Oil  people 
on  the  oil  that  Rice  shipped. 

Q.  (By  Mr.  KENNEDY.)  How  much?  A.  I  will  give  you  the  reference 
so  you  can  tell.  *See  the  report  of  the  Committee  of  Congress  on  Tru-ts, 
1888,   pages  575,   576,  577,   578;    also   page  583. 

What  further?  The  railroad  companies  discriminated  against  Rice  in 
favor  of  the  Standard  Oil  Company  people  to  an  amount  equal  to  $1f»9  per 
car  carrying  100  barrels.  *See  exhibit,  page  582,  report  of  Fiftieth  Congress, 
on   Combinations  and   Trusts. 

Now  then,  Mr.  Chairman,  and  Gentlemen  of  this  Commission,  I  hope  I 
am  not  asking  too  much  when  I  ask  the  members  of  this  commission  to  read 
the  forty-three  pages  giving  the  history  of  George  Rice's  exertions  to  do 
business  over  these  American  railways.  Every  fact  herein  stated  is  sub- 
stantiated by  sworn  evidence  before  the  Interstate  Commerce  Commission, 
before  the  courts,  before  the  State  and  National  investigating  committees, 
and  when  you  have  read  this  record  of  crime,  when  you  have  read  and  seen 
how  the  rights  of  the  American  people  are  destroyed  by  these  railway  com- 
panies, I  would  suggest,  and  I  think  it  is  proper,  that  when  John  D.  Rocke- 
feller appears  before  you  that  you  ask  him  if  the  railway  companies  had 
have  treated  him  as  they  did  George  Rice,  whether  he  thinks  he  could  have 
succeeded  in  business. 

Q.  (By  Senator  MADT.ORY.)  What  is  the  name  of  that  book?  (Re- 
ferring to  a  book  in  the  hands  of  the  witness.)  A.  This  is  three  chapters 
of  H.   D.    Lloyd's  great   book  on  Wealth   Against  the  Commonwealth. 

*Q.  (By  Vice-chairman  PHILLIPS.)  You  will  leave  that  for  the  present 
for  the  use  of  the  commission?  A.  Yes,  sir.  Now  then,  it  does  not  seem 
l)ossible  that  under  this  government,  based  upon  the  doctrine  of  the  equal 
rights  of  men,  that  such  outrages  can  be  possible;  yet  this  great  govern- 
ment, through  its  courts  and  through  its  commissions,  seems  powerless  to 
prevent  these  wrongs  which  I  have  enumerated. 


*Rlack  faced  type  indicates  matter  omittod,    in    thp  course   of  oditinp,    from    the 
official  report. 


M.   L.  LOCKWOOD.  143 

Now  then,  what  is  the  remedy?  Take  these  railroads  away  from  these 
corporations  and  make  them  public  property.  Let  the  government  own  and 
run  them.  Make  them  highways  over  which  the  people  can  go  to  market 
upon  even  terms  with  everybody.  The  eleven  billions  of  capital  combined 
in  the  railways  of  the  Republic,  organized  as  they  are  under  joint  traffic 
and  passenger  associations,  are  throttling  the  law  of  competition  and  con- 
stitute one  great  railway  trust,  controlling  the  highways  of  the  people,  dic- 
tating who  shall  and  who  shall  not  do  the  business  of  the  country,  condemn- 
ing this  man  to  poverty  and  that  man  to  riches.  Those  holding  these  eleven 
billions  of  capital  combined  with  those  holding  the  capital  of  trusts  and 
monopolies,  have  constituted  themselves  the  political  dictators  of  this  coun- 
try. They  furnish  the  millions  of  dollars  for  corrupt  political  campaign  pur- 
poses. They  assume  to  own  the  votes  of  all  the  men  in  their  employ,  and 
he  who  becomes  politically  obnoxious  to  them  is  blacklisted  and  turned  out 
to  starve  or  hunt  a  new  occupation. 

Shrewd  politicians,  backed  by  this  combination  of  capital  and  this 
power,  have  constituted  themselves  political  bosses.  These  political  bosses 
are  but  the  creatures  and  servants  of  this  great  corporate  power,  and  these 
bosses  are  dictating  the  nominations  of  legislators,  Congressmen,  Senators 
and  judges  satisfactory  to  their  masters.  In  this  way  they  are  controlling 
legislation,  and  escaping  punishment  for  their  crime. 

It  takes  a  strong  man,  Mr.  Chairman,  well  anchored  in  the  confidence 
and  affection  of  his  people  to  triumph  politicallj^ — *triumph  poiitically,  I  say 
— against  this  combined  capital  and  power.  And  just  in  proportion  that 
these  great  trust  combinations  are  enabled  to  absorb  the  wealth  produced 
by  the  people  and  impoverish  them,  will  the  people  become  subservient  and 
cowering,  because,  Mr.  Chairman,  the  fear  of  hunger  for  wife  and  babies 
makes  cowards  of  us  all. 

Can  the  Republic  survive  with  these  railways  in  the  hands  of  corpora- 
tions which  are  fastening  these  monopolies  upon  us? 

Mr.  Chairman  and  gentlemen,  these  corporations,  in  justification  of 
their  management  of  the  highways  of  the  people,  the  railways,  set  forth 
that  they  are  moving  the  freight  of  this  country  cheaper  than  the  freight 
of  .any  other  country  upon  the  globe.  True,  but  out  of  their  own  mouths 
they  convict  themselves  of  a  great  crime.  I  hold  in  my  hand  a  receipted 
freight  bill  for  the  shipment  of  a  car  load  of  oil  well  supplies  from  Harmony, 
Pa.,  to  Unity,  Pa.,  a  distance  of  forty-nine  miles.  The  cost  wa-?  .$-1'l.(;0  for 
this  carload  of  sixteen  tons,  or  $2.91  a  ton  for  forty-nine  miles,  or  $0.0.593  per 
ton  per  mile. 

*Q.  (By  Professor  JENKS.)  Will  you  put  that  in  evidence?  A.  Yes,  sir, 
I  will  give  you  the  distance,  too,  if  you  want  it.  I  have  freight  bills  showing 
that  I  have  paid  $0.04.32  per  ton  per  mile  in  carload  lots  of  freight.  Now  then, 
a  large  percentage  of  the  freight  of  the  American  people  is  moved  in  less 
than  carload  lots,  and  I  have  here  the  receipted  freight  bills  for  lots  of 
from  one  to  two  tons,  and  I  find  upon  that  class  of  freight  that  I  have  paid 
$0.13.57  per  ton  per  mile. 

Q.  Have  you  any  evidence  to  show  that  over  this  same  road,  for  the 
same  distance  and  the  same  freight,  any  lower  rates  have  been  given  to 
anybody  else?  A.  No,  I  have  not.  It  is  a  small  matter,  you  know,  and  I 
only  ship  over  it  occasionally.  A  large  percentage  of  the  freight  of  the 
country  is  shipped  by  men  who  ship  a  car  this  month  and  a  car  next  month 
and  so  forth.  Now  then,  these  freight  bills  are  for  fifth  or  sixth  class, 
freight  which  I  think  oil  well  supplies  are,  and  I  suppose  that  the  public 
pays  the  same  freight  for  similar  shipments.  I  suppose  they  do.  Now  then, 
the  statistics  of  this  country  show  that  all  the  freight  of  the  country  includ- 
ing everything  is  moved  at  the  average  rate  of  0.85  of  a  cent  per  ton  mile. 
Now,  then,  these  facts  convict  these  railway  managers  of  a  great  wrong,  for 
those  freight  bills  show  that  the  people  are  being  robbed  for  the  benefit  of 
the  stockholders  of  these  railways  and  the  statistics  show  that  these  stock- 
holders of  these  railways  are  being  robbed  for  the  benefit  of  monopolies, 
trusts  and  favorite  shippers. 


*Black  faced  type  indicates  matter  omitted,    in    the  course   of  editing,    from    the 
official  report. 


144  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

Now  here  is  a  problem.  If  the  people  are  obliged  to  pay,  as  shown  by 
these  freight  bills,  upon  their  shipments  of  freight,  from  four  and  thirty-two 
one-hundredths  cents  per  ton  mile  to  thirteen  and  fifty-seven  hundredths  cents 
per  ton  mile,  and  all  of  the  shipments  of  the  country  are  moved  for  eighty- 
five  one-hundredths  of  a  cent  per  ton  mile,  then  how  much  less  do  the  mon- 
opolies, trusts  and  favorite  shippers  pay  in  order  to  bring  this  average  from 
thirteen  and  fifty-seven  one-hundredths  cents  per  ton  mile  down  to  eighty-five 
one-hundredths  cents  per  ton  mile?  The  answer  to  this  question  will  an- 
swer the  oft-repeated  questions  of  why  so  many  of  our  railways  are  in  the 
hands  of  receivers.  The  proper  answer  to  this  question  will  answer  why  it  is 
that  many  managers  of  these  railroads  are  becoming  many  times  million- 
aires  while  the  railroads  are   becoming  bankrupt. 

The  record  for  the  last  twenty-five  years  has  demonstrated  that  as  long 
as  these  railway?  are  in  the  hands  of  these  corporations,  that  they  will  use 
them  for  the  benefit  of  their  friends — the  inside  combination — and  they  will 
use  them  for  the  purpose  of  destroying  the  great  principle  of  equal  rights 
which  is  the  foundation  stone  of  our  Republic. 

Now  then,  take  these  railroads  away  from  these  corporations.  Guar- 
antee to  every  man  an  equal  right  in  the  transportation  of  his  product.  I 
know  the  independent  oil  producers  and  refiners  of  America,  and  if  you  will 
establish  equality  over  these  railroads,  with  a  guaranty  that  that  equality 
will  continue,  I  feel  safe  in  saying  that  in  less  than  fifteen  years  the  inde- 
pendent oil  producers  and  refiners  of  America  will  drive  the  Standard  Oil 
Company  into  a  secondary  position  in  the  oil  trade  of  the  country. 

Now,  these  great  trusts  and  combinations  do  not  know  the  first  prin- 
ciples of  economical  management.  By  virtue  of  the  great  flow  of  wealth 
that  has  come  to  them  from  railway  rebates  and  monopolistic  possessions, 
they  have  not  been  obliged  to  study  the  principles  of  economy  a  moment  in 
their  lives.  By  this  monopoly  process  they  have  been  able  to  take  so  much 
money  from  the  people  that  they  absolutely  do  not  know  what  to  do  with  it. 
Re-establish  the  equality  of  our  people  over  the  railways  of  the  country,  and 
there  will  be  no  more  coal  miners'  strikes,  soldiers  and  deputies  will  not  be 
called  upon  to  shoot  down  American  citizens  like  dogs  in  order  to  drive  them 
back  into  subserviency  of  monopolistic  control,  for  then  the  miner  can  ship 
his  car  load  of  coal  just  as  cheap  as  the  biggest  coal  combine  in  the  land. 
Men  do  not  strike  and  go  out  and  starve,  only  as  a  last  resource.  Establish 
the  equality  of  our  people  over  the  railways  of  the  country  and  when  the 
coal  miners  become  dissatisfied  for  any  reason,  instead  of  striking  for  their 
ii.-;hts,  they  can  get  together,  or  can  keep  together,  and  form  a  little  com- 
pany of  their  own,  and  lease  either  McComb's  or  McLaughlin's  farm  and 
open  up  a  coal  mine  of  their  own  and  ship  their  coal,  the  products  of  their 
owii  labor,  and  market  it  upon  equal  terms  with  the  biggest  coal  combine 
in  tne  land. 

Now,  then,  how  can  these  great  over.-capitalized  and  extravagantly 
managed  coal  combinations  stand  such  competition  as  that?  They  could  not 
stand  it  at  all.  It  would  be  mighty  hard  on  these  big  coal  combines,  but  it 
would  Re  justice  and  it  would  be  a  wise  National  policy. 

Now.  then,  with  absolute  equality  over  the  railways  of  the  country,  so 
tha*:  every  butcher  could  ship  a  car  of  cattle  just  as  cheap  as  the  Big  Four 
Beef  Combine,  the  Big  Four  Beef  Com])ine  could  not  hold  a  monopoly  of  the 
meat  business  of  America  for  24  hours;  they  could  not  do  it. 

Under  government  control,  the  letter  of  an  oil  producer,  a  coal  miner  or 
a  butcher,  goes  to  its  destination  wqth  the  same  speed,  at  the  same  cost,  and 
with  the  same  precision  as  the  letter  of  an  .Vrmour  or  a  Rockefeller.  Send 
their  oil.  their  coal  and  their  meat  to  market  upon  these  same  terms  of 
equality,  and  it  wont  be  long  before  these  great  monopolistic  combines  will 
be  getting  rid  of  their  $25,000  a  year  lawyers,  and  their  $25,000  a  year  man- 
agers, upon  the  plea  that  their  business  will  not  stand  such  high-priced  men; 
and  these  managers  will  soon  be  engaged  in  building  up  a  business  of  their 
own,  and  these  lawyers  will  soon  be  engaged  in  a  better  business  than 
advising  their  principals  just  how  far  they  can  go  without  getting  behind 
the  Lais. 


M.  L.  LOCKWOOD.  145 

Now,  then,  how  can  these  railways  be  taken  away  from  these  corpora- 
tions? It  is  easy.  The  public  welfare  demands  it.  Under  the  eminent 
domain  of  the  State,  the  power  exists  to  condemn  these  railway  properties 
for  the  public  welfare,  just  as  under  the  eminent  domain  of  the  State  private 
lands  were  condemned  upon  which  to  build  those  railways  for  the  public 
welfare.  Pay  these  corporations  for  them  just  what  they  are  truly  worth, 
and  in  this  transaction  we  must  be  careful  that  we  do  no  injustice  either  to 
the  people  or  to  the  stockholders  of  these  railways. 

But  some  one  says,  how  could  the  government  pay  the  immense  interest 
upon  the  enormous  public  debt  which  this  purchase  would  create?  Why,  Mr. 
Chairman,  the  people,  who  in  this  land  are  the  government,  are  paying  it 
to-day.  These  railway  companies  are  taxing  the  people  in  exorbitant  freight 
rates  for  the  payment  of  the  interest  on  all  of  their  corporate  debt,  many  div- 
idends upon  watered  stock,  and  hundreds  of  millions  annually  for  the  benefit 
of  these  trusts,  monopolies  and  favorite  shippers.  Under  government  own- 
ership the  people  are  only  changing  the  managers  of  their  highways  for 
these  railways  are  the  peoples'  highways,  and  one  of  the  greatest  judges 
that  this  land  has  ever  produced,  in  my  judgment,  has  said  "that  a  public 
highway  cannot  be  private  property."  Now,  then,  an  important  reason  for 
government  ownership  is  that  the  bonded  debt  necessary  to  acquire  those 
roads  could  be  placed  at  from  l^/^  to  3  per  cent,  less  interest  annually  than 
is  now  being  paid  for  interest  upon  the  bonded  debts  of  these  roads,  and 
this  great  reduction  of  interest  would  be  an  important  factor  in  cheapening 
the  cost  for  the  transportation  of  the  products  of  the  people.  But  a  great 
and  more  overshadowing  reason  for  government  ownership  is  that  then  we 
will  be  able  to  shake  off  the  grip  of  these  monopolies  from  the  throats  of 
the  people. 

But  some  very  good  men  fear  the  power  of  patronage  which  the  govern- 
ment ownership  would  give  the  party  in  power.  I  do  not  fear  it.  That  can 
be  controlled  by  civil  service  laws.  But  even  if  the  National  ownership  of 
railways  should  be  a  source  of  strength  to  the  party  in  power,  they  would 
be  responsible  to  the  people  for  a  just,  honest  and  fair  administration  and 
management  of  the  great  public  property  in  the  interest  of  the  people.  While 
under  corporate  management  all  of  the  power  and  influence  of  these  great 
railway  combines,  together  with  all  of  the  influence  and  power  of  the  men 
whom  they  control,  are  thrown  into  the  balance  in  favor  of  this  or  that  party, 
whichever  will  secretly  agree  to  serve  them  the  best.  They  hold  the  balance 
of  power  in  many  of  the  States,  and  they  can  elect  the  candidates  of  that 
party  whose  bosses  will  guarantee  the  greatest  subserviency  to  their  will. 
The  party  that  obtains  control  by  virtue  of  this  influence  is  not  held  respon- 
sible to  the  people  for  the  maladministration  of  these  public  highways,  as 
they  would  be  under  government  ownership.  It  is  because  these  eleven  bil- 
lions of  railway  capital,  together  with  all  of  the  men  which  it  controls  and 
who  are  in  politics  clear  up  to  their  armpits,  and  all  of  this  influence  and 
power  is  used  for  corrupt  and  selfish  purposes;  it  is  because  these  eleven 
billions  of  capital,  together  with  all  the  capital  of  the  trusts,  are  corrupting 
our  public  affairs  and  debauching  our  public  men.  that  the  people  must  take 
these  railways  away  from  the  corporations. 

The  record  of  the  last  25  years  has  demonstrated  that  the  government 
must  own  and  control  these  railways,  or  else  the  railways  will  control  and 
run  the  government. 

Now,  then,  in  the  oil  regions  of  Pennsylvania  there  has  lived  a  set  of 
men  who  have  never  bowed  the  knee  to  Baal,  but  have  battled  on  continu- 
ously for  their  rights  as  American  citizens  to  use  the  railways  of  the  coun- 
try. It  has  been  a  long  battle.  Some  of  the  men  who  buckled  on  the  armor 
in  1872  have  been  claimed  by  the  hand  of  death;  some  of  them  have  gone 
down  under  the  blandishments  and  money  of  the  Standard  Oil  Company 
and  they  have  been  bankrupted  and  reduced  to  servitude  and  have  been 
obliged  to  go  to  work  for  this  great  monopoly  in  order  to  obtain  bread  for 
their  families.  Some  of  them,  with  a  deep  sense  of  the  great  wrong  that 
has  blighted  all  their  hopes  and  darkened  their  future  lives,  with  a  deep 
sense  of  the  great  wrong  that  has  driven  them  from  the  highways  of  the 
country  and  chained  them  to  the  rock  helpless  while  this  great  monopoly 

10 


146  REVIEW  OP  TESTIMONY— INDUSTRIAL  COMMISSION. 

has  robbed  them — some  with  a  deep  sense  of  this  wrong  have  been  driven 
to  the  grave  of  a  suicide  or  the  insane  asylum;  but  there  are  enough  left  to 
keep  the  faith  and  battle  on  for  commercial  liberty  and  equality.  These  men 
have  never  faltered,  but  have  battled  on  as  best  they  could  with  the  means 
at  their  command.  They  first  built  the  28  pipe  lines  which  I  have  referred 
to.  They  then  found  that  it  was  railway  discrimination.  They  then  went 
to  the  courts,  and  when  the  courts  failed  them  they  came  down  here  to 
Washington  to  Congress  for  an  interstate  commerce  law;  when  the  inter- 
state commerce  law  failed  them  they  attempted  to  hew  for  tuemselves  a 
way  by  building  a  pipe  line  to  the  ocean  where  commerce  is  free,  thinking, 
hoping,  praying,  that  somewhere  beyond  our  borders  we  might  find  a  land 
and  a  government  where  the  equal  rights  of  all  men  are  maintained  upon 
the  highways,  and  they  have  found  it,  Mr.  Chairman,  in  the  great  Empire  of 
Germany,  where  the  government  owns  and  controls  the  railways.  The  poor- 
est man  in  Germany  can  ship  a  barrel  of  oil  from  one  end  of  Germany  to  the 
other  just  a  cheap  as  the  Standard  Oil  Company  can.  In  Germany  the  inde- 
pendent oil  producers  and  refiners  of  America  are  not  only  enabled  to  com- 
pete successfully  with  the  Standard  Oil  Company,  but  in  addition  they  are 
enabled  to  earn  satisfactory  and  flattering  profits  upon  their  entire  capital. 
Give  us  National  ownership  of  these  American  railways,  which  will  insure 
and  perpetuate  equal  rights,  and  we  will  soon  give  the  people  of  America 
their  oil  at  competitive  rates,  and  the  people  of  America  will  not  then  be 
obliged  to  pay  40  per  cent,  dividends  on  Standard  trust  stock,  at  least  50  per 
cent,  water,  because  there  will  be  plenty  of  capital  ready  to  serve  them  at 
6  per  cent,  profit  on  the  actual  amount  of  capital  invested. 

I  take  no  stock  in  the  idea  that  inordinately  great  capital  can  produce 
cheaply.  Where  monopoly  begins,  there  improvement  ends.  It  is  competi- 
tion that  drives  men  to  economic  improvements  and  inventions.  It  is 
monopoly  that  demands  great  profits.  While  competition  is  putting  the 
refined  oil  into  tank  steamers  for  the  competitive  markets  of  Germany  at 
two  cents  a  gallon,  monopoly,  backed  by  railroad  favoritism,  is  forcing  the 
people  of  Texas  and  Arkansas  to  pay  25  cents  a  barrel  upon  the  oil  that  they 
burn  in  their  lamps.* 

Vice-Chairman  PHILLIPS.     A  gallon,  you  mean? 

The  WITNESS.  I  mean  a  gallon,  excuse  me.  The  paid  attorneys  of  the 
Standard  Oil  Company,  by  a  liberal  use  of  the  public  press  and  a  system  of 
comparison,  have  imposed  upon  the  American  people  the  thought  that  the 
Standard  Oil  Company  has  furnished  them  their  oil  cheaply.  If  the  people 
have  been  served  cheaply  by  this  monopoly,  what  means  the  five  hundred 
millions  of  profits  which  this  great  monopoly  has  garnered.  It  is  not  the 
purpose  of  trusts  to  serve  the  people  cheaply.  It  is  the  purpose  of  the 
trusts  to  create  monopoly,  and  then  force  the  producers  and  consumers  of 
America  to  pay  dividends  on  billions  of  watered  capital. 

Before  the  Sugar  Trust  had  fully  fastened  its  fangs  upon  us,  I  bought 
good  granulated  sugar  at  $3.90  a  hundred.  To-day  this  Sugar  Trust  is 
forcing  the  American  people  to  pay  them  $5.50  and  $6  a  hundred  for  the 
same  grade  of  sugar,  a  difference,  I  am  told,  of  more  than  $200,000,000  an- 
nually to  the  American  people.     Think  of  it,  Mr.  Chairman!     Two  hundred 


♦Mr.  Lockwood  should  have  known  that  his  Ftatement  that  refined  oil  Is  put  into 
tank  steamers  for  the  competitive  markets  of  Germany  at  two  cents  a  gallon  was 
incorrect,  and  had  he  heard  the  testimony  that  was  constantly  repeated  by  officials 
ijf  S'lnthern  railroads  before  the  commission,  he  would  have  known  that  at  certain 
Isolated  points  freipht  rates  are  very  high  because  of  natural  disadvantages  which 
hamper  the  railrot.ds  in  the  conduct  of  their  business  and  which  make  it  necessary 
for  them  to  charge  a  comparatively  high  rate,  whereas,  when  the  small  amount  of 
freight  handled  by  the  road  and  the  long  stretches  of  unproductive  country 
through  which  they  pass  are  taken  into  consideration,  the  rate  compares  favorably 
with  the  rate  actually  much  lower  on  Northern  roads.  This  had  been  shown 
to  be  the  case  from  the  fact  that  on  many  Southern  roads,  with  high  freight  rates, 
the  earning  capacity  is  greatly  inferior  to  that  of  roads  in  other  sections  where 
cheaper  rates  are  secured.  He  failed  to  refer  to  the  difference  in  quality  between  the 
export  oil  ,"nd  the  oil  he  referred  to  as  being  sold  elsewhere  at  a  higher  price.  T^ater 
he  admitted  that  the  two-cent  rate  he  referrcil  to  was  a  cut  rate  his  company  had 
adopted  to  open  a  market  abroad,  and  which  thty  promptly  abandoned  as  soon  as 
their  purpose   was   accomplished,   after   which  they  put  up  the  price. 


M.  L.  LOCKWOOD.  147 

million  dollars  of  the  wealth  produced  by  the  American  people  by  this  pro- 
cess taken  from  the  pockets  of  the  people  who  have  earned  it,  and  trans- 
ferred into  the  coffers  of  the  Sugar  Trust,  and  then  Mr.  Havemeyer  says, 
"What  are  you  going  to  do  about  it?" 

I  will  detain  you  but  a  little  longer.  Now,  then,  how  can  this  be  pre- 
vented? By  assuming  control  of  these  railways  of  America,  and  guarantee- 
ing to  every  man.  to  every  American  citizen,  equal  rates  upon  the  transporta- 
tion of  his  product,  and  then,  in  addition,  by  enacting  a  law  forcing  these 
great  trusts  and  monopolistic  combines,  when  they  fix  the  price  upon  their 
goods,  then  that  price,  freight  considered,  must  be  the  price  in  every  town- 
ship and  hamlet  of  the  land.  When  prices  are  changed  at  any  point  they 
must  be  changed  everywhere.  Make  a  violation  of  this  law  a  State's  prison 
offence  for  the  mdnagers  of  these  corporations.  These  corporations  are  the 
creatures  of  the  State.  The  State  has  created  them  *and  has  put  into  them 
all  of  this  power  for  commercial  and  creative  energy,  and  the  State  has  the 
right  to  control  them  in  such  a  way  that  they  may  not  be  detrimental  to  the 
public  welfare.  This  law  will  prevent  these  great  trusts  and  combinations 
from  putting  up  the  price  in  one  section  of  the  country  where  there  is  no 
competition,  and  forcing  the  people  of  that  section  to  pay  the  costs  of  destroy- 
ing competition  in  another  section  of  the  country.  This  law  will  prevent 
these  corporations  from  forcing  the  people  to  pay  for  a  war  of  annihilation 
against  new  competition.  This  law  will  protect  and  encourage  competition 
upon  every  hand,  and  cure  the  evils  which  are  now  upon  us.  Say  to  all  of  our 
people:  "Mine,  manufacture,  produce,  and  the  products  of  your  labor  shall 
find  a  market  upon  terms  equal  to  all,  and  you  shall  be  protected  in  a  fair 
competitive  combat."  Do  this,  and  these  great  over-capitalized  and  un- 
wieldy trust  combinations  will  wither  and  go  down  before  the  energetic,  intel- 
ligent, active,  competitive  capacity  of  the  American  people. 

I  thank  you,  gentlemen,  for  your  very  kind  attention. 

Q.  (By  Mr.  KENNEDY.)  I  gather  from  the  testimony  that  you  have 
just  made,  that  you  believe  freight  discriminations  and  favoritism  to  be  the 
mother  of  the  great  trusts  of  this  country?  A.  I  do,  largely,  yes,  sir; I  think 
it  is  really  the  foundation. 

*Representative  LIVINGSTON.    Is  that  intended  for  a  political  question? 

Mr.  KENNEDY.  No,  sir;  that  has  been  the  tenor  of  his  argument  all 
the  way  through;  that  they  could  not  exist  in  this  country  were  it  not  for 
freight  discriminations. 

The  Witness.  The  brains  of  the  country  must  have  protection  from 
some  source.  The  brains  of  the  country  are  not  in  the  heads  of  a  few  men; 
they  must  have  protection  from  some  source.  The  protection  which  has 
created  the  Standard  Oil  Company,  the  Big  Four  Beef  Combine,  and  trusts 
and  monopolies  of  that  class,  is  the  protection  of  railway  discriminations 
and  freights. 

The  commission  took  a  recess  from  1  to  2  o'clock  p.  m.,  after  which  Mr. 
Lockwood's  examination  was  continued. 

Q.  (By  Professor  JENKS.)  I  understood  you  to  say.  Mr.  Lockwood,  that 
there  were  quite  a  nmuber  of  different  pipe  lines  in  those  earlier  days  in  the 
oil  producing  industry  in  Pennsylvania,  that  were  either  forced  to  suspend 
their  operations  or  were  bought  up  by  the  Standard  Oil  Company,  and  united. 
How  many  of  these  different  pipe  lines  were  there — I  think  you  men- 
tioned     A.  I  have  a  record  of,  I  think.  28. 

Q.  Can  you  tell  us  the  methods  by  which  the  Standard  secured  control 
of  this  pipe  line  industry?  A.  Well,  in  those  early  days  theirf  policy  was  to 
go  to  the  wells,  and  pay  for  this  oil  more  than  anybody  else  could  pay.  For 
the  last  15  years  they  have  adopted  a  policy  of  paying  what  they  call  a 
premium  on  the  oil  that  is  accessible  to  these  competing  pipe  lines.  When 
a  new  pipe  line  starts  into  a  particular  district,  immediately  that  oil  becomes 
very  valuable  and  the  Standard  Oil  Company  will  put  a  premium  on  that  oil 
of  say  20  to  30  cents  a  barrel.  When  they  have  succeeded  in  finally  driving 
out,  buying  up  or  breaking  up  this  competing  pipe  line,  then  that  oil  is  not 


*P.lrick  faced  type  indicates  matter  omitted,    in   the  course   of  editing,    from    the 
official  report. 

tReferring-  to  the  Standard   Oil   Company. 


148  REVIEW   OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

any  more  valuable  than  any  other  oil,  and  they  take  the  premium  off.  Let 
me  give  you  an  illustration.  In  1887,  the  Craig,  Elkins  and  Kimball  outfit 
built  the  Western  &  Atlantic  Pipe  Lines.  They  made  their  first  shipment 
of  oil  on  October  11,  1887.  At  that  time  the  Standard  Oil  Company  was 
paying  for  crude  oil  at  the  wells  69  cents  a  barrel.  The  Western  &  Atlantic 
Pipe  Line  did  not  fairly  get  started  in  business  until  the  spring  of  1888.  By 
that  time  the  exchange  market  for  crude  oil  under  the  growing  competition 
was  88  cents  a  barrel,  and  the  white  sand  oils  of  Butler,  Armstrong,  Alle- 
gheny and  Washington  counties,  into  which  this  Atlantic  &  Western  Pipe 
Line  ran,  were  so  valuable  just  at  that  time  that  the  Standard  Oil  Company 
was  paying  a  premium  of  20  to  25  cents  a  barrel.  *ln  Washington  county, 
nearly  the  center  of  the  Craig  pipe  line  movements,  they  paid  25  cents,  and 
in  the  outlying  counties  beyond  they  paid  a  premium  of  20  cents,  which  made 
the  oil  at  the  wells  worth— 88  and  20  would  be  $1.08,  88  and  25  would  be 
$1.13,  respectively  in  the  different  districts. 

Now,  then,  refined  oil  was  selling  in  August  of  that  year  for  seven  and 
five-eighths  cents  a  gallon,  including  the  barrels,  in  New  York  City  and 
export  points.  In  November,  1889,  a  year  afterward,  the  Standard  Oil  Com- 
pany was  paying  us  for  oil  at  the  wells  $1.30  a  barrel  *under  the  competition, 
and'  refined  oil  was  selling  in  New  York  City  at  seven  and  a  half  cents  a 
gallon.  Competition  was  putting  the  price  of  crude  oil  up  to  the  producer 
and  competition  was  putting  the  price  of  refined  oil  down  to  the  consumer. 

I  have  a  very  vivid  remembrance  of  this  time  because  I  was  kind  of 
into  it.  I  was  opening  up  some  territory  on  the  Little  Connoquenessing 
creek.  That  is  in  the  western  part  of  Butler  county.  Pa.,  in  what  was  known 
as  the  "hundred-foot  rock."  I  had  leased  the  Cable  farm,  the  Charlie  Young 
farm,  the  Ed  Young,  Eyeholtz  and  Hayes  farms.  I  was  getting  some  magnifi- 
cent wells.  One  on  the  Eyeholtz  farm  started  off  at  125  barrels  an  hour.  I 
had  one  well  on  the  Chariie  Young  farm  that  averaged  1,000  barrels  a  day 
for  a  long  time.  I  think  I  drilled  about  40  wells  on  this  property.  Competi- 
tion was  giving  me  for  this  oil  all  that  it  was  worth  as  compared  with  what 
the  consumer  was  paying  for  it,  and  I  was  getting  rich.  I  was  getting  from 
$1.10  to  $1.30  a  barrel  for  this  oil.t  About  this  time,  it  became  evident  that 
there  was  a  hundred-foot  oil  belt  extending  from  the  western  part  of  Butler 
county  in  a  southwesterly  direction  down  into  the  eastern  part  of  Beaver 
county.  Pa.,  *and  1  got  on  to  that  idea,  and  I  worked  night  and  day,  never 
stopping  for  anything,  until  I  became  interested  in  about  three  miles  of  that 
oil  belt.  I  got  on  the  southwest  and  I  started  in  on  the  Fogle,  the  Kaneff,  the 
Shrumm,  the  Trautman.  the  Allen,  the  Passavant.  the  Coker,  the  Fankee,  the 
McCurdy,  the  Eyeholtz,  the  Getman,  the  Eichenhower,  and  the  Mover  farms. 
I  was  interested  in  two  and  a  half  miles  of  this  oil  belt.  I  had  it  all.  *Some 
others  worked  in,  so  I  didn't  have  it  solid.  1  thought  I  would  make  a  million 
out  of  it.  *We  were  getting  a  good  price  for  oil  and  of  course  I  felt  qood 
over  it.  I  had  some  grand  wells  on  it.  I  had  a  well  on  the  Trautman  farm 
that  started  off  1.200  barrels  a  day,  *and  a  number  of  the  wells  that  would  fill 
a  250-barrel  tank  a  day.  I  think  I  controlled  60,  70  or  80  wells  on  that  oil 
property. 

.About  that  time,  the  Standard  Oil  Company  gave  the  Elkins  and  Kimball 
crowd  their  price  and  bought  their  pipe  lines  and  refineries,  and  the  very 
next  day  the  premium  of  20  and  25  cents  came  off.  This  oil  wa<^  not  worth  any 
more  after  that  pipe  line  was  gone  than  any  other  oil,  and  the  price  of  the 


*Black  faced  type  indicates  matter  omitted,  in  the  course  of  <'ditinK.  from  the 
ofTicial  report. 

lit  will  be  seen  by  the  above  testimon.v  that  tlip  well  i)roducinR  12.")  barrelH  an 
hour  or  3.000  barrels  a  day  and  the  oth<T  1,000  barrels  a.  day,  g-avo  Mr.  T^ockwond 
4,000  barrels  a  day  on  those  two  wells  alone.  Estimatiiip:  the  value  of  this  oil  at 
the  lowest  figure  at  which  he  said  he  sold  it,  .$1.10.  would  sive  him  a  gross  income 
of  .$4,400  a  day.  Estimating  the  cost  of  production  at  2h  cents  a  barrel,  which  is  far 
in  excess  of  what  it  could  have  been  in  the  case  of  flowing  wells,  and  the  royalty 
to  the  land  owner  at  one-eig-hth  of  the  product,  it  will  be  seen  that  Mr.  I.ockwood 
was  realizing  $2,SSS  a  day  net  nn  these  two  wells.  In  this  estimati>,  no  account  is 
taken  of  the  product  of  the  other  .^S  wells  which  he  drilled.  As  the  cost  of  drilling- 
these  two  wells  could  not  have  exceeded  $2,500  each,  it  will  be  seen  that  Mr.  Lock- 
wood  made  100  per  cent,  nn  that  investment  every  two  days. 


M.  L.   LOCKWOOD.  149 

oil  came  down,  *down,  down,  down,  down  to  $1.06  and  down  to  $1;  down  to 
95  cents;  down  to  90  cents;  down  to  85  cents;  down  to  80  cents;  down  to 
75  cents  and  to  70,  and  65  and  60  and  55,  clear  down  to  53  cents  a  barrel.  I 
didn't  sell  a  barrel  of  oil  in  one  of  those  years  above  60  cents  a  barrel.  The 
average,  I  think,  was  along  about  50  cents,  along  about  53 — I  should  say  as 
low  as  53. t 

The  next  year  after  that — *there  was  no  competition  now,  you  know — I 
sold  all  of  my  oil  below  70  cents  a  barrel,  below  the  cost  of  production, 
*away  down  below  the  cost  of  production,  and  for  two  long  years  I  had  to 
sell  this  oil  for  less  than  the  cost  of  production,  and  practically  the  Standard 
Oil  Company  confiscated  all  of  that  magnificent  property,  and  instead  of  hav- 
ing a  million  of  dollars,  which  I  ought  to  have  had  if  1  had  had  my  share  of  the 
profits  that  were  made  on  that  oil,  *according  to  what  the  consumers  paid 
for  it,  I  absolutely  had  to  mortgage  my  property  to  get  money  to  pay  the 
costs  of  this  operation,  the  tubing,  casing,  engine,  boilers  and  tools,  and 
work  of  the  men.  All  the  value  of  that  immense  property  that  should  have 
made  any  man  a  millionaire  was  transferred  into  the  coffers  of  the  Standard 
Oil  Company. 

Q.  (By  Mr.  KENNEDY.)  What  was  the  price  a  barrel  when  you  say 
it  started  to  go  down?    A.  $1.30. 

Q.  And  what  was  the  price  of  refined  oil?  A.  The  price  of  refined  oil 
when  I  started  was  seven  and  five-eighths  cents  a  barrel  in  New  York. 

Q.  A  barrel?    A.  A  gallon. 

Q.  The  cost  of  refined  did  not  go  down  at  all  compared  with  the  cost  of 
crude?    A.  No. 

Q.  It  did  not?  A.  That  is,  you  can  see  there.  I  give  the  dates  of  the 
two  times  when  this  competition  in  this  line  was  in  existence.  The  price  of 
crude  oil  went  up  and  the  price  of  refined  oil  went  down.  I  think  there  was  a 
reduction  of  a  fraction  of  a  cent  during  the  time  of  these  low,  extremely  low, 
prices.  The  history  of  that  case  is  the  history  of  the  manipulations  of  the 
Standard  Oil  Company  over  and  over  again.  When  the  oil  producers  are 
lucky  enough  to  find  and  open  up  a  great  field,  the  Standard  puts  the  price 
down  r:i\(]  practically  confiscates  the  profits.  Of  course  the  Standard  Oil 
Company's  newspapers  there  during  this  time  had  great  cock-and-bull  stor- 
ies ?.boi:t  the  increase  of  production,  increase  of  stock,  as  an  excuse  for  this 
oil  to  go  down.  But  the  facts  are  that  during  these  years  which  I  have 
described  when  the  price  of  crude  oil  was  pulled  down  from  $1.30  to  53  cents 
a  barrel,  the  entire  increase  of  stocks  of  oil  would  not  have  supplied  the 
consumptive  demand  of  the  world  for  two  and  one-half  months.  All  of  this 
talk  about  production  and  stocks  was  a  mere  subterfuge  to  take  from  the 


*Black  faced  type  indicates  matter  omitted,  in  the  course  of  editing,  from  tlie 
ofHcial  report. 

tEven  after  the  price  of  oil  dropped  to  o3  cents  a  barrel  Mr.  Lockwood,  accord- 
ing to  his  own  testimony,  wa.s  in  receipt  of  an  enormous  income.  He  testified  that 
on  the  first  property  he  developed,  two  of  his  40  wells  gave  him  4,000  barrels  a  day 
and  on  the  second  property  one  of  his  "60,  70  or  SO  wells"  produced  1,000  barrels  a 
day.  The  cost  of  production  for  these  flowing  w'ells  could  not  have  been  as  high  as 
25  cents  a  barrel,  and  yet  if  that  had  been  his  expense,  in  addition  to  the  royalty 
of  one-eighth  of  the  product  to  the  landowner,  he  would  still  have  realized  a  profit 
of  $1,225  a  day  from  three  of  liis  wells.  Even  at  this  hard-time  price  Mr.  Lockwood 
must  have  received  100  per  cent,  on  his  total  investment  from  these  three  wells  alone 
in  a  little  over  six  days,  or  about  16  2-3  per  cent,  profit  per  day,  estimating  the  cost 
of  drilling  the  tliree  wells  at  $2,500  each,  and  it  could  not  have  exceeded  that  amount. 
At  this  same  rate  of  interest  Mr.  Lockwood  was  '-eceiving  a  net  profit  on  his  three 
wells  of  about  6,000  per  cent,  per  annum.  Accorditig  to  his  statement  he  had  at 
least  97  other  wells  on  these  two  pieces  of  property,  but  his  testimony  as  to  their 
production  was  too  vague  to  permit  the  making  of  an  estimate  of  the  net  income 
he  derived  from  them.  Supposing  Mr.  Lockwood  had  120  wells,  which  was  the  high- 
est number  he  named,  and  the  cost  of  drilling  them  had  been  $2,500  each,  his  total 
investment  would  have  been  $300,000,  which  three  of  his  wells  would  have  paid  back 
in  245  days.  However  disastrous  the  low  price  of  53  cents  a  barrel  may  have  been 
to  small  producers,  Mr.  Lockwood's  testimony  indicates  that  his  flowing  wells  were 
still  enormously  profitable  at  the  lowest  price  at  which  oil  was  sold.  As  the  low- 
price  was  the  result  of  the  enormous  output  of  these  and  other  flowing,  wells,  Mr. 
Lockwood  occupied  an  odd  position  when  he  posed  as  a  martyr  to  a  condition  he 
himself  had   helped  to  bring  about. 


150  REVIEW   OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

producers  the  wealth  they  had  created,  and  transfer  it  into  the  coffers  of 
the  Standard  Oil  Company. 

Q.  (By  Professor  JENKS.)  That  practically  covers  the  explanation  as 
to  the  way  in  which  these  pipe  lines  were  absorbed  by  the  Standard  Oil  Com- 
pany and  the  effect  upon  the  producers?     A.  Yes,  sir. 

Q.  (By  Vice-chairman  PHILLIPS.)  About  28  in  number  here?  A.  I 
have  a  record  here  of  this  number,  and  the  names  of  them  all. 

Q.  (By  Vice-Chairman  PHILLIPS.)  It  is  not  perhaps  worth  while  to 
name  them  here,  if  you  can  give  us  the  reference  to  the  book.  (Referring 
to  book  held  by  the  witness.)  A.  Well,  now,  it  is  in  a  biographical  book  in 
which  there  is  a  speech  that  I  delivered  on  the  Free  Pipe  Bill  question  20 
j^ears  ago. 

Q.  (By  Professor  JENKS.)  In  your  testimony  this  morning  you  gave  us 
a  great  many  instances  of  cheap  railroad  rates  that  were  secured  by  the 
Standard  Oil  Company  a  good  many  years  ago,  and  showed  how,  in  your 
judgm.ent,  by  virtue  of  these  special  rates,  the  Standard  Oil  Company  had 
been  built  up.  You  have  cited  us  also  the  authorities  by  which  these  state- 
ments could  be  verified.  Have  you  any  information  or  any  proof  that  the 
Standard  Oil  Company  is  at  the  present  time  getting  any  special  privileges 
from  any  of  the  railroads?  A.  The  evidence  in  the  Titusville  and  Oil  City 
independent  cases  gives  the  proof. 

Q.  How  long  ago  were  these  cases  brought?  A.  Well,  they  were  brought 
in 

Q.  (By  Mr.  KENNEDY.)  1893,  you  said  this  morning.  A.  Well,  I  don't 
know;  fome  place  along  in  there  that  they  were  brought,  because  they  were 
lon5  af'er  the  Interstate  Commerce  law  was  enacted.  The  evidence  all  goes 
to  prove  that  the  lailway  companies  are  manipulated  *by  different  subterfuges 
some  way  by  which  the  Standard  Oil  Company  gets  an  advantage,  and  the 
great  fear  of  the  independent  producers  and  refiners  is  that  after  they  have 
gone  on  and  extended  their  trade  and  spent  money  to  build  up  stations  and 
acquired  property  with  which  to  do  business  in  any  section  of  the  country  by 
bome  scheme  the  railway  companies  will  put  u))  the  rate  on  them  and  shut 
thorn  out  of  that  district  just  as  they  have  shut  them  out  of  the  New  England 
States  in  the  case  which  I  cited  this  morning.  It  is  the  fear  of  railway  dis- 
crimination that  paralyzes  the  men. 

Q.  (By  Professor  JENKS.)  We  have  had  some  evidence  offered  tend- 
ing to  show  that  the  Standard  Oil  Company  is  at  the  present  time  receiving 
special  favors.  Have  you  yourself  anything  in  the  nature  of  definite  proof 
to  show  that  fact?  A.  No.  sir;  no,  sir;  I  am  an  oil  producer,  you  know,  and 
I  don't  get  in  touch  with  these  railroad  people  so  much  as  the  refiner  does. 
I  have  no  doubt  that  they  are  getting  a  great  advantage  to-day,  and  probably 
at  the  end  of  four  or  five  years  we  will  find  out  just  what  that  advantage  is. 
The  time  in  which  they  were  getting  $1.50  and  sometimes  more  rebates,  they 
v.ere  persistently  denying  that  they  had  any  advantages,  and  they  have 
persistently  denied,  time  and  time  again,  that  they  had  any  advantage,  but 
ultimately  the  truth  would  come  out  in  some  way,  and  we  could  see  then 
why  it  was  that  they  were  triumphing  over  the  independent  interests. 

Q.  Have  you  any  information  at  the  present  time  in  reference  to  the 
rates  of  freight  on  oil  over  the  Canadian  road?  A.  I  have  no  information 
on  that  subject. t 

Q.  You  gave  us  some  instances  this  morning  in  reference  to  the  very 
high  rates  of  freight  that  you  yourself  have  paid  over  some  of  the  roads  that 
run  from  Pittsburg  to  Union  City.    A.  To  Unity  Station. 

Q.  Those  rates  of  freight  were  very  high,  as  you  just  showed,  very  much 
higher  than  the  average  rates  throughout  the  country.  Have  you  any  proof 
that  th(M-o  is  any  discrimination  in  rates  between  different  persons  or  differ- 
ent companies  over  these  railroads?  A.  This  road  that  extends  to  Unity,  on 
the  Allegheny  Valley  Railroad,  is  a  coal  road;  it  was  built  into  that  district 
to  take  out  the  coal  for.  I  think,  the  Buffalo  &  Cleveland  Coal  &  Gas  Com- 


*T'.l.T(k  faced  typo  inflicatfs  matter  omitted,  in  the  course  of  editing,  from  the 
official  report. 

rit  will  be  noticed  in  the  above  testimony  that  wher^  clopely  questioned  about 
the  statements  lie  liad  testified  to  as  facts,  he  had  no  proff  of  any  kind  to  show  that 
they  were  facts,  excusing  himself  by  sayii:?;  that  he  did  not  gel  in  touch  with  the 
railroad  people  as  much  as  did  the  refiners. 


M.  L.  LOCKWOOD.  151 

pauy.  I  was  told  while  I  was  operating  in  that  district,  that  the  rate  of 
freight  on  coal  to  anybody  outside  of  that  company  was  so  high  that  it  was 
impossible  for  them  to  compete  at  all  in  the  markets  of  Buffalo. 

Q.  Were  the  rates  of  freight  on  coal  different  to  the  members  of  the 
company  from  what  they  were  to  outsiders,  or  were  the  rates  themselves  the 
same  to  all  parties,  the  members  of  the  company  getting  their  profits  simply 
from  the  higher  rates  of  freight  that  put  money  into  their  pockets  as  railroad 
owners?  A.  I  really  do  not  know  the  inside  workings  of  that  coal  road;  all 
I  know  is  that  the  men  who  owned  coal  farms  there  could  not  ship  their  coal; 
that  they  were  powerless  to  do  any  business  in  competition  with  the  coal 
combine.* 

Q.  Of  course  it  may  have  been  true,  even  though  the  owners  of  the  road 
were  paying  the  same  rates  of  freight,  because  what  they  were  paying  out 
in  one  form  they  were  getting  back  in  another.  Have  you  any  information 
to  show  that  this  railroad  has  been  acting  contrary  to  law  in  making  dis- 
criminations? A.  I  imagine  that  on  the  class  of  freight  that  I  ship  every- 
body pays  the  same  rate. 

Q.  Pays  the  same?    A.  Yes,  sir;  I  imagine  that. 

Q.  Was  there  very  much  freight  shipped  over  this  road  besides  coal? 
A.  There  has  been  quite  a  development  of  oil  and  gas  in  that  region  and 
there  has  been  quite  a  large  amount  of  oil  well  supplies,  pipe,  etc.,  shipped 
over  that  road. 

Q.  Is  the  railroad  running  from  Pittsburg  to  Unity  a  small  line  of  road? 
A.  It  is  a  part  of  the  system  of  the  Allegheny  Valley  Railroad,  which  is  a 
branch  of  the  Pennsylvania  system. 

Q.  (By  Mr.  KENNEDY.)  Did  you  not  say  the  independent  companies 
had  their  own  pipe  line  to  the  seaboard.  A.  The  independent  oil  producers, 
after  the  purchase  by  the  Standard  Oil  Company  of  the  Elkins,  Kimball  and 
Craig  pipe  line  system,  when  oil  got  down  so  low  that  it  meant  bankruptcy 
and  ruin  to  all  of  us,  went  to  work  to  try  to  hew  for  ourselves  a  way  out  by 
building  this  pipe  line  through  to  the  seaboard.  The  first  movement,  I  think, 
was  in  building  the  pipe  line  of  what  was  known  as  the  Producers  &  Refiners' 
Oil  Company.  Limited. t  That  was  built  into  the  McDonald  field  with  the  expec- 
tation of  piping  oil  to  the  railroads  and  shipping  it  with  cars  to  the  independ- 
ent refinerymen  at  Oil  City  and  Titusville.  As  soon  as  that  was  completed  and 
the  business  was  begun,  there  was  a  system  of  discrimination  set  up  against 
them  in  some  way — I  do  not  remember  just  how  it  was — but  it  resulted  in 
the  producers  having  to  lay  a  line  from  the  McDonald  field,  where  this  first 
little  line  was  started,  through  to  Oil  City  and  Titusville  to  the  refineries. $ 
Then  after  they  had  done  that  the  discrimination  began  against  the  refined 
oil  again.  As  long  as  these  refinerymen  were  taking  the  inferior  oils  of  the 
Standard  Oil  Company  that  had  been  in  the  tanks  until  the  finer  parts  had 
evaporated,  they  did  not  discriminate  so  much  against  them,  I  understand, 
but  after  they  were  able  to  get  good  oil  from  the  wells  they  commenced  to 
block  the  shipments  of  refined  oil  and  then  we  undertook  to  lay  a  seaboard 
line  from  Titusville  to  New  York  or  Jersey  City. 

Q.  You  have  a  line  then?  A.  The  line  has  been  built  down  into  New 
Jersey,  and  the  railroads  have  blocked  us.  The  managers  bought  a  piece  of 
land  in  fee  simple  that  went  under  a  wagon  road,  and  I  believe  in  the  lower 
courts  we  got  a  verdict  in  favor  of  our  right  to  lay  that  line  under  there, 
and  after  we  had  laid  our  line  I  think  60  miles  further,  they  carried  the  case 
up  to  the  Supreme  Court  of  New  Jersey,  and  that  court  reversed  the  decision 
and  forced  us  to  stop,  I  understand.  I  don't  know,  but  I  think  we  are  still 
putting  oil  through  there,  but  it  is  subject  to  the  final  decision  of  the  court 
there.    The  verdict  by  which  we  had  the  right  was  reversed. 

Q.  And  do  you  ship  from  that  point?  A.  It  comes  down  over  the  Jersey 
Central  Railroad. 


*Ap:ain  it  will  be  seen  that  after  offering'  hearsay  evidence  the  witness  excused 
himself  when  he  was  asked  for  some  definite  Inform.ation  on  the  subject  on  which  he 
testified. 

tThe  witness  probably  referred  to  the  Producers'    Oil   Company. 

tThe  Producers  &  Refiners'  Pipe  Line. 


152  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

Q.  (By  Vice-chairman  PHILLIPS.)  From  that  point?  A.  From  that 
point,  from  the  end  of  the  pipe  line,  I  think  80  or  90  miles  (it  must  be  as  far 
as  that  to  the  tanks  at  the  seaboard).  This  is  the  line  that  the  Producers  & 
Refiners'  Company  built  as  a  double  line.*  They  transport  the  refined  oil 
from  the  refineries  at  Oil  City,  Bradford  and  Titusville,  through  to  the  end 
of  this  pipe  line  as  they  do  crude  oil,  and  then  it  goes  on  board  the  cars  to 
the  seaboard  and  the  refined  oil  is  there  put  into  steam  tank  vessels  and 
sent  to  Germany,  where  the  independent  producers  and  refiners  have  built 
three  large  stations  which  were,  I  think  capable  of  holding  70,000  barrels  of 
oil,  and  the  crude  oil  is  refined  at  the  seaboard.  In  Germany  there  is  no  rail- 
way discrimination. 

Q.  (By  Mr.  KENNEDY.)  What  I  wanted  to  get  at,  Mr.  Lockwood,  is 
whether  the  railroads  now  can  give  the  Standard  Oil  Company  any  advan- 
tage over  you  in  getting  oil  to  the  seaboard,  and  I  judge  by  what  you  say 
that,  with  the  possible  exception  of  the  Jersey  Central,  no  road  can  do  it.t 
A.  No  road  has  anything  to  do  with  our  oil  from  the  time  it  starts  from  the 
wells  until  it  gets  to  the  Jersey  Central. 

Q.  They  cannot  give  the  Standard  Oil  Company  any  advantage  over  you? 
A.  Not  on  that  export  oil.  On  that  export  oil,  we  are  on  even  terms  with  the 
Standard  Oil  Company,  except,  I  think,  about  seven  cents  on  every  barrel. t 

Q.  (By  Vice-chairman  PHILLIPS.)  It  does  not  exceed  15?  A.  It  does 
not  exceed  15,  anyway. 

Q.  (By  Vice-Chairman  PHILLIPS.)  A  great  deal  has  been  said  about  the 
Standard  Oil  Company's  methods  of  doing  business.  Were  they  ever  able  to, 
or  did  they  ever  ship  refined  oil  any  distance  through  pipe  lines?  A.  They 
always  claimed  it  could  not  be  done;  that  it  would  injure  the  quality  of 
the  oil. 

Q.  (By  Vice-Chairman  PHILLIPS.)  What  has  been  proved  by  this  pipe 
line  running  through  to  New  Jersey?  A.  It  has  been  proved  that  it  can  be 
done  and  successfully  done.  Not  only  can  you  pump  110°  fire  test,  which  is 
export  oil,  but  you  can  pump  through  this  line  right  behind  it,  150°  fire  test, 
and  they  are  able  to  separate  that  oil  at  the  end  of  the  pipe  line  without 
making  a  change  of  more  than  a  barrel.  Within  20  and  30  feet  the  column 
of  oil  can  be  kept  separate. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Do  you  consider  that  a  great  im- 
provement over  the  Standard  Oil  Company's  methods  of  handling  oil?  A. 
Certainly;  very  much. 

Q.  (By  Mr.  KENNEDY.)  Then  the  independents  have  some  advantage 
over  the  Standard  Oil  Company  in  getting  their  product  to  the  seaboard? 
A.  In  this  connection;  yes,  sir. 

Q.  (By  Vice-Chairman  PHILLIPS.)  But  does  not  the  Standard  refine  a 
very  large  percentage  of  theirs  at  the  seaboard  after  having  it  pumped 
through  in  the  crude  state?  A.  Yes,  sir;  I  understand  their  export  oil  Is 
nearly  all  refined  at  the  seaboard. 


*The  witness  probably  meant  the  "United  States  Pipe  Lines. 

tMr.  Archbold  in  his  testimony  gave  the  exact  rates  that  were  charged  the 
T'nited  States  Pipe  Line  Company  by  the  Central  Railroad  of  New  Jersey  on  tlie 
crude  and  refined  oil  transported  over  that  line  from  their  terminal  point  at  Hamp- 
ton Junction,  N.  J.,  to  Bayonne,  N.  J.,  a  distance  of  52i^  miles,  the  witness  stating 
that  he  considered  it  a  lower  freight  rate  than  the  Standard  Oil  Company  ever  had 
fur  an  equal  distance  at  any  time  in  the  history  of  its  business.  Mr.  Archbold  fur- 
nished the  following  statement  of  the  rates: 

(Distance,  52V2  miles;  mileage  ^  cents  each  way,  equals  78  cents  per  car;   empty 
car  returned  free.     Weight  per  gallon  crude  oil,  6  2-3  pounds;  refined  oil,  QV2  pounds.) 
Rate  per  Actual 

barrel  of  50     weight  per  Rate  per 

gallons.        barrel  of  50       Rate  per  Rate  per         car,  less 

gallons.         100  pounds,      car  of   120  barrels. 

Crude  0.0692  S.'S  mileage. 

Refined 0769  325  0.0208  $8.20  $7.42 

.02366  9.22  8.44 

JThere  was  a  freight  charge  of  about  seven  cents  and  a  terminal  charge  about 
equal  that  amount,  which  was  paid  to  the  Columbia  Oil  Company.  His  reference 
shows  that  he  omitted  one  of  these  charges. 


M.  L.  LOCKWOOD.  153 

Q.  (By  Professor  JENKS.)  I  understood  you  to  say  this  morning  that 
the  independent  refiners  were  supplying  the  refined  oil  in  Germany  at  two 
cents  a  gallon?  A.  In  the  contest  for  that  trade  the  producers  sent  ship- 
ments of  oil  to  Germany  at  from  two  to  two  and  an  eighth  and  two  and  a 
half  cents  a  gallon.  One  cargo  of  oil,  I  believe,  was  sent  to  Germany  at  one 
and  nine-tenths  cents  a  gallon. 

Q.  That  was  for  the  purpose  of  starting  the  German  trade?  A.  Well,  it 
was,  yes,  sir;  to  get  into  the  trade,  to  become  a  part  of  the  trade. 

Q.  They  were  selling  the  oil  in  Germany  cheaper  than  they  were  selling 
it  here?  A.  I  think  so,  a  great  deal  cheaper  than  it  was  sold  to  the  American 
people  generally. 

Q.  I  understood  you  to  say  that  it  was  the  independent  oil  producers 
who  were  chiefly  instrumental  in  starting  the  idea  of  the  interstate  com- 
merce law?     A.     Yes,  sir. 

Q.  And  also  that  since  the  interstate  commerce  law  had  been  in  force  the 
Standard  Oil  Company  in  particular,  and  the  railroads  who  were  placed  under 
restrictions  upon  their  powers,  had  succeeded,  in  your  judgment,  largely  in 
defeating  the  purpose  of  the  law?    A.  Yes,  sir. 

Q.  And  in  that  connection  you  used  an  expression  like  this:  That  the 
members  of  the  Interstate  Commerce  Commission  had  been  threatened?  A. 
Yes,  sir. 

Q.  In  what  way  have  they  been  threatened?  A.  Well,  that  their  power 
would  be  tested.    I  gave  a  reference  there  to  the  case. 

Q.  You  do  not  mean  then  that  the  members  of  the  Interstate  Commerce 
Commission  have  been  personally  threatened?  A.  Oh,  no;  they  simply 
questioned  their  authority,  and  threatened  to  test  their  powers. 

Q.  From  the  connection  in  which  you  used  the  expression,  I  was  not 
certain,  but  thought  you  meant  to  say  that  the  members  of  the  commission 
had  been  personally  threatened?     A.  Oh,  no,  sir. 

Q.  You  mean  simply  that  the  Standard  Oil  Company  and  the  railroads 
had  asserted  that  they  thought  they  could  defeat  the  law?  A.  Well,  that 
the  commission  did  not  have  the  power  to  perform  the  duties  provided  for  it 
under  the  law  that  created  it. 

Q.  And  they  proposed  to  test  that  question  in  the  courts?  A.  In  the 
courts,  yes,  sir.  There  was  one  case  taken  into  the  court  by  the  commission. 
11  years  ago,  you  remember,  the  Cox  case,  and  it  has  not  yet  been  settled. 

Q.  You  made  the  statement  also  that  the  press  had  been  subsidized  by 
the  Standard  Oil  Company.  *We  have  had  some  little  testimony  before  of 
that  nature  which  tended  to  show  specific  cases  of  that  kind.  Have  you 
yourself  any  positive  information  of  the  specific  cases  in  which  the  Standard 
Oil  Company  has  subsidized  the  newspaper  press.  A.  Well,  they  bought  the 
Oil  City  Derrick,  and  since  the  time  they  got  it,  brought  Pat  Boyle  to  run  it, 
and  he  runs  it  in  their  interest.  I  don't  know  just  what  their  arrangements 
are,  but  the  paper  is  in  the  interest  of  the  Standard  Oil  Company  and  it 
attacks  the  independent  producers  and  their  movements.! 

Q.  (By  Vice-Chairman  PHILLIPS.)  Has  there  ever  been  any  action 
brought  against  that  paper  and  its  editors  for  libel?  A.  Why,  yes.  sir;  I 
think  Senator  Lee  sued  them  for  libel;  they  published  some  very  damaging 
statements  and  he  brought  suit  against  them.  I  think  Senator  Emery 
brought  suit  against  them  for  what  they  said  about  him. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Were  these  suits  carried  to  a  con- 
clusion; either  or  both  of  them?  A.  I  am  not  clear  about  how  these  cases 
ended.  My  memory  is  that  they  were  settled  in  some  way.  I  don't  know 
just  how. 

Q.  (By  Professor  JENKS.)  Have  you  any  other  specific  cases  in  mind 
besides   this  of  the  Oil  City  Derrick?     A.  Well,  the  Titusville  papers — the 


''Black  faced  type  Indicates  matter  omitted,  in  the  course  of  editing,  from  the 
official  report. 

jMr.  Boyle  in  his  testimony  given  September  6,  1899,  showed  that  he  was  pro- 
prietor of  the  Oil  City  Derrick  and  that  since  he  had  been  connected  with  it  the 
Standard  Oil  Company  had  never  owned  a  share  of  its  stock  and  he  did  not  believe 
it  had  ever  owned  any  interest  In  it. 

When  Mr.  Boyle  was  before  the  commission  another  attempt  was  made  to  dis- 
credit him  as  a  witness  in  much  the  same  manner  as  when  Mr.  Lockwood  testified. 


154  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

Titusville  Herald  seemed  to  be  under  their  thumbs,  and  now  the  Pittsburg 
papers  have  reached  a  point  in  which  they  take  all  of  the  oil  information  that 
they  publish  from  the  Standard  Oil  people.  The  Standard  Oil  people  are 
publishing  what  they  want  in  the  reports;  and  in  the  daily  papers  *on  the 
question  of  oil,  they  depend  on  the  Standard  Oil  Company  to  furnish  them 
what  they  want  printed,  as  near  as  I  understand  it. 

Q.  Your  statement  then  means  substantially  this:  That  there  are  sev- 
eral papers  in  the  section  of  the  country  in  which  you  live,  that  make  favor- 
able reports  regularly  in  reference  to  the  Standard  Oil  Company,  and  make 
unfavorable  reports  in  reference  to  those  that  are  opposed  to  it?  A.  More 
particularly  the  Oil  City  Derrick. 

Q.  More  particularly  the  Oil  City  Derrick?     A.  Yes,  sir. 

Q.  But  you  have  no  direct  personal  knowledge  that  the  paper  is  owned 
by  the  Standard  Oil  Company.  You  make  your  assertions  largely  upon  the 
nature  of  the  material  that  is  published  by  that  paper?  A.  Yes,  sir,  and  the 
knowledge  that  I  have  had  through  the  public  press  of  the  transactions. 

Q.  (By  Vice-chairman  PHILLIPS.)  Has  the  Oil  City  Derrick  been 
favorable  or  unfavorable  to  the  independent  movements  generally?  A.  Oh, 
it  is  bitterly  opposed  to  independent  movements  and  attacks  the  credit  and 
reputation  of  the  men  who  are  putting  their  energies  to  the  case  at  all. 

Q.  (By  Vice-Chairman  PHILLIPS.)  You  do  not  remember,  then,  the 
termination  of  the  suit  in  Warren  in  regard  to  the  libel  case?  A.  I  am  not 
clear  that  it  was  pushed  to  a  final  hearing. 

*Q.  (By  Mr.  KENNEDY.)  Mr.  Lockwood,  you  stated  this  morning  that 
a  certain  gentleman  in  a  certain  State  had  been  elevated  to  the  Supreme 
bench  by  means  of  a  corruption  fund  furnished  by  this  corporation.  That  is 
a  pretty  serious  and  a  very  grave  charge  to  make  under  oath,  and  I  think  the 
commission  would  like  to  have  you  at  least  specifically  state  some  facts  that 
will  corroborate  your  testimony  to  that  effect?  A.  The  action  of  that  judge 
in  connection  with  that  case  was  of  such  a  character  that  it  appalled  every- 
body that   knew  about   it. 

Q.  (By  Professor  JENKS.)  This  was  the  Matthews  case?  A.  Yes,  sir; 
and  the  fact  that  he  received  the  nomination  for  the  Court  of  Appeals,  and 
of  course  in  those  times  this  corruption  fund  was  a  large  part  of  the  cam- 
paign in  which  the  corporations  were  interested  and  that  was  the  basis  upon 
which  I  made  the  statement. 

Q.  You  do  not  know  anything  further  about  it  then?  A.  Not  further  than 
just  what  I   have  stated. 

Mr.  FARQUHAR.  I  hope  that  Mr.  Lockwood's  statements  regarding 
Judge  Haight  will  be  taken  out  of  the  minutes  of  this  commission — every 
word  that  he  has  said  against  Judge  Haight.  I  do  not  think  it  is  proper  that 
this  commission  should  adopt  them.  It  amounts,  in  my  mind,  to  an  assassi- 
nation of  character  that  is  not  permissible  before  a  body  of  this  kind.  I  know 
more  of  the  Matthews  case  than  Mr.  Lockwood  does,  and  I  am  a  friend  of  Mr. 
Matthews,  and  this  is  the  first  time  I  have  ever  heard  called  into  question 
the  honesty  of  Albert  Haight,  as  a  jurist  or  a  man.  No  jurist  who  was  ever 
in  the  State  of  New  York  stands  as  high  as  Albert  Haight  in  the  National 
Bar  Association  and  the  State  Bar  Association,  of  New  York.  1  defy  any  man 
to  say  one  word  against  his  character  from  the  first  day  he  came  as  judge 
of  the  county  court  of  Erie  county  until  the  present  time,  when  he  is  on  the 
bench  of  the  Court  of  Appeals.  I  have  known  him  as  a  young  man,  known 
him  through  his  whole  judicial  career.  He  has  been  my  nearest  neighbor 
almost  for  life.  I  have  known  him  in  the  church  and  in  public  assemblies. 
I  have  met  him  almost  every  day  of  his  life  for  20  or  25  years,  and  the 
highest  honors  have  been  given  Mr.  Haight.  In  New  York  he  ran  very  far 
ahead  of  any  political  ticket  that  was  put  up.  I  have  been  pt  conventions 
that  nominated  him,  and  I  have  never  known  of  a  single  man  belonging  to 
a  corporation  that  had  anything  to  do  with  nominating  Albert  Haight  for 
one  office.  I  do  not  want  this  as  a  matter  of  record.  I  simply  make  the 
request,  and  submit  it  to  Mr.  Lockwood  now  to  have  the  whole  of  that  scored 
out  of  his  testimony,  and  I   believe  that  if  Mr.  C.   B.   Matthews  were  here  he 


♦Black  faced  type  inrticatos  matter  omittpcl,    in   the   coiir.se   of   editing,    from    the 
official  report. 


M.   L.  LOCKWOOD.  155 

♦would  make  the  same  request.  I  do  not  believe  any  man,  under  a  solemn 
oath,  as  is  Mr.  Lockwood  here  before  this  body,  should  be  permitted  to 
impugn  the  character  of  a  great  judge  of  the  Court  of  Appeals  without  a 
protest,  and  it  should  not  go  on  the  records  of  this  commission  in  any  shape 
whatever,  and  at  the  proper  time  I  shall  make  a  request  to  have  it  scored 
from  the  minutes. 

Mr.  KENNEDY.  I  take  it  that  what  Mr.  Lockwood  says  about  Judge 
Haight  has  no  weight  at  all.  He  simply  gives  it  as  a  matter  of  his  belief; 
he  does  not  know  anything  about  it. 

Mr.  FARQUHAR.  He  speaks  of  corruption  funds  and  everything  of  that 
kind. 

Mr.  RATCHFORD.  I  beg  to  rise  to  a  point  of  order,  Mr.  Chairman.  We 
are  not  here  trying  the  character  of  any  man. 

Mr.   FARQUHAR.     That  is  what   I   think. 

Mr.  RATCHFORD.  I  do  not  know  anything  in  relation  to  this  matter, 
but  this  has  nothing  to  do 

Mr.  FORQUHAR.  I  hope  that  this  commission  will  not  take  cognizance 
of  it  and  I  hope  it  will  be  taken  out  of  the  minutes  entirely.  It  is  not  testi- 
mony. 

Mr.  RATCHFORD.  I  do  not  know  the  man;  I  do  not  care  anything 
about   it. 

Mr.  KENNEDY.  Mr.  Chairman,  the  gentleman  made  the  statement  this 
morning  that  this  thing  had  been  done,  and  he  made  it  under  oath.  I  thought 
it  was  very  proper  to  ask  whether  he  could  give  any  facts  that  would  sub- 
stantiate his  statement.  I  thought  that  was  the  proper  question  to  ask,  and 
he  says  he  cannot. 

Mr.   RATCHFORD.     The   gentleman   has   answered  the   question. 

The  WITNESS.     Only  the  evidence  of  the  case  which   is  on   record. 

Vice-Chairman  PHILLIPS.  I  would  state,  according  to  the  f:rm  of  the 
oath  that  is  taken  here,  that  a  man  has  a  right  to  give — (I  will  just  read  it)  — 
(Reading.)  "And  all  other  facts  stated  on  information  and  belief,  you  be- 
lieve to  be  true." 

Now,  the  chair  would  rule  this:  That  Mr.  Lockwood's  testimony  was 
entirely  competent  in  regard  to  the  trial  of  that  case  and  the  decision  of  the 
court  in  regard  to  it,  and  he  would  not  have  the  right  to  state  positively — and 
he  says  now  he  did  not — that  he  was  elected  by  a  corruption  fund,  but  he 
inferred  that.  I  would  suggest  that  it  might  be  well,  as  Major  Farquhar's 
statement  has  gone  in,  that  it  is  only  a  matter  of  opinion  and  belief  in  regard 
to  his  being  elected,  and  as  Major  Farquhar  makes  this  request,  that  the 
part  relating  to  his  election  might  be  eliminated  from  the  testimony. 

Mr.  KENNEDY.  I  think,  Mr.  Chairman,  if  the  reporter's  notes  were  to 
be  appealed  to  it  would  be  found  that  Mr.  Lockwood  made  that  statement  in 
regard  to  that  judge  without  any  qualification  whatever. 

Mr.    FARQUHAR.      Of   course   it  was   a   pure    libel. 

The  WITNESS.     Now  I  would   like  to  ask   Mr.  Farquhar 

Mr.   FARQUHAR.     I   hope  this  will   not  be  discussed  any  further. 

Mr.  RATCHFORD.  We  have  questions  on  more  important  things  than 
that. 

Vice-Chairman  PHILLIPS.  The  chair  has  tried  to  make  a  clear  state- 
ment in  regard  to  what  the  chair  would  believe  to  be  competent;  and  as  he 
has  stated  that  this  has  simply  been  rumor  or  his  opinion,  I  think  it  would  be 
well  for  Mr.  Lockwood,  if  he  does  not  yet  make  the  positive  statement,  to 
now  withdraw  that  statement,  because  he  has  no  personal  knowledge  and 
a  man  has  a   right  to  do  that  in   his  testimony. 

The  WITNESS.  The  issue,  as  I  understand  it,  from  the  information 
that  I  have,  was  made  against  Judge  Haight  in  that  campaign  for  the  Court 
of  Appeals;  and  Judge  Haight  ran  behind  the  ticket  on  that  issue.  Am  I 
not  correct? 

Vice-Chairman  PHILLIPS.  Well,  you  do  not  state  this  as  your  own 
knowledge  and  belief.  If  you  stated  that  he  was  elected  in  that  way  it  is  not 
of  your  own  knowledge;  you  think  that  or  believe  that  from  circumstances. 
A.  Yes,  sir;    I   believe   it. 


*Black  faced  type  indicates  matter  omitted,    in   the   course   of  editing,    from   tiie 
official  report. 


156  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

*Vice-Chairman  PHILLIPS.  You  are  not  willing  here  to  testify  that  he 
was  elected  by  a  corruption  fund  positively?  A.  No,  I  don't  say  a  corruption 
fund,  but  from  what  I  know  of  the  campaign  I  am  satisfied  there  was  a  lot 
of  money  used. 

Mr.  A.  L.  HARRIS.  Of  course  I  do  not  want  to  discuss  this  proposition, 
but  it  goes  a  little  bit  further  than  the  question  as  regards  this  particular 
judge.  We  live  under  a  republican  form  of  government;  we  nominate  and 
elect  our  representatives  not  only  to  make  the  law,  but  to  execute  the  law, 
and  this  kind  of  thing  insinuates  that  the  whole  machinery  can  be  corrupted. 
Any  time  that  a  proposition  can  be  proved  it  is  all  right,  but  if  an  insinuation 
is  to  be  made  about  candidates  without  the  possibility  of  proving  it,  it  has 
the  effect  of  course  of  weakening  the  faith  of  the  common  man  in  this  repub- 
lican form  of  government;  and  I  think  all  of  that  line  should  go  out  of  the 
testimony. 

Representative  BELL.  I  want  to  raise  a  point  of  order.  I  want  to  know 
whether  it  is  the  business  of  this  commission  to  sit  here  for  the  purpose  of 
criticising  a  witness,  and  telling  him  what  he  shall  state  and  what  he  shall 
not;  whether  a  man  is  here  for  the  purpose  of  protecting  his  friends  or 
whether  we  call  witnesses  here  for  the  purpose  of  telling  the  facts,  let  the 
facts  hit  where  they  will. 

Mr.   FARQUHAR.      Facts  are   all   right. 

Representative  BELL.  Yes,  and  I  notice  in  one  direction  that  some 
people  get  very  sensitive.  Now,  I  will  venture  that  here  is  a  man  that  knows 
what  he  is  talking  about;  here  is  a  man  that  has  investigated  subjects  that 
probably  not  two  or  three  men  on  this  commission  know  anything  about.  He 
is  a  pioneer  in  thought;  there  is  no  trouble  to  tell  that,  and  I  want  to  say  to 
you  that  you  can  go  to  the  best  authority  to-day  in  the  land  and  you  will 
find  these  things  put  on  record.  I  will  cite  to  you  a  Republican  Governor  of 
the  State  of  Iowa,  Mr.  Larrabee,  who  has  v/ritten  a  valuable  work  on  rail- 
roads, and  I  know  my  friend  has  read  it.  I  can  tell  from  his  testimony  that 
he  has.  Mr.  Larrabee,  as  a  Republican  Governor,  fixed  the  railroad  problem 
in  the  State  of  Iowa,  and  but  for  such  a  Governor  it  would  not  have  been 
fixed  to-day.  Mr.  Larrabee,  in  that  book,  that  is  in  almost  every  library  in 
the  world,  says  that  the  judges  were  not  only  put  into  office,  but  he  tells  you 
how  they  did  it.  He  points  out  to  you  that  there  are  two  judges  on  the 
Supreme  bench  to-day  that  were  put  there  by  the  railroad  interests  of  the 
United  States  for  the  purpose  of  repealing  what  was  known  as  the  Granger 
law,  and  the  moment  that  those  two  judges  got  on  the  bench  of  this  govern- 
ment they  went  so  far  out  of  their  way  that  when  they  got  to  a  bar  associa- 
tion or  some  place  where  they  had  to  respond  to  a  toast,  that  they  got  so  far 
from  the  subject  that  they  got  entirely  outside  of  the  record  and  ran  off  ad- 
vocating that  you  be  easier  with  railroads,  and  that  you  do  this  and  that  and 
the  other.  He  tells  you  clearly  that  they  went  to  a  district  judge  of  that 
district,  or  a  circuit  judge,  and  they  did  not  say:  "We  will  buy  you  out," 
but  they  said:  "Wouldn't  you  like  to  practice  law  again."  There  was  a 
judge  that  was  impartial  as  between  the  people  and  the  great  railroad  that 
Mr.  Larrabee  was  fighting.  Oh,  he  said,  he  did  not  know;  there  were  some 
things  about  the  judicial  business  that  he  liked.  They  said:  "We  would 
like  to  find  a  man — we  want  to  find  a  man  to  keep  us  out  of  litigation; 
we  would  like  to  employ  such  a  man  and  therefore  we  would  like  to  employ 
you  for  10  years;  we  will  give  you  $15,000  a  year  if  you  will  step  out  and 
represent  this  railroad  company."  It  was  perfectly  legitimate  with  the 
judge;  he  was  not  purchased;  he  didn't  see  the  point,  but  the  moment  he 
went  out  of  office  there  dropped  into  his  place  a  man  whose 
every  sympathy  and  every  fibre  was  with  the  railroad  company. 
He  not  only  does  that,  but  he  gives  the  facts.  He  cites  the  speeches 
to  the  very  toasts  that  were  made  by  some  men  that  are  occupying  the  bench 
of  the  United  States  to-day;  and  he  shows  you  where  they  get  the  railroad 
statistics  of  eleven  billions  of  dollars  invested,  and  how  they  had  said  how 
tenderly  we  should  care  for  them,  when  it  had  no  application  to  the  subject 
that  they  were  treating. 

♦Black  faced  type  Indicates  matter  omitted,  in  the  course  of  editing,  from  the 
offlclal  report. 


M.  L.  LOCKWOOD.  157 

*Now  this  question  of  railroads  is  the  biggest  question  in  civilization  to- 
day. The  question  of  honesty  in  the  offices  is  just  as  great,  and  this  gentle- 
man told  the  truth,  that  is  verified  by  history,  when  he  said  the  most  diffi- 
cult place  on  earth  for  the  common  people  to  get  a  hearing  is  in  the  highest 
offices  of  the  land.  Now,  then,  mind.  I  do  not  say  they  are  dishonest.  I 
say  that  men  are  picked  up  who  are  in  sympathy  with  the  railroad  problems, 
or  w;th  bank  problems,  or  with  problems  of  that  kind,  and  they  are  put  in 
office  with  the  idea  that  they  will  remain  in  sympathy  during  their  terms 
of  office. 

Now  I  want  to  say  that  Congress  provided  a  short  time  ago  a  committee 
to  investigate  a  problem.  What  was  it?  The  problem  of  the  excessive  cost 
of  carrying  the  mails  in  the  United  States.  One  of  the  leading  Republican 
members  of  that  committee  told  me  himself  that  it  had  proved  futile.  He 
said  that  the  Second  Assistant  Postmaster-General,  in  the  Postoffice  Depart- 
ment of  this  government,  seemed  to  be  in  the  hands  of  the  railroad.  I  saw 
it  read,  and  it  is  a  part  of  the  Congressional  records  of  this  government  that 
the  Second  Assistant  Postmaster-General  of  this  government,  eight  years 
ago,  was  taken  from  a  place  of  superintendent  of  one  of  the  greatest  railroads 
in  Ohio;  that  the  Second  Assistant  four  years  subsequently  was  a  traffic 
manager  in  the  State  of  New  Jersey,  and  these  men  make  the  contracts 
with  the  railroads.  I  ask  you  to  go  to  either  end  of  the  Capitol  and  see  who 
is  at  the  head  of  the  Postoffice  Committee  of  the  Senate  and  who  of  the 
House.     Then   investigate  their  connection  with  railroads. 

I  want  to  say  to  you  that  it  is  very  pertinent  for  this  gentleman  to  give 
his  opinion  of  men,  whether  they  are  in  the  judiciary,  in  Congress,  in  the 
Senate,  or  anywhere  else,  if  they  abuse  the  rights  of  American  citizens.  Men 
are  not  sacred  because  of  the  place  they  occupy  in  this  land.  That  is  not 
the  test  of  humanity.  Men  are  sacred  because  they  are  flesh  and  blood  and 
reasonable  creatures,  and  the  man  who  works  on  the  street  and  does  his  duty 
as  a  bootblack,  in  my  estimation,  is  just  as  good  as  the  man  that  sits  on  the 
bench  of  the  Court  of  Appeals  of  the  State  of  New  York.  And  if  he  does  not 
perform  his  duty,  if  he  got  there  in  devious  ways,  it  is  not  our  business  to 
throw  it  aside,  neither  is  it  our  business  to  come  here  and  produce  a  witness, 
and  then  say  you  shall  strike  out  his  testimony  if  it  doesn't  suit  me  or  if  it 
doesn't  suit  you. 

Now,  you  would  get  on  my  toes  pretty  fine  if  I  were  considering  these 
as  political  questions.  This  was  supposed  to  be  a  non-partisan  body;  I  am 
considering  it  so;  but  I  notice  that  when  we  strike  a  new  ques- 
tion, or  when  we  strike  a  question  that  affects  one  man  politi- 
cally, v.e  are  liable  to  get  a  little  sensitive;  but  I  say  that  if 
we  are  going  to  make  any  discrimination  with  this  witness  because  a  man 
may  be  known  by  one  member  of  this  commission,  or  because  he  may  belong 
to  my  party  or  yours,  let  us  call  this  a  partisan  commission,  and  let  us  go 
Into  this  and  have  men  swear  to  what  we  want  them  to  swear  to,  and  not  to 
the  facts  that  they  propose  to  produce  before  this  commission. 

Now,  v.e  want  to  find  the  facts.  This  man  can  teach  us  all.  Men  think 
that  these  statements  are  wild,  that  they  are  ravings.  I  want  to  say  that 
there  is  a  man  who  has  gone  into  these  subjects;  there  is  a  man  who  has 
read  the  books.  There  is  a  book  that  lies  before  him.  Wealth  vs.  The  Com- 
monwealth. It  is  a  mass  of  material;  it  is  a  mass  of  the  record  of  crime;  it 
is  a  mass  of  stuff  and  pretty  nearly  all  of  it  is  in  quotation  marks.  It  is 
taken  from  your  Congressional  investigations,  your  Legislative  investigations, 
or  some  court  proceedings;  and  it  shows,  just  as  this  man  says,  that  in  Cleve- 
land, 11  men — or  13  men,  I  believe  it  was — formed  a  company  to  go  into  the 
oil  business.  No  one  of  them  had  a  pound  of  oil  or  an  oil  well;  but  it  was 
a  combination  of  railroads  and  not  an  oil  combination.  They  put  the  rates 
so  that  they  not  only  shut  off  competition,  but  they  squeezed  the  value  out 
of  every  man's  oil  claim  in  the  oil  regions,  knocked  it  down  to  40  or  50  cents 
on  the  dollar;  and  I  say  this  has  been  done  in  every  coal  field  in  the  United 
States,  and  as  he  says,  these  things  have  been  going  on,  and  it  is  impossible 
for  a  man  to  — rk  his  mine,  whether  it  ^e  coal  or  oil,  or  anything  else.     Now, 

*Black  faced  type  indicates  matter  omitted,  In  the  coiupe  of  editing-,  from  the 
official  report. 


158  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

*he  simply  means  that  they  have  controlled  the  offices  and  that  he  is  con- 
vinced of  that.  He  believes  from  certain  things  that  have  happened,  that  a 
certain  member  of  the  judiciary  was  elevated;  he  has  a  right  to  that  opinion, 
and  he  has  a  right  to  express  it  here.  We  have  no  right  to  reflect  on  him 
by  criticising  and  telling  him  what  he  shall  state  before  this  commission. 

I  am  willing  to  say  that  we  will  come  in  now  and  we  will  revise  our  rule, 
and  we  will  say  that  a  man  shall  state  so  and  so,  and  we  will  circumscribe  it 
within  this  oath,  and  then  we  will  try  them  all  that  way. 

Now,  I  want  to  see  this  man  treated  as  other  witnesses.  I  think  he  is  a 
man  and  a  student;  he  is  one  of  those  men  that  has  been  tried  in  the  fire. 
That  is  what  is  the  matter  with  him.  He  has  had  the  experience,  he  has 
gone  through  the  flames,  and  he  has  come  out  like  a  man  that  I    have  often 

quoted  here,  like  Mr.  ,  the  manager  of  the  great  western   railroad, 

who  went  before  the  committee  down  here.  When  the  opposing  counsel 
referred  to  the  people  of  Kansas  as  anarchists,  he  said,  "I  will  tell  you  what 
made  them  anarchists;  you  charged  them  twice  as  much  to  carry  their  grain 
from  their  homes  to  the  Missouri  river,  400  miles,  as  you  charged  the  elevator 
company  to  carry  the  same  grain  1,200  miles."  He  said,  that  is  what  makes 
them  anarchists.  That  is  what  made  them  in  that  country,  and  that  is  what 
makes  this  man's  conviction,  and  that  is  what  makes  my  conviction,  for  I 
have  seen  these  things. 

I  am  in  a  country  where  we  are  in  a  developing  state.  I  have  seen  rail- 
roads come  up  here  where  there  was  a  struggling  town,  and  turn  right  around 
and  go  within  a  quarter  of  mile  of  it,  or  two  miles  above  and  start  a  to'"-, 
and  never  run  down  there  at  all.  I  have  seen  them  fix  a  rate  which  wr'ld 
be  less  to  the  further  town  than  to  the  nearer  one  that  was  in  the  hub  of  the 
wheel,  as  it  were,  and  destroy  it.  I  have  seen  them  shut  down  an  individual's 
coal  mine,  covering  over  50.000  acres  of  coal  land.  Whenever  it  got  to  a 
point  even  v/here  they  would  make  the  freight  rate  so  high  and  we  would 
attempt  to  ship  a  little  coal,  they  would  furnish  us  no  cars.  They  would  say: 
"We  have  no  cars  and  therefore  we  cannot  ship  it." 

I  say,  this  man  has  gone  along  that  line,  and  he  has  answered  those 
questions.  I  have  seen  them  in  Congress  under  an  investigation  in  a  Senate 
committee.  I  want  to  say  to  you  that  Mr.  Huntington  stated  openly  that  in 
the  State  of  New  York  every  time  the  Legislature  met  one  of  the  great  rail- 
roads there  made  an  appropriation  of  $250,000. 

Are  we  not  to  go  into  these  questions?  He  stated  that  his  company  had 
paid  over  a  million  dollars  for  legislation  and  for  Congressional  aid.  Are  we 
not  to  go  into  these  questions.  We  showed  by  the  Second  Assistant  Post- 
master-General of  this  government,  that  they  had  been  taking  for  the  Second 
Assistant  Postmaster-General's  position  for  the  eight  years,  and  prior  to  that 
time  a  high  officer  of  the  railroad  company,  who  had  to  make  all  the  contracts 
of  the  government  for  carrying  the  mail.  He  showed  there  that  we  paid 
more  annually  for  rent  alone  of  postal  cars  than  every  postal  car  in  the  land 
cost;  in  the  United  States  that  we  paid  more  rent  per  annum  than  it  would 
cost  to  build  them,  and  that  we  paid  eight  cents  a  pound  in  addition  to  that 
for  carrying  the  freight,  and  the  average  haul  was  448  miles  in  the  United 
States,  and  the  cost  of  carrying  the  letters  across  the  continent  was  about 
$60  a  ton.  All  these  things  have  been  shown  to  the  Congressional  Commit- 
tee.    We  are  not  so  particular  down  there.     Why  should  we  be  here? 

Now,  I  am  in  earnest  about  this,  because  I  am  in  sympathy  with  this 
man.  I  know  his  doctrine;  I  know  what  books  he  has  read,  and  I  know 
where  they  are  from,  and  I  want  to  say  that  if  what  he  says  treads  on  my 
toes,  or  the  toes  of  my  political  party,  I  want  to  see  every  man  have  an  oppor- 
tunity before  this  commission — and  if  it  gets  out  of  the  record — if  we  are 
going  to  apply  it  to  one  let  us  apply  it  to  all.  Let  us  not  listen  to  a  man  who 
will  tickle  our  fancy  because  he  flatters  our  particular  theories,  and  then 
when  he  gets  on  to  a  theory  of  somebody  that  is  maybe  a  little  in  advance  of 
you,  stop  him. 

It  is  not  the  great  majority  power  in  men  that  are  always  right;  there 
has  always  been  a   little  minority  right  in  every  great  advance  in  the  world. 


•Black   faced   type  indicates   matter  omittrd,  in  the  course  of  editing,   from  the 
official  report. 


M.  L.  LOCKWOOD.  159 

*There  were  just  a  few  pioneers  who  blazed  the  way.  Here  is  one  of  them;  a 
pioneer  in  thought;  a  pioneer  in  action,  and,  God  bless  them,  we  owe  to  them 
all  that  is  sacred  to  humanity  to-day — the  civilization  we  have. 

Now,  I  want  to  see  him  treated  just  as  other  men,  and  I  don't  want  to  see 
anybody  get  up  here  and  tell  a  witness:  "You  can't  state  this,  or  you  can't 
state  tiiat,  or  you  can't  state  the  other;  let  us  strike  it  out."  If  you  do,  I 
want  to  say  that  I  propose  that  when  we  make  our  report,  to  say  that  this 
is  not  a  non-partisan  commission;  that  men  were  not  permitted  to  state  facts 
or  give  opinions,  but  they  had  to  correspond  with  the  majority  of  this  com- 
mission. 

Now,  the  commission,  I  know,  is  a  little  off  when  it  thinks  about  telling 
a  man  to  give  this  data,  or  the  other,  when  it  is  given  under  oath.  If  you 
want  to  establish  rules,  all  right,  but  I  think  that  man  is  right.  I  believe 
with  old  Larrabee  and  these  other  men  that  say  that  these  things  are  the 
truth;    it  is  the  absolute  truth  and  you  cannot  deny  it. 

Now,  there  is  no  use  in  being  so  particular  about  these  things.  If  these 
things  are  not  competent,  let  us  bind  ourselves  by  some  rule.  But  let  us  not 
get  up  and  invite  a  witness  before  us,  and  then  jump  up  and  tell  him  that  he 
must  take  this  back  and  that  back  and  that  you  must  swear  what  we  want 
you  to,  and  not  what  is  your  real  conviction. 

Mr.  KENNEDY.  I  desire  to  make  a  few  remarks  just  here:  This  is  a 
very  simple  matter.  Mr.  Lockwood  stated  under  oath,  without  any  qualifica- 
tion, and  the  notes  will  show  it  as  I  stated  before,  that  the  judge  in  a  certain 
State  was  elected  by  corrupt  means — by  this  corruption  to  which  he  refers. 
Now,  this  commission  should  know  whether  Mr.  Lockwood  is  stating  that  as 
a  matter  which  he  can  prove — which  he  can  substantiate — and  when  he  was 
asked  further  he  says  that  he  cannot  do  it.  He  changes  the  form  of  his  tes- 
timony and  says  that  it  is  a  matter  of  belief.  Now,  that  is  all  right;  let  it 
go  that  way. 

Judge  Bell  is  a  man  who  has  been  on  the  bench.  I  appeal  to  him  and 
ask  him  whether  he  would  not,  as  a  judge,  when  testimony  is  not  substan- 
tiated, ask  the  witness  a  question  which  would  lead  up  to  substantating  these 
things  which  he  says  are  facts. 

Representative  BELL.     That  is  perfectly  right. 

The  WITNESS.     I  want  to  say  to  this  commission 

Mr.  FARQUHAR.  Just  one  minute.  There  were  some  remarks  that 
Judge  Bell  made,  that  I  said  I  hoped  the  witness  would  make  the  change.  I 
did  not  demand  that  the  witness  should  make  the  change;  I  know  my  duty 
better  as  a  legislator  and  as  a  member  of  this  commission.  I  hope  that  there 
will  be,  and  I  think  that  there  will  be  the  same  view  taken  that  I  do  about  it. 
Now,  that  matter  of  the  implied  argument,  the  argument  that  Judge  Bell  has 
made  about  what  I  said  there,  is  entirely  out  of  place.  No  one  in  this  com- 
mission would  ever  demand  of  a  witness  to  strike  out  his  testimony.  We 
could  not  do  that;  it  is  not  in  the  perview  of  this  commission,  anyway,  nor  I 
would  not  ask  it — I  would  be  the  last  one,  because  there  are  kindly  personal 
relations  now,  and  have  been,  between  the  witness  and  myself.  What  I  said 
about  Judge  Haight  was  in  a  general  manly  way,  I  think,  and  I  want  to  say 
there  are  no  closer  friends  in  Buffalo  than  Charles  T.  Matthews  and  myself. 
We  have  been  in  a  good  many  reform  movements  together;  we  have  been 
close  personal  friends,  and  I  am  sure  if  Mr.  Matthews  were  here,  he  would 
not  hesitate  a  moment  to  do  Judge  Haight  justice,  and  I  believe  Mr.  Lock- 
wood  knows  about  Mr.  Haight  right  here  at  this  time. 

The  WITNESS.  I  desire  to  state,  Mr.  Chairman,  that  Judge  Haight  and 
I  attended  the  same  school  together  when  we  were  school  boys. 

Mr.  FARQUHAR.     That  is  right. 

The  WITNESS.  He  was  a  man  I  always  admired  and  I  had  the  highest 
regard  for  him.  I  have  earnestly  studied  this  Matthews  case,  the  evidence 
that  was  taken  in  that  case,  and  the  remarks  that  were  made  upon  that  sub- 
ject were  well  considered,  and  I  made  that  statement  because  I  believed  I 
owed  that  to  this  commission  and  to  the  American  people.  The  evidence  I 
gave  is  from  a  study  of  this  question  which  convinced  me  that  the  statement 
I   made  was  correct. 


♦Black   faced   type  indicates   matter  o  :  iMed,  in  the  course  of  editing,   from,  the 
official  report. 


160  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

*Q.  (By  Representative  BELL.)  May  I  ask  you  a  question?  Did  you  ever 
read  Larrabee  on  railroads?     A.  Yes,  sir;   I  did  a  long  time  ago. 

Q.   Do  you  know  who  Larrabee  is?     A.   I   know  he  was  Governor  of  Iowa. 

Q.  A  Republican  Governor?     A.  Yes,  sir. 

Q.  And  Governor  at  the  time  the  railroad  went  through?     A.  Yes,  sir. 

Mr.  RATCHFORD.     I  rise  to  a  point  of  order. 

Vice-chairman   PHILLIPS.     Please  state  your  point,  sir. 

Mr.  RATCHFORD.  If  Judge  Bell  will  excuse  me,  Mr.  Chairman  and 
gentlemen  of  the  commission,  I  must  renew  my  point  of  order.  My  point  of 
order  is:  First,  that  this  is  not  a  commission  to  try  Republicans  or  Demo- 
crats, or  anybody  else;  second,  that  if  we  are  going  to  investigate  into  the 
character  of  any  man,  if  we  are  going  to  inquire  into  his  integrity,  if  we  are 
going  to  charge  crime  against  any  man  in  authority,  we  ought  to  have  the 
witnesses  here,  we  ought  to  have  the  man  himself  here  and  give  him  a 
chance;   that  is  my  point  of  order,  and   I   insist  upon  the  ruling  of  the  chair. 

Vice-Chairman  PHILLIPS.  Has  any  gentleman  any  further  remarks  to 
make  on  the  point  of  order  that  the  gentleman  has  raised? 

Senator  MALLORY.  I  do  not  understand  what  the  point  of  order  is.  The 
point  of  order  has  been  stated  by  Mr.  Ratchford  here,  in  his  terms,  but  I  do 
not  see  where  the  application  of  the  general  rule  which  is  invoked,  comes  in. 
To  what  inquiry  or  language  does  he  refer? 

Mr.  KENNEDY.  This  gentleman  comes  in,  and  says  that  this  man  was 
elevated  to  the  bench  by  the  means  of  a  corruption  fund,  and  I  asked  him  if 
that  was  a  matter  of  belief,  or  if  he  could  give  any  facts  to  substantiate  it, 
and  then  he  changed  his  form  of  answer,  and  then  this  controversy  sprang  up. 

Senator  MALLORY.  It  strikes  me  that  it  is  impossible  for  us  to  under- 
take to  restrain  the  witness  as  to  any  particular  statement.  If  a  witness  goes 
out  of  his  way  and  makes  a  statement  which  cannot  be  substantiated  on  cross- 
examination,  inquiry  directed  that  way  will  reveal  that  fact.  I  was  present 
this  morning,  and  I  came  very  near  interrupting  Mr.  Lockwood  when  he  made 
the  statement,  and  asking  him  if  he  was  testifying  to  his  own  knowledge  on 
that  particular  case,  or  if  it  was  mere  rumor  or  report,  because  it  was  a 
serious  charge  to  make  against  a  man  sitting  on  the  highest  bench  of  the 
State,  but  at  the  same  time  I  preferred  to  wait  until  he  finished  his  testimony, 
and  then  on  cross-examination  to  ask  him  where  his  information  came  from. 
I  do  not  think  it  would  do  for  this  commission  to  adopt  a  remark  of  that  kind, 
because  we  are  endeavoring  to  avoid  any  partisanship  in  this  investigation, 
and  that  therefore  a  witness  should  be  inquired  of  but  not  told  what  we  want 
him  to  say.  In  other  words,  I  think  as  long  as  the  witness'  testimony  is  not 
scandalous  and  is  not  of  such  a  character  as  to  be  unfit  to  be  heard,  that  he 
ought  to  be  allowed  the  largest  latitude  possible.  Then,  as  in  a  court  of  jus- 
tice, if  he  makes  a  statement  that  he  cannot  sustain,  that  may  be  discolsed  on 
cross-examination  by  asking  him  ftr  the  source  of  information. 

Mr.  KENNEDY.     What  you  propose  to  do  is  just  exactly  what  I  did. 

Mr.  RATCHFORD.  In  defence  of  the  position  I  have  taken  in  rising  to 
a  point  of  order  on  this  question,  I  want  to  say  to  the  Senator  that  Mr.  Ken- 
nedy on  cross-examination  has  brought  out  the  very  thing  that  he  intended  to 
bring  out  with  reference  to  the  explanation  that  was  made  by  the  witness 
this  morning.     Evidently  on  a  question  of  fact. 

On  cross-examination  the  witness  modified  that  statement,  I  believe,  and 
properly  so.  He  has  done  that,  and  why  not  pass  on?  Let  that  man  who  is 
in  New  York,  who  does  not  know  that  he  is  being  arraigned  before  this  com- 
mission,  rest. 

We  are  here,  Mr.  Chairman,  to  consider  issues,  if  you  please;  to  consider 
industrial  conditions;  to  consider  social  conditions;  and  not  to  consider  polit- 
ical questions  or  political  corruption.  I  ask  for  a  ruling  on  my  point  of  order. 
Vice-Chairman  PHILLIPS.  The  chair  would  state,  in  regard  to  the  wit- 
ness' testimony,  that  it  is  entirely  competent  for  him  to  state  an  act,  and  after 
that  statement  goes  before  this  commission,  he  can  be  examined  as  to  it. 
But  he  surely  can  state  what  he  has  reason  to  believe  from  personal  knowl- 
edge of  the  judges,  from   the   history  of  that  case,   and  the  testimony   given. 


♦Black   faced   type   indicates   matter  omitted,  In  the  course  of  editing,   from   tlio 
official  report. 


M.  L.   LOCKWOOD.  161 

*lf  he  was  promoted  thereby,  and  from  his  knowledge  of  the  surroundings, 
he  believed  there  were  corrupt  practices  used  in  his  promotion,  he  has  a 
right  to  state  it. 

Mr.  FARQUHAR.  That  is  true;  but  Judge  Haight  was  elected,  Mr. 
Chairman,   not  promoted. 

Vice-Chairman  PHILLIPS.  He  has  stated  that  and  he  has  now  amended 
his  statement  by  saying  that  he  did  not  know  of  his  own  personal  knowledge 
that  corrupt  methods  were  used,  but  from  the  circumstances  he  believed 
them  to  have  been  used,  so  there  is  nothing  further  to  rule  as  to  its  compe- 
tency— regarding  its  competency  or  its  accuracy,  and  the  chair  would  so  rule. 

Q.  (By  Representative  BELL.)  You  say  you  have  read  that  book?t  A. 
Yes,  sir. 

Q.  What  would  you  say  as  to  the  merits  of  it?  A.  Well,  I  think  it  is  a 
full  exposition  of  this  railroad  question,  as  it  has  grown  up  in  this  country. 

Q.  Doesn't  he  develop  the  fact  that  the  tendency  then,  as  early  as  1876, 
was  prevalent  in  the  United  States? 

The  WITNESS.  That  is  the  tendency  of  the  roads  to  manipulate  political 
parties? 

Representative  BELL.     Yes,  sir. 

The  WITNESS.     Yes,  sir. 

Q.  And  fill  judicial  positions  with  their  sympathizers?     A.  Yes,  sir. 

Q.  Now,  sir;  you  speak  of  the  Standard  Oil  Company  building  up  their 
trust  through  railroad  discrimination.  Was  there  any  other  reason  at  that 
time  for  building  the  trust,  or  that  would  enable  them  to  build  the  trust, 
other  than  railroad  discrimination?  A.  I  don't  think  so  in  any  respect.  The 
men  who  were  refining  oil  in  the  oil  regions  were  men  of  ability  and  business 
capacity,  as  I  understand,  equal,  don't  you  know,  to  the  business  capacity 
of  the  Standard  Oil  Company  people,  with  the  exception  that  the  Standard 
Oil  Company  people  recognized  that  it  was  a  question  of  advantageous  freight 
rates,  instead  of  a  question  of  superior  goods;  that  superior  goods  could  not 
go  over  these  railways  unless  the  railways  would  let  them. 

Q.  Well,  they  raised  the  price  on  crude  oil  from  about  40  to  80  cents  a 
barrel,  and  then  if  the  independents  shipped  a  barrel  of  oil  at  all,  they  took 
40  cents  of  it,  and  handed  it  over  to  the  Southern  Improvement  Company?  A. 
Yes,  sir. 

Q.  Forty  to  $1.10;  that  was  the  contract?    A.  Yes,  sir. 

Q.  And  that  had  the  effect  of  not  only  destroying  competitors,  but  did 
it  not  destroy  the  value  of  all  independent  oil  wells  to  the  owners?  A.  Very 
much. 

Q.  And  the  market  value  of  them?    A.  Very  much. 

Q.  And  froze  them  out  of  business?    A.  In  a  great  many  cases. 

Q.  Now.  have  you  given  any  study  to  the  coal  fields  of  the  United  States? 
A.  No,  I  have  not,  only  in  a  general  way. 

Q.  Well,  don't  you  know  that  it  is  a  fact  that  the  railroads  of  the  United 
States  refused  to  allow  any  private  individuals  to  operate  coal  fields?  A.  Yes, 
sir;  I  know  that  to  be  the  case  in  Allegheny  county. 

Q.  That  they  there  have  an  independent  coal  company  that  is  a  wheel 
within  a  wheel,  usually  gotten  up  by  the  railroad  stockholders.  A.  Yes,  sir; 
and  that  company  is  the  only  company  that  can  exclusively  ship  coal  over 
that  special  railroad. 

Q.  If  they  give  you  the  rate  here,  did  you  ever  have  any  trouble  in  the 
country  in  getting  cars?  A.  Why  in  those  early  days,  and  clear  down  during 
the  time  of  the  independent  refiners'  struggle  within  the  last  10  years,  that 
was  one  of  the  principal  ways  in  which  the  railways  discriminated  in  favor 
of  the  Standard  Oil  Company  by  refusing  to  give  men  who  had  oil  the  cars  to 
ship  it  in.  For  instance,  if  a  man  needed  20  or  30  cars,  likely  enough,  two  or 
three  days  after  he  expected  them,  one  or  two  cars  would  come,  and  he  would 
not  be  able  to  get  his  oil  into  the  market  at  the  time  he  expected. 

Q.  Speaking  of  private  ownership,  have  you  seen  in  your  experience,  any- 
thing in  the  way  of  discrimination  against  towns?    Did  anything  of  that  kind 


•Black  faced  type  Indicates  matter  omitted.  In  the  course  of  editing,  from  the 
official  report. 

tLarrabee's  work. 

11 


162  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

come  under  your  observation?  A.  Well,  not  personally,  but  in  the  investiga- 
tion of  this  question  I  have  found  that  towns  are  built  by  railways  and  towns 
are  practically  destroyed  by  railways,  as  far  as  they  are  commercially  and 
industrially  concerned. 

Q.  Isn't  it  the  tendency  of  all  private  ownership  to  make  commercial 
centers,  great  centers  like  Chicago?    A.  Yes,  sir;  and  New  York. 

Q.  Now,  what,  in  your  judgment,  would  be  the  effect  of  the  government 
ownership  or  the  government  control  that  would  require  all  railroads  to  carry 
freight  for  one  man  at  the  same  price  they  carried  it  for  all  others?  A.  I 
think  it  would  be  especially  beneficial;  it  would  give  individual  enterprise 
an  opportunity  to  develop  itself,  men  would  have  the  courage  to  enter  into 
business  enterprises  that  they  do  not  dare  to  enter  under  the  present  system. 

Q.  And  as  I  understand  you,  the  reason  they  have  hesitated  about  build- 
ing up  enterprises  in  your  part  of  the  country  is  for  fear  of  these  discrimina- 
tions?   A.  Yes,  sir. 

Q.  In  favor  of  some  strong  company,  or  against  the  men  that  are  starting 
these  new  enterprises.    A.  Yes,  sir. 

Q.  Therefore,  it  keeps  back  development?  A.  Yes,  sir;  the  great  over- 
shadowing fear  that  men  have  in  the  oil  country  in  starting  into  an  enter- 
prise to  compete  for  the  oil  trade,  the  refined  business,  is  the  fear  that  the 
railroad  will  discriminate  against  them  and  shut  them  out  of  the  market; 
that  is  the  thing.  If  there  was  a  guarantee  that  everybody  would  be  equally 
treated  over  the  railways,  the  men  of  the  oil  region  have  the  courage,  the 
ability  and  the  resources  to  go  in  and  do  this  business. 

Q.  Now,  what  experience  have  your  people  had  between  the  original 
farmer  marketing  his  product  and  the  elevator  companies  hauling  the  same 
product  from  the  West?  A.  Well,  we  don't  have  any  elevator  companies  in 
our  section. 

Q.  Not  in  your  section;  but  there  are  elevator  companies  in  Chicago? 
A.  Yes,  sir;  yes,  sir. 

Q.  How  does  the  freight  rate  from  Chicago  to  New  York  correspond 
with  your  freight  rate  from  Pennsylvania  to  New  York?  A.  Well,  from  the 
information  I  have  gathered  on  investigating  that  subject,  that  rate  from 
Chicago  to  New  York  is  sometimes  much  less  than  it  is  from  Pittsburg  to 
New  York. 

Q.  That  is  with  these  big  companies?    A.  Yes,  sir. 

Q.  The  rate  given  to  the  elevator  companies  or  the  beef  companies?  A. 
Yes,  sir. 

Q.  So  that  they  really  can  market  their  grain  in  New  York  for  less  than 
can  the  individual  farmer  from  Pennsylvania?    A.  Yes,  sir;  I  believe  that. 

Q.  Isn't  that  the  general  principle  that  is  now  established  as  between 
the  Beef  Combine,  the  Elevator  Combine,  and  all  like  combines?  A.  I  think 
it  is. 

Q.  (By  Mr.  RATCHFORD.)  I  understood  the  witness  to  say  this  morn- 
ing that  the  South  Improvement  Company  made  a  contract  with  the  railroad 
company  in  1878?    A.  Yes,  sir,  1872. 

Q.  1878,  I  thought  you  said;  1872  is  it?    A.  Yes,  sir. 

Q.  To  transport  their  product  at  certain  prices,  I  presume,  wasn't  it? 
A.  Yes,  sir;  that  is,  certain  prices;  they  raised  the  prices. 

Q.  Would  you  care  to  state  those  prices.  A.  I  could  not  state  those 
prices  without  reference  to  the  testimony  in  those  cases. 

Q.  (By  Vice-Chairman  PHILLIPS.)  You  have  referred  to  where  that 
testimony  can  be  found?    A.  I  have  referred  to  that  sworn  testimony. 

Q.  (By  Mr.  RATCHFORD.)  Can  you  state  who  composed  this  South 
Improvement  Company?  Was  it  composed  of  what  are  now  known  as  inde- 
pendent producers?  A.  No;  the  South  Improvement  Company  was  composed 
of  13  men,  and  10  of  these  men  afterwards  were  the  prime  movers  in  the 
Standard  Oil  Company  combine. 

Q.  Well,  it  appears  that  the  contract  which  you  refer  to  was  not  carried 
out  on  the  part  of  the  railroad  company?  A.  No,  that  is  true;  it  was  not 
carried  out.  That  contract  was  so  abhorrent  to  every  idea  of  American  right, 
that  the  men  in  the  oil  region  went  into  revolt;  they  would  not  stand  it,  and 
it  created  such  an  excitement  that  the  Legislature  took  up  the  question  and 
repealed  the  charter  of  the  South  Improvement  Company. 


M.  L.  LOCKWOOD.  163 

Q.  And  the  producers  brought  action  against  the  raih-oad  company,  did 
they?  A.  At  that  time  there  was  a  settlement  of  this  difficulty  in  which  the 
producers,  or  a  committee  of  the  producers,  entered  into  a  contract  with  the 
railway  companies  that  henceforth  there  should  be  no  discrimination  for  or 
against  anybody — that  everybody  was  to  have  equal  rights.  I  give  a  refer- 
ence to  that  contract;  it  is  in  the  record. 

Q.  Is  the  South  Improvement  Company  still  in  existence?  A.  The  char- 
ter of  the  South  Improvement  Company  was  repealed  by  the  Pennsylvania 
Legislature  in  1872,  and  the  company,  of  course,  went  out  of  existence;  but  as 
you  well  know,  by  a  reference  to  my  statement,  everything  that  the  railway 
companies  had  contracted  to  do  publicly  for  the  South  Improvement  Com- 
pany they  have  since  secretly  and  persistently  done  for  the  benefit  of  the 
Standard  Oil   Company. 

*Q.  That  being  the  case,  then,  would  you  care  to  state,  in  your  opinion, 
as  to  what  the  difference  is  from  a  consumer's  standpoint  as  to  whether  the 
South  Improvement  Company  was  favored  by  railroads,  or  the  Standard  Oil 
Company  favored  by  the   railroads?     A.  Why,  the  result  would  be  the  same. 

Q.  The  result  would  be  the  same?  A.  Yes,  sir;  the  South  Improvement 
Company,  if  they  had  been  allowed  to  go  on,  would  have  created  a  monopoly 
and  controlled  the  oil  business  just  exactly  as  the  Standard  Oil  Company, 
enjoying  the  same  advantages  which  the  railroad  companies  had  contracted 
to  give  to  the  South  Improvement  Company,  were  afterwards  enabled  to  do. 

Q.  Now,  referring,  Mr.  Lockwood,  to  the  case  of  Mr.  Rice  in  Marietta, 
against  the  Standard  Oil  Company,  I  understood  you  to  say  that  the  railroad 
company  increased  their  rates  on  Mr.  Rice's  product,  charging  him  an  exorb- 
itant price.     A.  Yes,  sir. 

Q.  And  in  doing  so,  they  paid  a  certain  percentage  of  the  amount  received 
from  Mr.  Rice  to  the  Standard  Oil  Company.  Is  that  right?  A.  Yes,  sir; 
that  is  right. 

Q.  Well,  then?  A.  Now,  wait;  let  me  answer  that  a  little  further.  While 
Mr.  Rice's  refinery  was  at  Marietta  he  got  his  crude  oil  to  put  into  his  refinery 
from  the  Macksburg  field,  something  like  70  or  SO  miles,  by  the  Marietta  & 
Lake  Road — the  road  that  runs  up  toward  the  lake  there.  Rice  had  a  little 
pipe  line  and  a  car,  and  he  obtained  a  rate,  I  think,  of  15  cents  a  barrel  over 
the  railroad  for  his  car,  running  it  back  and  forth.  Rice  was  extending  his 
business,  and  the  Standard  Oil  Company  got  after  that  railroad,  you  know, 
in  regard  to  this  man.  Dan  O'Day.  the  manager — you  know  what  I  said 
about  him — this  road  with  a  good  many  others  went  into  the  hands  of  a 
receiver — and  he  went  to  this  receiver,  and  threatened  them  that  unless  they 
would  carry  his  Standard  oil,  I  think,  for  10  cents  a  barrel,  and  charge  Rice 
■3:5  cents  a  barrel — I  am  not  quite  sure  as  to  this  particular  price,  but  I  can 
fix  that — that  they  would  lay  a  pipe  line  to  their  refinery  at  Marietta.  The 
evidence  shows  that  the  receiver  made  that  arrangement  with  them,  and  they 
paid  out  of  the  35  cents  that  Rice  paid  them  back,  25  cents  to  the  Standard  Oil 
Company.     That  is  in  evidence;  it  is  on  record;  it  can  all  be  seen. 

Q.  Now,  Mr.  Lockwood,  do  you  believe  that  that  was  the  result  of  a 
demand  on  the  part  of  the  Standard  Oil  Company  from  the  railroad?  A. 
Yes,  sir. 

Q.  Well,  carrying  that  question  out  a  little  further.  You  have  stated.  I 
believe,  in  that  connection  that  the  railroad  company  finally  refused  to  ship 
Mr.  Rice's  oil  at  any  price?  A.  Yes,  sir;  that  was  afterwards.  Rice  extended 
his  pipe  line  down  to  the  Muskegon  river,  I  think,  or  some  little  river  that 
runs  in  there  at  Marietta,  and  got  some  flat  boats  after  this  refusal  to  give 
Rice  any  rate  at  all  in  his  attempt  to  get  his  oil  into  the  Southern  market. 

Q.  Do  you  believe  that  it  was  also  the  result  of  the  influence  of  the  Oil 
Company?    A.  I  have  no  doubt  of  it  in  the  world,  not  the  least. 

Q.  Now,  the  question  I  would  like  to  have  you  answer  is  this:  If  the 
Standard  Oil  Company  found  it  advantageous  to  get  a  certain  percentage 
from  the  Railroad  Company  of  the  money  paid  to  them  by  Mr.  Rice  for  his 
shipment,  how  could  it  be  advantageous  for  the  same  oil  company  to  cause 
the   railroad   to   give   Mr.   Rice   no   transportation?     A.  The    profits    of   this 


*Black  faced   type  indicates  matter  omitted,  in  the  course  of  editing,   from  the 
official  report. 


HM  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

monopoly  have  been  enormous.  The  $500,000,000  which  it  is  said  they  have 
accumulated,  is  an  immense  amount  of  wealth,  and  they  have  gotten  this 
wealth  by  working  these  railroads  to  destroy  all  competitors,  so  that  they 
can  force  the  consumer  to  pay  a  large  price  for  their  oil. 

Q.  But   Mr.    Lockwood A.  The    25-cent   rebate   which   they   got   on 

Rice's  oil  was  only  a  drop  in  the  bucket  upon  the  price  that  they  could  obtain 
if  they  could  shut  Rice  out  of  the  market  and  sell  their  oil  in  Rice's  place. 
Q.  Your  answer  is  directly,  I  take  it,  that  that  company  obtained  the  best 
conditions  they  could  at  the  time — at  a  certain  time — and  when  they  made 
these  conditions,  they  did  the  best  they  could.    Is  that  it? 
The  WITNESS.     The  Standard  people? 
Mr.  RATCHFORD.     Yes,  sir. 

The  WITNESS.     Yes,  sir;  they  are  always  looking  out  for  the  Standard. 
Q.   (By  Mr.  KENNEDY.)     Mr.  Lockwood,  can  you  state  approximately 
what  per  cent  of  the  refined  oil  of  this  country  is  turned  out  by  the  independ- 
ent companies?    A.  We  calculate  that  they  are  handling  about  4  per  cent. 

Q.  Only  4  per  cent.?  A.  Only  4  per  cent.;  you  know  this  is  Hn  immense 
btisiiiGss, 

Q.  (By  Vice-chairman  PHILLIPS.)  That  is  including  the  Ohio  oil?  A. 
Including  the  Ohio  oil  and  the  Pennsylvania  oil  and  all  these  different  grades 
of  oil. 

Q.  (By  Mr.  KENNEDY.)  Can  you  state  what  per  cent,  of  the  oil  that 
you  refine  is  sent  into  the  German  market?  A.  I  am  one  of  the  managers  of 
that  enterprise,  and  I  know  that  the  larger  percentage  of  the  oil  is  exported. 
Q.  Well,  I  gather  from  your  testimony  that  the  business  you  do  in  this 
country  is  done  at  a  loss,  but  the  companies  are  enabled  to  live  and  make  a 
profit  by  the  advantages  they  have  in  the  German  market?  A.  Yes,  sir;  yes. 
sir;  yes,  sir. 

Q.  Is  that  so?  A.  Yes,  sir.  The  independent  producers  and  refiners 
went  into  the  New  York  City  market  to  supply  the  consumers  and  the  Stand- 
ard Oil  Company  immediately  brought  the  price  down  there,  and  held  it  down, 
so  that  there  is  no  profit.  I  guess  I  am  not  revealing  any  of  the  secrets  when 
1  say  that  the  independents  have  lost  money  continuously  in  New  York  and 
Philadelphia  in  their  attempt  to  supply  those  towns  with  oil.  but  the  profits 
that  they  make  in  their  export  business,  in  their  trade  with  Germany,  in 
which  they  have  an  equal  show  all  around,  is  sufficient  to  make  up  these  losses 
and  still  show  quite  a  favorable  earning  upon  the  amount  of  capital  invested. 
Q.  (By  Vice-chairman  PHILLIPS.)  I  would  like  to  ask  Mr.  Lockwood 
one  quesLion.  How  did  the  Standard  Oil  Company  meet  the  competition  at 
different  points  in  the  country  in  the  distribution  of  refined  oil?  Have  you 
any  specific  knowledge  of  discrimination  against  the  independent  producers 
at  any  particular  point  or  points?  A.  When  the  independent  producers  come 
into  a  district  they  bring  the  price  of  oil  down  to  try  to  make  them  lose 
money.  Another  way  in  which  the  Standard  Oil  Company  people — I  always 
call  it  by  that  name  because  it  is  such  a  hydra-headed  concern — does  this 
business,  is  to  intimidate  merchants  to  prevent  them  from  using  or  selling 
anybody's  else  oil  except  their  own.  Of  course,  I  have  read  of  a  good  many 
instances  of  that  kind,  but  I  have  in  mind  a  special  incident: 

In  1888,  I  think  it  was,  I  was  in  the  Pan  Handle  of  Texas.  I  bought  some 
land  down  there  from  a  gentleman  by  the  name  of  White — W.  W.  White. 
He  was  quite  a  prominent  merchant.  He  had  quite  a  large  store,  and  he  fitted 
out  these  trains  that  went  over  the  prairies,  you  know — three  or  four  wagons, 
or  five  or  six  teams.  While  I  was  there  he  told  me  his  experience  in  the  oil 
business.  He  had  been  buying  his  oil  from  the  Standard  Oil  Company  people, 
and  finally  one  day  a  man  came  along  with  some  specimens  of  oil  that  were 
very  much  finer  than  any  he  had  been  able  to  get,  and  the  price  being  satis- 
factory he  purchased  a  carload  of  oil  from  this  man.  It  ran  along  for  two 
or  three  weeks,  and  finally  this  car  of  oil  arrived  and  the  next  morning  the 
Standard  oil  representative  from  Fort  Worth  (this  was  at  Wichita  Falls) 
appeared  on  the  scene  and  challenged  Mr.  White's  right,  don't  you  know,  to 
buy  anybody's  else  oil  except  theirs  and  said  they  would  not  stand  it — they 
would  not  have  it — and  he  finally  threatened  to  establish  a  store  and  run 
White  out  of  business  if  he  insisted  on  selling  any  other  oil  except  theirs. 


M.  L.   LOCKWOOD.  165 

White  was  a  conservative,  close-fisted  fellow,  and  of  course  the  prospect  of 
having  to  lose  his  business  was  sufficient,  so  that  ultimately  it  was  settled 
and  agreed  that  Mr.  White  could  sell  this  car  of  oil  if  he  would  agree  not  to 
buy  any  more  of  this  oil,  but  to  buy  his  oil  from  that  trust.  I  guess  that  is 
all  I  have  to  say  on  that. 

Q.  (By  Vice-chairman  PHILLIPS.)  Mr.  Lockwood,  the  Standard  Oil 
Company  have  become  quite  large  producers  of  oil,  have  they  not?  A. 
Yes,  sir. 

Q.  (By  Vice-Chairman  PHILLIPS.)  They  own  a  very  large  per  cent,  of 
the  Ohio  oil  field?    A.  Yes,  sir. 

Q.  (By  Vice-chairman  PHILLIPS.)  What  is  called  the  Lima  oil,  do 
they  not?    A.  Yes,  sir. 

Q.  (By  Vice-chairman  PHILLIPS.)  Well,  did  they  purchase  that  after 
having  a  long  depression  in  the  Lima  oil,  after  the  price  had  fallen,  didn't 
you  say,  10,  15  or  20  cents — somewhere  around  there?    A.  Yes,  sir. 

Q.  (By  Vice-chairman  PHILLIPS.)  When  they  entered  that  field,  and 
purchased  a  large  body  of  it,  wasn't  it  very  cheap,  and  did  they  fix  the  price? 
A.  Let  me  state  that:  I  remember  that  development  very  well.  When  the 
first  oil  was  struck  in  Ohio,  the  independent  people  were  interested  in  this 
oil,  went  out  and  found  a  market  for  it  for  fuel  and  manufacturing  purposes, 
and  they  were  unable  to  get  over  40  to  50  cents  for  this  oil  at  the  wells.  That 
is  all  it  would  net  them  after  they  had  paid  the  expenses  of  delivering  it. 
Finally,  the  Standard  Oil  Company  reached  out  after  this  good  development, 
and  by  the  manipulation  of  the  railways  they  interfered  with  the  independ- 
ents and  got  control,  and  pulled  that  oil  down  to  15  cents  a  barrel — 15  cents 
a  barrel — and  they  held  that  oil  down  to  15  cents  a  barrel  in  Ohio  until 
they  broke  the  hearts  of  the  producers,  and  bought  nearly  the  entire  country 
up  on  that  basis.     I  don't  know  anything  further. 

Q.  (By  Vice-chairman  PHILLIPS.)  Well,  they  fix  the  price  of  oil  now 
absolutely,  do  they  or  not,  by  telegraph?    *A.  Oh,  that  is  it. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Is  it,  or  not,  fixed  by  the  exchange, 
or  is  it  fixed  absolutely  by  the  Standard  Oil  Company?  A.  I  couldn't  just 
give  the  date,  but  it  is  on  record,  when  Joseph  Seep,  the  purchasing  agent, 
gave  notice  that  thereafter,  quite  a  number  of  years  ago,  the  price  of  oil  upon 
the  exchange  would  not  be  the  price  that  they  would  pay  for  oil — that  they 
would  fix  the  oil  price  for  credit  balances.  That  is,  on  what  the  producers 
had  and  wanted  to  sell,  they  would  make  the  market;  and  from  that  time 
since  they  have  fixed  this  price.  Often  there  has  been  quite  a  wide  range  of 
difference  between  what  the  price  of  oil  would  be  upon  the  floor  of  the 
exchange  and  what  the  Standard  Oil  Company  would  fix  as  the  price  for 
credit  balances. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Now,  Mr.  Lockwood,  you  have 
spoken  about  the  reduction  of  the  price  of  oil  in  Ohio.  Have  the  Standard 
Oil  Company  not  bought  a  large  amount  of  producing  property  in  the  Penn- 
sylvania and  Virginia  fields,  and  when  they  made  those  purchases  was  not 
oil  at  an  extremely  low  price,  as  a  rule.  A.  I  think  their  policy  has  been  to 
depress  the  price  of  oil  and  discourage  men  who  had  oil  property,  and  who 
were  discouraged  with  it.  until  this  discouragement  would  reach  a  point  at 
which  they  could  go  to  these  men  and  buy  their  property.  They  bought  a 
very  large  amount  of  property  just  before  the  great  rise  which  occurred 
after  they  had  bought  all  the  property  they  could. 

Q.  (By  Vice-chairman  PHILLIPS.)  Was  that  along  about  1896  or 
1897?  A.  Yes,  sir;  1896  or  1897,t  after  they  had  bought  all  the  property 
they  could,  the  market  went  up  very  high;  as  high,  I  think,  as  $2.60,  and  had 
quite  a  high  range  of  values  for  quite  a  long  period.  Evidently  they  had  in 
mind  the  idea  of  depressing  these  prices  and  obtaining  this  property,  but  the 
law  of  supply  and  demand  will  ultimately  make  itself  felt.  For  instance,  the 
low  price  at  which  they  had  maintained  the  oil  had  impoverished  producers 
and  stopped  their  development;  and  finally,  as  a  result  of  that  long  depres- 
sion, stocks  ran  down  in  the  storage  tanks  to  between  four  and  five  millions 


♦Black  faced   type  Indicates  matter  omitted,  in  the  course  of  editing-,  from   the 
offlcial  report. 

tThls  high  range  of  prices  occurred  April  17,  1895. 


166  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

of  barrels.  Then  this  movement,  in  which  they  fixed  a  very  extreme  ficti- 
tious price,  was  for  the  purpose  of  getting  everybody  excited  and  getting  all 
the  producers  out  in  the  field  to  develop  new  territory  and  increase  the  sup- 
ply of  oil. 

Q.  (By  Vice-chairman  PHILLIPS.)  But  did  not  that  great  advance, 
when  the  purchase  of  that  territory  was  made,  aid  them  in  paying  for  it? 
Did  they  not  advance  the  price  of  refined  oil?  A.  Yes.  sir;  very  largely.  I 
cannot  give  you  the  figures,  but  I  have  them  here.  I  can  give  the  commis- 
sion the  benefit  of  those  figures. 

Q.  (By  Vice-chairman  PHILLIPS.)  Do  you  think,  then,  that  they  as- 
sessed the  world  to  pay  for  this  property,  or  not?  A.  Yes,  sir;  two  or  three 
times  over — or  forty  times  over. 

Q.  (By  Vice-Chairman  PHILLIPS.)  When  they  have  bought  out  pipe 
lines,  as  a  rule,  they  have  depressed  the  price  of  oil,  have  they  not?  A. 
Always;  I  think  I  can  show  that  to  the  commission. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Back  to  whom,  then,  would  they  go 
to  pay  for  these  pipe  lines?  A.  Four  or  five  times  over  the  amount  would 
come  from  the  producers.  I  gave  the  commission  a  statement  of  how  they 
pulled  the  price  from  $1.30  down  to  53  cents  a  barrel. 

Q.  (By  Vice-chairman  PHILLIPS.)  Do  you.  or  do  you  not.  think  that 
w^hen  they  buy  a  large  amount  of  property  they  are  enabled  to  assess  the 
consumers,  not  only  of  this  country,  but  of  the  world,  to  pay  for  it?  Have 
they  had  entire  power  to  do  that?  A.  They  practically  can  control  the  mar- 
kets of  the  world,  and  they  are  working  them  to  get  all  out  of  them  they  can. 

Q.    (By  Vice-Chairman  PHILLIPS.)     When  they  buy  out  a  pipe  line  at  a 

large  price,  and  depress  the  price  of  oil A.  The  producers  have  to  pay 

for  that  pipe  line  two  or  three  times  over;  or  forty  times  over. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Have  you  any  brief  statement  to 
make.  Mr.  Lockwood,  before  we  conclude?     A.  I  have  nothing  further. 

Vice-Chairman  PHILLIPS.  I  will  state  that  I  am  authorized  by  the 
commission  to  return  the  thanks  of  this  commission  to  you  for  your  very 
clear,  full  and  frank  statement  of  this  matter. 

The  WITNESS.     And  1  am  very  much  obliged  to  the  commission. 


CHAPTER  X. 

TESTIMONY  OF  FRANK  S.  MONNETT,  ATTORNEY- 
GENERAL  OF  THE  STATE  OF  OHIO. 

Mr.  Frank  S.  Monnett.  of  Columbus,  Ohio,  Attorney-General  of  the  State 
of  Ohio,  appeared  before  the  Industrial  Commission  on  May  16,  1899.  Mr. 
Monnett's  testimony  was  merely  a  review  of  his  own  official  acts  as  Attorney- 
General  of  the  State  of  Ohio,  and  of  the  testimony  that  had  been  taken  in 
the  case  of  the  State  of  Ohio  vs.  the  Standard  Oil  Company  of  Ohio,  which 
had  been  pending  since  1891. 

A  comparison  of  the  testimony  of  Mr.  Monnett  as  actually  given  and  ag 
shown  in  the  official  report  indicates  that  in  a  large  measure  it  was  practi- 
cally re-written,  without  regard  to  the  wording  of  the  original  testimony. 
This  was;  leally  necessary  in  order  to  make  the  story  told  by  Mr.  Monnett 
read  with  some  degree  of  consecutiveness  of  thought,  the  report  of  his 
remarks  while  on  the  stand  showing  a  very  disjointed  manner  in  recounting 
what  he  had  to  say  about  the  Standard  Oil  Company. 

Mr.  Monnett  said  that  the  secret  power  of  the  Standard  Oil  Company 
would  be  found  in  the  discriminating  favors  they  get  through  having  an 
absolute  monopoly  of  the  transportation  of  crude  oil  and  by  means  of  vari- 
ous devices,  "even  authorized  by  statutes  that  should  be  repealed."  This 
statement  that  the  Standard  Oil  Company  receives  discriminating  favors 
that  are  "authorized   by   statutes   that   should   be   repealed"   was  eliminated 


FRANK   S.   MONNETT. 


167 


from  the  official  report  of  the  testimony.  Instead  of  the  elimination  of  so 
important  an  assertion,  it  would  have  been  interesting  had  Mr.  Monnett 
pointed  out  the  statutes  he  referred  to.  It  seems  strange  that  the  Attorney- 
General  of  a  great  State  like  Ohio  should  go  on  the  stand  at  Washington 
and  before  a  government  commission  make  such  a  statement.  The  follow- 
ing quotations  from  the  testimony  as  shown  by  the  stenographic  report  and 
as  officially  published  show  how  Mr.  Monnett's  statement  was  modified: 


STENOGRAPHIC  REPORT. 

*  *  *  In  other  words,  the  secret 
of  the  power  of  the  Standard  Oil 
Company's  trust  will  be  found  in  the 
discriminating  favors  that  they  get 
through  having  an  absolute  control 
and  monopoly  of  the  transportation 
of  the  crude  product,  and  the  discrim- 
inating favors  they  receive  by  the 
various  devices,  even  authorized  by 
statutes  that  should  be  repealed 
where  such  exist,  giving  a  discrim- 
inating rate  in  favor  of  carload  lots, 
giving  them  a  discrimination  for 
loading  and  unloading  their  own 
product. 


OFFICIAL  REPORT   (p.  299). 

*  *  *  In  other  words,  the  secret 
of  the  power  of  the  Standard  Oil 
Trust  will  be  found  to  be  the  dis- 
criminations or  favors  that  they  se- 
cure by  controlling  or  monopolizing 
the  transportation  of  the  crude  prod- 
uct and  the  discriminations  they  re- 
ceive by  various  devices  in  trans- 
porting the  refined  oil,  e.  g.,  the 
discriminating  rate  in  favor  of  car- 
load lots  and  train  loads,  with  allow- 
ances for  loading  and  unloading  their 
own  product. 


Again  Mr.  Monnett  asserted  that  there  was  "some  arrangement"  be- 
tween railroads  and  pipe  line  companies  by  which  the  former  raised  their 
rates  when  paralleled  by  a  pipe  line,  instead  of  lowering  them.  One  would 
have  expected  such  a  charge  of  an  "arrangement"  between  railroads  and 
pipe  lines  to  have  been  sustained  by  the  offering  of  proof.  The  fact  is  that 
in  the  official  report  of  the  testimony  the  charge  of  "some  arrangement"  be- 
tween railroads  and  pipe  line  companies  has  been  eliminated.  The  steno- 
graphic and  official  reports  of  this  testimony  follow: 


STENOGRAPHIC  REPORT. 

*  *  *  If  you  go  into  the  freight 
department  you  will  find  that  these 
classifications  were  often  violently 
changed,  and  freight  actually  in- 
creased after  a  competing  pipe  line 
company  was  placed  alongside  of  a 
railroad  that  formerly  had  a  given 
rate.  Instead  of  competition,  by  pipe 
lines  paralleling  a  railroad,  lowering 
the  rate,  it  actually,  by  some  arrange- 
ment between  them,  raised  the  price, 
so  that  the  independent  shipper,  who 
heretofore,  because  of  regular  rates, 
over  the  railroad  had  a  fair  chance, 
now  will  not  have  any,  because  the 
rates  have  been  raised  on  him  and  he 
will  be  obliged  to  pay  their  own 
prices  if  he  ships  through  the  pipe 
lines.     *     *     * 


OFFICIAL  REPORT   (p.  299). 

*  *  *  If  you  examine  the  freight 
charges  in  cases  where  a  competing 
pipe  line  has  been  constructed  along 
a  railroad,  that  formerly  had  a  fixed 
rate,  you  will  find  that  instead  of  the 
competititve  pipe  line  which  paral- 
lels the  railroad  lowering  the  price, 
it  has  absolutely  raised  it,  showing 
that  the  independent  shipper  is  dis- 
criminated against.  He  cannot  com- 
pete because  rates  have  been  raised, 
and  he  must  pay  their  price  if  he 
ships  through  the  pipe  line. 


In  his  testimony  Mr  Monnett  asserted  that  the  Standard  Oil  Company 
had  issued  more  than  the  original  issue  of  trust  certificates.  This  statement 
v/as  modified  in  the  official  report  of  testimony  so  as  to  make  him  say  in 
effect  that  the  Standard  Oil  Company  could  have  issued  more  than  the 
original  amount  of  trust  certificates  under  the  trust  agreement.     His  state- 


168 


REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 


ment  was  flatly  denied  by  Mr.  Archbold.  It  is  very  likely  that  Mr.  Archbold's 
contradiction  of  his  testimony  caused  him  to  reconsider  his  reckless  state- 
ment. 

The  testimony  as  shown  by  the  stenographic  report  and  as  it  appears  in 
the  official  report  follows: 


STENOGRAPHIC  REPORT. 

*  *  *  The  insinuation  has  been 
made  that  they  have  issued,  as  we 
could  show,  under  their  trust  agree- 
ment, much  more  than  the  original 
issue  of  trust  certificates. 


OFFICIAL  REPORT    (p.   309). 

*  *  *  Considering  the  fact  that 
three-sevenths  of  the  trust  certifi- 
cates have  not  been  reconverted,  in 
connection  with  Mr.  Rockefeller's 
testimony  that  he  gets  his  Interest 
just  the  same  now  as  he  did  before, 
the  present  value  of  the  aggregate 
stock  of  the  companies  and  the  trust 
certificates  may  be  fairly  estimated 
at  $486,250,000,  provided  they  have 
not  issued,  as  they  could  under  the 
trust  agreement,  more  than  the  orig- 
inal amount  of  trust  certificates. 

In  referring  to  the  shipment  of  oil  by  pipe  lines,  Mr.  Monnett  said  the 
pipe  lines  affiliated  with  the  Standard  Oil  Company  charged  20  cents  a  barrel 
to  pipe  oil  when  that  service  cost  less  than  a  fraction  of  a  cent  a  barrel  a 
mile.  Such  a  statement  might  readily  be  calculated  to  mislead  a  casual 
reader  or  even  a  student  who  did  not  carefully  consider  such  language.  Of 
course  the  20  cents  a  barrel  referred  to  by  Mr.  Monnett  was  a  charge  for 
the  entire  district  and  the  fraction  of  a  cent  that  he  said  it  cost  to  pipe  oil 
was  for  each  mile  it  was  piped.  As  a  matter  of  fact  20  cents  a  barrel  fre- 
quently amounts  to  a  fraction  of  a  cent  per  mile. 

This  testimony  was  changed  when  it  appeared  in  the  official  report,  the 
testimony  as  actually  given  and  as  officially  reported  being  as  follows: 


STENOGRAPHIC  REPORT. 

Q.  (By  Professor  JENKS.)  Is  it 
your  idea  that  a  pipe  line  should  be 
forbidden  to  discriminate  in  rates,  or 
that  they  should  be  compelled  by  the 
government  to  hold  the  rates  down 
to  what  is  reasonable?  A.  In  the 
case  of  a  pipe  line,  where  they  are 
charging  20  cents  when  it  costs  less 
than  a  fraction  of  a  cent  a  barrel  a 
mile  to  ship  it,  it  is  an  abuse  of  a 
governmental  function  and  they 
ought  to  have  their  charter  taken 
from  them.  It  is  a  fair  deduction  and 
it  is  very  easy  to  deduce  that  that  is 
done  to  shut  out  competition.  A  com- 
petitor obliged  to  pay  that  rate  would 
be  like  ten  farmers,  one  of  them  hav- 
ing a  load  to  haul  is  charged  $1,  and 
everybody  else  is  served  free. 

Q.  Have  you  any  specific  sugges- 
tion as  to  how  that  rate  could  be  held 
down?  A.  The  Cudahys,  of  Chicago, 
would  run  a  pipe  line  at  once;  they 
have  been  five  years  running  a  line 
to  New  .lersey,  because  one  of  the 
independent  men  said  he  would  give 
$100,000  to  connect  there.  So  that 
the  government  ought,  wherever  a 
public  carrier  is  undertaking  to  throt- 


OFFICIAL    REPORT    (pp.    310-311). 

Q.  (By  Professor  JENKS.)  Is  it 
your  idea  that  the  pipe  line  compan- 
ies should  be  forbidden  to  discrim- 
inate, or  that  the  government  should 
hold  the  rates  down  to  what  is  rea- 
sonable? A.  If  a  pipe  line  company 
charges  20  cents  when  it  costs  less 
than  one-tenth  of  a  cent  a  barrel  per 
mile  for  shipping,  it  is  an  abuse  of  a 
governmental  function,  and  the  com- 
pany ought  to  have  its  charter  taken 
away  for  excessive  charges.  Persons 
obliged  to  compete  under  such  cir- 
cumstances are  like  farmers  who 
should  have  to  pay  $3  to  $5  a  load 
for  hauling  their  wheat,  while  some- 
one else  has  the  public  right  of  haul- 
ing his  for  a  dollar. 

Q.  Have  you  any  specific  sugges- 
tion as  to  how  that  rate  could 
be  held  down.  A.  The  Cuda- 
hys, at  Chicago,  would  run  a 
pipe  line;  they  have  been  for 
years  trying  to  get  a  pipe  line  privi- 
lege in  Indiana  and  Ohio.  One  of  the 
independent  men  of  New  York  said 
he  would  give  $42,000  for  three  miles 
of  line  to  connect  up  his  lines  with 
the  seaboard.     Wherever  a  common 


FRANK   S.   MONNETT.  169 

tie    a    competitor,    to    interfere    and  carrier   is   undertaking   to   thwart  a 

have  a  public  policy.     What  I  mean  competitor  the  government  ought  to 

when  I  say  public  policy  would  be  to  interfere.     If  the  owner  of  a  public 

oblige  them  to  submit  their  rates  to  utility  is  obliged  to  submit  his  rates 

open  competition  and  there  would  be  to  open  competition  there  will  be  no 

no  more   oppression  in  that  depart-  more  oppression  in  that  department 

ment  than  in  any  other.  than  in  any  other. 

The  witness  said  that  a  decree  had  been  rendered  on  March  2,  1892, 
against  the  Standard  Oil  Company  of  Ohio,  it  having  been  charged  with 
being  a  member  of  the  Standard  Oil  Trust,  or  being  one  of  the  constituent 
companies  of  the  Standard  Oil  Trust.  Under  the  orders  of  the  Supreme 
Court  of  the  State  of  Ohio,  in  November,  1897,  the  witness  said  he  was 
ordered  to  bring  the  Standard  Oil  Company  of  Ohio  before  the  court  on  the 
charge  of  contempt,  charging  it  with  having  violated  the  decree  rendered 
March  2,  1892,  in  not  withdrawing  from  the  trust  in  good  faith,  but  simply 
shifting  or  modifying  its  former  system  of  doing  business  so  as  to  still  get 
the  benefit  of  the  trust  combination  or  arrangement.  On  that  order  he  filed 
a  complaint  in  contempt,  to  which  complaint  the  court  gave  an  order  for  ser- 
vice upon  the  defendants,  and  the  defendants  thereupon  came  into  court 
with  an  answer,  attempting  to  justify  their  conduct  subsequent  to  the  decree 
Mr.  Monnett  said: 

*  *  *  *  to  which  answer  we  filed  a  reply  with  some  29  interroga- 
tories, addressed  to  the  president  of  the  Standard  Oil  Company,  who  was 
also  the  chairman  of  the  liquidating  trustees;  and  also  the  chairman  of  the 
former  nine  trustees  of  the  Standard  Oil  Trust,  Mr.  John  D.  Rockefeller,  of 
New  York,  formerly  of  Cleveland.  Ohio.  Mr.  Rockefeller  answered  those 
printed  questions  under  oath  in  part,  demurred  to  part,  which  under  our 
code  they  had  a  right  to  do,  and  a  part  of  them  he  refused  to  answer  on  the 
ground  that  they  were  irrelevant.  The  court  overruled  the  demurrer  and 
the  refusal  to  answer  the  main  interrogatory  that  was  objected  to,  and  then 
they  came  into  court  with  a  supplemental  list  of  answers.  Thereupon  we 
took  an  additional  order,  and  took  Mr.  Rockefeller's  testimony  in  the  way 
of  depositions  under  the  master  appointed,  and  from  that  testimony  I  will 
give  such  data  as  your  commission  cares  to  have.  In  their  testimony  dis- 
closed by  the  interrogatories  and  by  Mr.  Rockefeller  in  person,  and  the  sec- 
retary, Mr.  F.  B.  Squires,  of  Cleveland,  we  were  able  to  find  data  that  war- 
ranted the  State  in  filing  suits  against  such  of  the  constituent  companies  of 
the  original  trust  as  did  business  in  Ohio. 

We  filed  independent  suits  against  the  Buckeye  Pipe  Line  Company,  a 
constituent  company,  *making  substantially  four  causes  of  action.  The  first 
cause  of  action  against  tliem  was  on  the  ground  that  their  business  was 
against  the  public  policy  of  the  State  as  based  upon  the  Constitution.  The 
Attorney-General  instituted  that  proceeding  in  the  nature  of  a  quo  warranto, 
as  he  had  the  right  to  do  against  any  corporation  that  offends  against  any 
of  the  existing  statutes  of  the  State,  or  against  any  public  policy  of  the 
State.  Under  that  power,  vested  in  my  office,  I  began  the  suit,  as  I  have 
said,  against  the  Buckeye  Pipe  Line  Company,  which  is  the  company  that 
transports  the  crude  product.  We  also  began  suit  against  the  Ohio  Oil  Com- 
pany, which  is  a  company  that  is  known  as  the  producing  company  and 
makes  leases  or  contracts  with  the  owners  of  the  oil  in  the  land,  usually 
farmers.  We  also  brought  a  suit  against  the  Solar  Refining  Company,  which 
has  functions  substantially  the  same  as  the  Standard  Oil  Company  of  Ohio 
under  its  present  organization,  which  is  only  a  refining  company.  We  then 
brought  suit  against  the  Standard  Oil  Company  of  Ohio  anew,  and  in  each 
of  these  cases,  we  charged  them  with  violating  the  public  policy  of  the  State 
by  confederating  together  in  attempting  to  evade  the  decree  of  the  Supreme 
Court  in  the  decision  of  March  2,  1892,  in  the  Standard  Oil  cases  proper.  We 
had  a  second  cause  of  action  based  upon  what  was  known  as  our  Anti-Trust 
Act.  the  Stewart- Valentine  Act,  which  was  passed  a  year  ago  and  took  effect 
July  1.  1898. 


*Black  faced   type   indicates   m.Ttter   omitted.  In  the  course  of  editing,  from   the 
official  report. 


170  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

On  taking  the  testimony  at  Lima,  Ohio,  against  the  Buckeye  Pipe  Line 
Company,  it  was  disclosed  that  they  had  a  telegraph  system.  From  a  lawyer's 
standpoint,  the  company,  from  the  nature  of  the  business  they  were  doing, 
might  have  a  telegraph  system,  if  it  was  to  carry  on  their  own  private  busi- 
ness by  means  of  communication  between  the  different  posts.  We  conceded 
that.  But  in  the  testimony  it  was  disclosed  that  they  were  exchanging  busi- 
ness with  the  Western  Union  Telegraph  Company  and  that  they  had  a  sys- 
tem of  monthly  balances — that  they  were  acting  as  common  carriers  of  tele- 
graphic messages  for  Ohio,  for  whoever  applied  to  them.  It  was  stated  that 
they  even  produced  the  election  returns  and  other  news  in  advance  of  the 
regular  system,  and  that  they  were  exercising  this  franchise  outside  of  their 
corporate  authority,  so  that  we  made  it  an  additional  cause  of  action  against 
them,  charging  them  with  exercising  this  ultra  vires  act,  and  we  have  taken 
testimony  to  establish  that,  which  I  can  furnish  to  the  commission.  Under 
the  Ohio  law  it  would  be  necessary  for  them  to  have  a  special  charter  to  do 
that  class  of  business. 

It  was  also  disclosed  and  is  in  evidence,  as  claimed  by  the  State,  that  in 
the  relationship  existing  between  the  constituent  companies  to  which  I  will 
refer  later,  they  had  separate  telegraphic  contracts  for  the  Ohio  Oil  Company, 
the  Buckeye  Pipe  Line  Company  and  the  Solar  Refining  Company,  differing 
from  those  they  had  with  their  customers  or  the  public  generally.  They  used 
the  Western  Union  contract  for  the  ordinary  telegraphic  service,  but  they 
had  a  separate  contract  and  a  separate  account  for  each  of  these  constituent 
companies,  raising  the  legal  presumption,  as  we  claim  from  the  evidence, 
that  they  had  the  system  organized  about  as  follows:  They  have  a  produc- 
ing company,  the  Ohio  Oil  Company,  that  makes  the  original  contract  with 
the  owners.  That  oil,  known  as  the  crude  product,  is  then  turned  over  to  the 
Buckeye  Pipe  Line  Company  which,  in  conjunction  with  the  other  pipe  line 
companies  makes  a  complete  system,  and  is  all  one  system,  as  we  understand 
it,  the  Buckeye  Pipe  Line  Company  having  the  Ohio  field,  and  doing  business 
in  Indiana  also.  Subsequent  to  this  suit  they  also  turned  over  the  Indiana 
field  to  the  Indiana  Pipe  Line  Company,  which  is  also  one  of  the  constituent 
companies,  as  we  understand  it.  Then  from  the  "crude"  or  transporting 
department,  with  its  telegraphic  system  connected  with  all  of  their  pipe 
lines,  they  transferred  the  oil  to  their  respective  refineries  at  Whiting,  Ind., 
a  suburb  of  Chicago  practically;  at  Cleveland,  Ohio,  known  as  the  Standard 
Oil  Company  of  Ohio  proper;  and  to  the  Solar  Refinery  at  Lima.  They  have  a 
refinery  at  Parkersburg.  W.  Va. — well,  they  formerly  had,  and  I  will  refer  to 
that  later.  From  the  Buckeye  Pipe  Line  Company  the  oil  goes  to  the  refiner- 
ies thpn  the  refined  product,  the  kerosene  and  the  gasoline,  is  transported  to 
the  consumers,  through  another  constituent  company,  the  Union  Tank  Line 
Company,  and  from  the  Union  Tank  Line  to  the  consumers  they  have  a 
system  of  tankage  stations.  I  mean  by  that,  distributing  points,  county 
seats  of  three  to  five  thousand  upward,  to  the  largest  cities.  Then  through 
contracts  with  the  railroads,  which  you  can  go  into  more  fully  than  we  have 
*authority  to  do  under  the  present  suit,  you  will  find  the  relationship  exist- 
ing between  the  Union  Tank  Line  system  and  the  railroads,  *and  this  bit  of 
evidence  will  be  important  for  you  to  develop,  I  think.  They  got  a  rate  on  a 
car  load  or  train  load  on  their  tank  line,  shipped  to  a  tank  station,  with  an 
allowance  for  loading  and  unloading  their  own  product,  varying,  if  I  under- 
stand it,  between  a  part  car  load  and  barrel  lots,  where  the  company  load 
and  unload  its  own  cars.  I  think  the  testimony  in  the  trust  investigation  of 
Ohio,  or  somewhere,  gives  the  difference  of  a  discrimination  between  ship- 
ping by  the  Union  Tank  Line,  car  load  lots,  and  delivering  in  tank  stations, 
and  the  rate  that  is  established  on  particular  carload  lotr,  and  short  distances 
is  as  much  as  400  per  cent,  against  the  small  producer.  The  State  claims 
that  this  is  one  of  the  means  by  which  they  gained  a  preference  as  shippers, 
means  which  they  have  of  defeating  competition.  *because  they  have  the 
advantage  in  the  transportation  department,  outside  of  the  original  advan- 
tage in  the  crude  transportation.  In  other  words,  the  secret  of  the  power 
of  the  Standard  Oil  Company's  trust  will  be  found  to  be  the  discriminating 


*Rlack   faced   type   Indicates   matter   omiltrd,  in  the  course  (if  editing,   from   the 
official  report. 


FRANK  S.   MONNETT.  171 

favors  that  they  get  through  having  an  absolute  control  and  monopoly  of  the 
transportation  of  the  crude  product,  and  the  discriminating  favors  they 
receive  by  the  various  devices,  *even  authorized  by  statutes  that  should  be 
repealed  where  such  exist,  giving  a  discriminating  rate  in  favor  of  car  load 
lots,  giving  them  a  discrimination  for  loading  and  unloading  their  own 
product." 

Q.  (By  Professor  JENKS.)  You  understand  this  discrimination  to  be, 
in  spirit,  at  any  rate,  in  violation  of  the  interstate  commerce  act?  A.  The 
interstate  commerce  act  applies  only  to  interstate  commerce.  I  am  speaking 
of  Ohio  and  Ohio  rates,  but  on  examination  you  will  find  that  they  are  per- 
mitted to  have  a  more  favorable  rate  for  car  load  lots  and  in  tanks  than  they 
will  for  barrel  lots.  The  argument  that  they  will  adduce  to  you  is  that  the 
return  of  gasoline  barrels  or  a  part  car  load  of  oil  contaminates  all  other 
groceries  and  they  cannot  ship  in  that  way,  but  the  one  thing  we  know  in 
practice  is  that  they  do  ship  furniture  and  plows,  and  of  course  hardware, 
that  are  classified.  If  you  go  into  the  freight  department  you  will  find  *that 
these  classifications  were  often  violently  changed,  and  freight  actually 
increased  after  a  competing  pipe  line  company  was  placed  alongside  of  a 
railroad  that  formerly  nad  a  given  rate.  Instead  of  competition  by  pipe  lines 
paralleling  a  railroad,  lowering  the  rate,  it  actually,  by  some  arrangement 
between  them,  raised  the  price,  so  that  the  independent  shipper,  who  here- 
tofore, because  of  regular  rates  over  the  railroad,  had  a  fair  chance,  now  will 
not  have  any,  because  the  rates  have  been  raised  on  him  and  he  will  be 
obliged  to  pay  their  own  prices  if  he  ships  through  the  pipe  lines.  I  will  now 
take  this  matter  up  and  give  you  the  figures  accurately,  if  you  care  for  them, 
starting  with  the  Standard  Oil  Company  of  Ohio,  when  and  how  it  entered 
into  the  trust,  and  the  names  of  the  constituent  companies,  with  the  capital 
stock.     I  can  furnish  the  commission  that,  if  you  wish  it. 

Q.  Yes.  if  you  please.  Have  you  also  the  dates  of  the  organization  of 
the  different  companies,  with  the  names  of  the  officers — that  is,  of  the  lead- 
ing officers?  A.  Yes,  sir;  I  can  furnish  you  that,  too.  The  Standard  Oil 
Company  of  Ohio  (I  start  with  them,  because  I  think  it  is  the  Ohio  talent 
that  got  the  credit  of  organizing  this  wonderful  corporation)  was  organized 
oric-inally  on  the  10th  day  of  January,  1870,  and  was  known  then  as  the 
Standard  Oil  Company.  It  had  a  million  dollars  stock.  It  increased  that  stock 
on  the  12th  day  of  February.  1872,  to  two  millions  and  a  half.  On  the  13th 
day  of  March,  A.  D.  1875,  it  increased  its  capital  stock,  by  State  authority — 
under  our  State  they  have  authority  to  do  that — to  three  millions  and  a  half. 
It  was  in  this  condition  from  187.5  to  January  2,  1882.  and  it  had  35,000  shares 
of  stock  at  the  par  value  of  $100  a  share.     *     *     * 

The  witness  said  all  this  stock,  except  seven  shares,  got  into  the  hands 
of  the  trustees  of  the  Standard  Oil  Trust  in  1882.  They  retained  enough  stock 
in  the  State  organization  to  hold  one  share  and  they  could  elect  a  president 
and  secre!ary.  Thirty-nine  constituent  companies  were  merged  into  20 
companies  that  were  the  original  constituent  companies  of  the  trust.  During 
the  year  1892  an  inventory  and  appraisement  showed  that  the  appraised  value 
of  these  20  constituent  companies  was  $121,631,312.63.  their  total  capitaliza- 
tion being  $102,233,700,  an  excess  of  appraised  value  over  their  capitalization 
of  $19,397,612.63. 

Mr.  Monnett  stated  that  the  Standard  Oil  Company  of  Ohio  was  to  appear 
before  the  Supreme  Court  of  the  State  of  Ohio  in  November  to  show  why 
they  did  not  obey  the  order  of  the  master  and  the  decree  of  the  court.  The 
court  adjourned  on  the  night  of  November  15  (Thursday)  and  they  were  to 
appear  before  the  court  on  the  following  Tuesday.     He  said: 

*  *  *  *  ^vg  £;ot  an  anonymous  communication  that  if  we  would  sub- 
poena certain  officers  they  would  be  compelled  to  testify  that  they  had 
burned  their  commercial  books,  some  16  boxes,  on  the  following  day.  The 
addresses  of  the  people  I  can  give  you.  I  will  9:ive  you  Mr.  McNirney's  testi- 
mony on  this  =ubiect.  *Thev  claimed  that  Mr.  Archboiri  was  very  much 
incensed  over  it  and  said  that  they  were  anarchists  and  laboring  men  that 
had  been  purchased  by  the  State,  but  he  withdrew  that  statement  afterwards. 


*Black  faced   type   indicates   matter   omitted,  in  the  course  of  editing,   from  the 
official  report. 


172  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

which  of  course  was  arrant  nonsense.  These  gentlemen  were  laboring  men 
and  men  connected  with  the  company  and  perfectly  honorable,  and  gave  the 
details  and  were  corroborated  in  many  important  features  of  their  testimony 
as  to  the  burning  of  the  books,  and  they  have  their  explanation  for  it  here 
also.  It  is  for  courts  to  draw  conclusions,  and  witnesses  to  give  the  facts. 
Mr.  McNirney,  a  resident  of  Cleveland,  Ohio,  and  an  employe  of  the  Standard 
Oil  Company,  testified  under  oath  as  to  the  burning  of  the  books  about  No- 
vember, or  the  latter  part  of  December,  or  the  early  part  of  January,  I 
would  say. 

Q.  (By  Professor  JENKS.)  Perhaps  you  will  be  able  to  find  it  later.  A. 
Yes,  sir.  They  have  what  they  call  car  building  works  on  Broadway,  and 
they  have  their  offices  on  Euclid  avenue,  in  the  Standard  block.  He  says  he 
was  called  on  Saturday,  the  19th  of  November,  to  the  general  offices,  to  do 
work  there.  We  adjourned  taking  the  depositions  when  Mr.  Squires,  the  sec- 
retary, refused  to  produce  these  commercial  books  called  for  under  the  orders 
of  the  court,  and  under  the  interrogations  of  the  Attorney-General.  (Reading 
from  the  testimony  of  Mr.  McNirney)  : 

"A.  The  first  thing  we  done  was  to  lower  a  lot  of  books  from  the  fifth 
story  to  the  ground  floor.  Q.  Lower  them?  A.  I  dicfn't  say  books.  I  say 
boxes.  I  don't  know  what  was  in  the  boxes.  To  lower  a  lot  of  freight  boxes; 
we  call  them  supply  boxes.  Q.  Whom  did  you  lower  them  to?  What  team- 
sters, if  you  know  any  of  them?  A.  There  was  a  teamster  there,  but  we  was 
going  to  take  the  books — I  say  the  boxes — out  in  front,  but  as  I  understood, 
the  janitor  objected  and  said  we  must  not  take  them  out  in  front,  we  must 
take  them  out  in  the  rear  of  the  building.  Q.  You  lowered  these  boxes  with 
a  tackle  from  the  rear  window.  A.  No,  on  the  passenger  elevator.  Q.  What 
was  done  with  them  after  that?  You  lowered  them  with  that?  A.  With 
that:  yes,  sir." 

*!  will  cut  this  down.  He  told  about  putting  up  the  block  and  tackle  he 
brought  down  from  the  shops  from  the  rear  of  the  room.  They  lowered  the 
16  boxes,  giving  the  weight  of  them  and  the  size  of  them,  weighing  as  much 
as  250  pounds,  with  a  Mr.  Gabelein  and  a  Mr.  Moran,  who  testified  aftewards 
as  to  the  contents.  They  took  them  first  to  the  car  works  furnace,  and  they 
choked  the  steam  so  that  they  had  to  remove  them  to  the  other  furnace. 
They  took  most  of  them  that  night,  and  part  the  next  night,  and  burned  them. 
This  is  all  substantiated.     I   will   furnish  you  with  the  ekact  testimony. t 

Q.  (By  Professor  JENKS.)  It  is  your  belief  that  the  books  that  were 
burned  were  the  ones  that  you  had  required  Mr.  Squires  to  produce  in  court? 
A.  It  is  a  fair  legal  presumption,  from  the  testimony  and  from  the  size  of 
the  books  and  the  size  and  number  of  the  boxes,  and  the  circumstance  of  their 
refusing  to  produce  them  afterward,  although  Mr.  Kline  afterward  in  open 
court  stated  that  they  had  not  destroyed  them,  that  they  had  them  yet  and 
they  would  not  produce  them  at  the  request  of  the  Chief  Justice  in  the  other 
court;  that  they  still  refused  to  produce  them,  relying  upon  their  constitu- 
tional privilege  to  refuse  to  answer.  I  will  furnish  you  the  exact  testimony 
as  to  the  burning  of  the  books,  before  your  conclusion.  The  only  purpose  I 
have  in  citing  this  in  this  hearing  is  to  show  that  we  are  dependent  upon 
mere  conclusions  as  to  the  profits  and  how  they  distributed  them,  and  so 
on,  and  the  reason  being  that  we  do  not  have  the  substantive  evidence. 

Mr.  Monnett  continued  to  testify  concerning  the  financial  affairs  of  the 
Standard  Oil  Company  of  Ohio.  He  said  that  Mr.  John  D.  Rockefeller  received 
perhaps  four  times  as  many  of  the  original  trust  certificates  as  were  issued 
to  any  other  one  man.  He  said  the  trust  organization  was  a  scheme  where- 
by, after  they  were  in  the  trust  with  nine  other  trustees,  Mr.  Rockefeller 
was  in  control.     The  whole  organization  was  a  one-man  power. 

He  said  that  the  liquidating  trustees,  representing  the  Standard  Oil 
Trust,  held  their  meeting  at  26  Broadway,  November  3,  1898,  or  December 
15,  1898,  and  adopted  the  following  resolution:  "Resolved,  That  there  be 
divided   from  the  income  of  the  stock  still  remaining  in  the  hands  of  the 


•Black  faced  type  indicates  matter  omitted.  In  the  course  of  editing,  from  the 
official  report. 

vOver  three  p!if,'e.s  of  the  nfncinl  report  are  taken  up  with  extracts  from  Mc- 
Nlrney's  testimony. 


FRANK   S.  MONNETT.  173 

liquidating  trustees  a  sum  equal  to  $3  upon  each  share  of  said  trust,  quar- 
terly; also  a  further  special  sum  equal  to  $4  upon  each  share  of  said  trust, 
payable  on  and  after  December  15,  and  that  the  transfer  books  be  closed 
from  3  p.  m.,  November  16,  to  10  a.  m.,  December  16,  1898." 

He  said  that  the  dividend  of  $3  a  share  quarterly  gave  $12,000,000  per 
annum.  This  dividend  was  only  on  the  trust  certificates.  He  said  that  on 
November  30,  1895,  they  paid  $5  upon  each  share  of  trust  stock,  and  on  March 
17,  1896,  $3  a  share  and  $10  extra.  This  last  mentioned  rate  of  payment 
amounted  to  $13,000,000  in  that  quarter.  On  August  1,  1896,  they  paid  out  a 
quarterly  dividend  of  $3  a  share  and  $7  extra,  which  made  that  dividend 
$10,000,000.  On  the  following  November  15,  they  paid  $3  regular  and  $2 
extra  quarterly  dividend.  On  February  17,  1897,  their  quarterly  dividends 
were  $3  regular  and  $7  extra;  on  May  19,  1897,  $3  regular  and  $7  extra;  on 
August  16,  1897,  $3  regular  and  $2  extra;  on  November  17,  1897,  $3  regular 
and  $5  extra. 

The  witness  said:  "The  insinuation  has  been  made  that  they  have  issued, 
as  we  could  show  under  their  trust  agreement,  much  more  than  the  original 
issue  of  trust  certificates."* 

Mr.  Monnett  referred  to  the  testimony  of  Mr.  F.  B.  Squires  and  Mr.  T.  F. 
Davis,  of  Marietta,  Ohio.  He  quoted,  from  memory,  statements  made  by  Mr. 
Davis  during  the  Ohio  investigation  to  the  effect  that  the  Standard  Oil  Com- 
pany had  practically  dismantled  all  the  competing  oil  refineries  down  to 
Marietta  and  Parkersburg.  He  advised  the  commission  to  secure  Mr.  Davis 
as  a  witness  before  it. 

Mr.  Monnett  said  the  commission  would  find  that  the  control  of  trans- 
portation was  the  source  of  the  maintenance  of  discrimination  in  nearly  all 
commercial  trusts. 

Q.  (By  Professor  JENKS.)  Is  it  your  idea  that  a  pipe  line  should  be 
forbidden  to  discriminate  in  rates,  or  that  they  should  lie  compelled  by  the 
government  to  hold  the  rates  down  to  what  is  reasonable?  A.  In  the  case  of 
a  pipe  line,  where  they  are  charging  20  cents  when  it  costs  less  than  a  frac- 
tion of  a  cent  a  barrel  a  mile  to  ship  it,  it  is  an  abuse  of  a  governmental 
function  and  they  ought  to  have  their  charter  taken  from  them,  vlt  is  a  fair 
deduction,  and  it  is  very  easy  to  deduce,  that  that  is  done  to  shut  out  com- 
petition. A  competitor  obliged  to  pay  that  rate  would  be  like  ten  farmers, 
one  of  them  having  a  load  to  haul  is  charged  $1  and  everybody  else  is  served 
free. 

Q.  Have  you  any  specific  suggestion  as  to  how  that  rate  could  be  held 
down?  A.  The  Cudahys,  of  Chicago,  would  run  a  pipe  line  at  once;  they 
have  been  for  five  years  running  a  line  to  New  Jersey,  because  one  of  the 
independent  men  said  he  would  give  $100,000  to  connect  there.  So  that  the 
government  ought,  wherever  a  public  carrier  is  undertaking  to  throttle  a 
competitor,  to  interefere,  and  have  a  public  policy.  What  I  mean,  w-hen  I 
say  public  policy,  would  be  to  oblige  them  to  submit  their  rates  to  open  com- 
petition and  there  would  be  no  more  oppression  in  that  department  than  in 
any  other. 

In  summing  up  the  profits  made  by  the  Standard  Oil  Company,  Mr.  Mon- 
nett said: 

"At  their  non-competitive  price  of  oil,  at  $4  a  barrel  at  retail,  taking 
their  data,  their  gross  receipts  for  Ohio  oil  would  be  about  $120,000,000  a 
year." 

Mr.  Monnett  said  that  the  Standard  Oil  Company  of  Ohio,  after  the  suit 
in  which  he  had  figured  had  been  begun  against  them,  had  organized  what 
was  known  as  the  Jennings  Publishing  and  Advertising  Agency,  and  they 
had  found  several  men  who  had  received  marked  copies  of  certain  news- 
papers in  Ohio,  defending  the  Standard  Oil  Company.  They  had  taken  various 
means  to  secure  articles  defending  themselves  published  in  newspapers. 

The  witness  referred  to  the  testimony  of  W.  H.  Clark  during  the  Ohio 
investigation.  He  said  he  thought  Mr.  Clark  could  give  "valuable  informa- 
tion and  exact  data  for  the  commission."  Mr.  Clark  was  later  called  before 
the  commission  and  testified  regarding  matters  referred  to  by  Mr.  Monnett. 


♦This  statement  was  greatly  modified  in  the  official  report,  as  shown  in  the 
introduction  to  Mr.  Monnett's  testimony. 

tBlaclc  faced  type  indicates  matter  emitted,  in  the  course  of  editing,  from  the 
official  report. 


174  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

He  said  that  the  testimony  in  the  Ohio  investigation  had  disclosed  the 
fact  that  the  Standard  Oil  people  had  been  nourishing  three-sevenths  of  their 
trust  certificates,  notwithstanding  the  decree  of  the  court  dissolving  the 
Standard  Oil  Trust.  That,  he  said,  it  was  charged,  was  an  offense  sufficient 
to  revoke  their  charter.  If  that  should  be  done  the  crude  petroleum  that 
passes  through  Ohio  would  be  in  the  hands  of  a  company  under  the  control 
of  the  State  and  that  would  give  competition  and  an  equal  chance  to  all  pro- 
ducers.   If  that  could  be  done,  no  further  legislation  would  be  necessary. 

Mr.  Monnett  said  that  oil  could  be  retailed  at  four  cents  a  gallon  in  the 
larger  centers  in  Ohio  at  a  profit.  In  other  places  outside  of  Ohio  the  cost  of 
transportation  would  be  added  to  this  price.  He  said  that  it  was  true  of  oil 
as  well  as  other  things  entering  into  competition  that  the  through  rate  is 
made  up  by  an  excessive  local  rate. 

Mr.  Kennedy  asked  the  witness  whether  he  had  any  knowledge  of  at- 
tempts by  the  Standard  Oil  Company  to  interfere  with  judicial  proceedings 
against  them  by  resorting  to  bribery. 

The  witness  said  that  the  bribery  charge  had  been  made  officially  in  the 
Supreme  Court  of  Ohio.  He  did  not  think  it  advisable  for  him  to  go  into  the 
merits  of  the  pending  case,  it  being  a  matter  peculiarly  personal  to  the  court. 

He  said  that  the  testimony  in  the  Ohio  investigation  showed  that  the 
Standard  Oil  Company  paid  different  people  to  furnish  them  information, 
that  they  paid  railroad  employes  to  give  information  regarding  oil  of  their 
competitors  passing  over  the  line  on  which  they  worked,  and  paid  men  to 
tell  them  the  names  of  their  competitors'  customers.  He  said  they  had  hired 
a  rival's  clerk  to  give  such  information. 

Mr.  Monnett  referred  to  cases  in  ^which  pipe  lines  were  put  alongside  of 
railroads  and  the  rate  of  the  railroad  company  on  oil  was  increased.  He  said 
the  ordinary  result  of  such  a  severe  competition  by  pipe  lines  should  be  to 
lower  the  rates. 

"You  can  draw  your  inference,"  he  said,  "that  by  some  arrangement  the 
freight  instead  of  being  lowered  by  competition  in  these  particular  cases  was 
raised.    I  am  basing  that,  of  course,  on  testimony." 

Q.  (By  Mr.  KENNEDY.)  Are  you  prepared  to  say  on  what  railroad?  A.  I 
think  when  that  came  out  they  spoke  of  the  Erie  in  the  original  fight,  and  the 
C.  &  N.  down  to  Macksburg  was  one  of  the  originals  charged,  and  the  Lake 
Shore  was  charged  with  that,  I  think,  originally,  in  the  contest  in  which  Vir- 
gil B.  Kline  was  fighting  the  Lake  Shore  on  the  discrimination  of  rates. 

He  did  not  think  the  Standard  Oil  Company  could  claim  the  credit  for 
reducing  the  price  of  oil.  He  gave  a  number  of  instances  to  show  that  prices 
of  oil  in  different  places  were  not  uniform.  He  said  the  Standard  Oil  Com- 
pany had  taken  advantage,  as  they  had  a  right  to  do,  of  each  patented  im- 
provement for  taking  sulphur  out  of  oil.  They  also  had  made  an  improve- 
ment for  getting  an  increased  profit  out  of  a  by-product,  and  there  had  been 
a  great  improvement  in  cheapening  the  prices  of  boring  for  oil.  The  Stand- 
ard Oil  Company  had  simplified  the  method  of  transporting  crudp  oil 
through  their  pipe  line  system,  which  he  declared  had  originally  been  intro- 
duced by  others. 

Mr.  Monnett  said  there  was  only  a  limited  competition  in  the  oil  business 
in  Ohio.  Scofield,  Shurmer  &  Teagle  and  a  man  by  the  name  of  Shields  at 
Mansfield  were  competing  with  the  Standard.  He  said  Scofield,  Shurmer  & 
Teagle  originally  had  a  contract  whereby  they  were  limited  in  the  amount 
of  their  production.  The  Standard  Oil  Company  had  no  successful  competi- 
tion in  pipe  line  nor  tank  line  services,  and  they  had  driven  competition  out 
by  unfair  means- — by  means  of  railroad  freight  discriminations  and  selling 
oil  at  non-competitive  prices.  While  they  were  selling  at  a  low  price  to  drive 
out  competition  in  one  place,  they  could  use  their  other  territory  to  make 
up  any  losses  incurred.  Ho  said  they  have  expert  prospectors  that  are 
always  on  the  ground  the  moment  a  new  field  is  discovered,  with  their  sys- 
tem of  transportation  to  control  the  sale  of  the  oil  of  the  territory. 

The  witness  said  that  he  did  not  know  how  much  of  the  crude  product  of 
oil  in  the  United  States  is  owned  by  the  Standard  Oil  Company  but  he  thought 
it  was  more  than  half;  their  proportion  of  ownership  was  greater  than  that 
in  Ohio.     He  said: 


FRANK  S.   MONNETT.  175 

"If  they  have  the  transportation  in  a  given  field  they  do  not  need  to  own 
any  of  it.  All  they  have  to  say  is  how  much  they  are  going  to  pay  for  it. 
They  can  fix  the  producers'  price.  Then  it  comes  to  be  with  them  a  propo- 
sition to  allow  the  producer  just  living  wages,  and  let  him  have  the  worry 
of  getting  the  oil  out  of  the  rock." 

The  witness  said  he  would  furnish  the  commission  a  pamphlet  that  had 
been  published  in  England  to  show  how  the  Standard  Oil  Company  prevented 
the  Russian  oil  companies  from  controlling  the  English  market. 

Mr.  Monnett,  when  asked  what  course  he  would  recommend  to  correct 
the  evils  complained  of,  said  that  States  granting  charters  to  corporations 
should  control  them  when  they  operate  within  the  States,  but  when  they  do 
an  interstate  business  he  thought  the  Industrial  Commission  should  suggest 
legislation  to  Congress  for  the  control  of  these  corporations  by  the  Federal 
government. 

He  explained  at  some  length  the  efforts  of  the  State  of  Ohio  to  control 
the  railroads  of  that  State  in  the  matter  of  transportation,  so  as  to  provide 
that  rates  between  different  points  in  the  State  should  not  be  greater  per 
mile  than  the  through  rates. 

Q.  (By  Representative  LIVINGSTON.)  *  *  *  Is  it  your  opinion  that 
the  evolution  that  is  now  going  on,  if  unchecked,  will  lead  to  a  control  of  the 
industries  of  this  country,  and  after  that  to  the  control  of  the  government 
by  a  few  hundred  or  a  few  thousand  men?  A.  Well  that  is  the  merest  con- 
jecture. I  feel  as  though  under  a  republican  form  of  government  we  have 
as  socialistic  a  form  of  government  as  man  has  ever  been  able  to  invent;  that 
as  long  as  people  have  the  opportunity  to  control  matters  in  the  line  I  have 
suggested  through  taking  away  charters  and  granting  of  charters,  a  condi- 
tion of  affairs  will  never  rise  whereby  monarchical  conditions  that  you  have 
suggested  will  be  substituted  for  the  republican  form  of  government.  To 
resist  that  sort  of  thing  is  what  we  had  the  revolution  for  and  what  we 
wanted  to  get  rid  of  when  we  formed  this  government,  and  I  do  not  think 
we  will  get  back  into  it,  although  we  have  made  some  rapid  strides  in  the 
last  two  years.  I  believe  it  has  gone  as  far  back  as  it  will  go.  Commissions 
like  your  honorable  body  here,  can  aid  us  and  point  out  a  remedy,  and  it  will 
be  severely  applied.  The  people  are  ripe  for  the  remedy,  but  they  do  not 
know  how  to  get  at  it.  They  have  diagnosed  the  disease,  but  they  do  not 
know  what  remedy  to  apply.  To  use  an  illustration,  the  doctors  oftentimes 
make  a  good  many  mistakes  on  the  outside  of  the  body  in  diagnosing  the 
disease,  and  they  do  not  reach  the  disease,  but  I  believe  that 
you  gentlemen,  when  you  get  through  your  duties  here  want  to 
say  that  you  have  reached  the  disease  and  to  suggest  the  proper  rem- 
edies. I  know  with  three  years'  experience  in  my  office,  so  far  as  the 
State  is  concerned  it  has  absolute  power  to  regulate  that  one  feature  that  I 
have  mentioned,  viz.,  the  abuse  of  governmental  powers  by  creatures  exer- 
cising those  functions. 

Q.  Would  not  the  result  which  I  suggested  be  realized  if  other  industries 
were  controlled  in  the  way  a  few  men  control  the  Standard  Oil  Company 
and  the  oil  production  of  the  country?  A.  Yes,  sir;  that  would  be  the  result. 
The  socialists  are  advocating  that  this  be  speedily  gone  on  with  and  con- 
tinued to  its  ultimate  conclusion  and  when  a  few  men  get  possession  of  all 
the  public  utilities  then  they  would  take  them  away  from  them.  It  is  their 
theory  that  the  government  ought  to  own  all  of  these  industries;  that  the 
only  way  to  demonstrate  the  possibility  of  that  is  to  allow  a  few  people,  a 
few  brainy  men  like  Mr.  Rockefeller  and  others  to  demonstrate  that  they 
can  be  run  by  a  few,  and  then  to  have  the  government  step  in  and  take  the 
place  of  Mr.  Rockefeller. 

Q.  That  is  the  point  I  was  referring  to,  Mr.  Monnett.  A.  Well,  if  we 
could  always  have  a  man  like  Mr.  Rockefeller  to  run  them  he  might  be  able 
to  run  them  better  than  they  would  be  run  under  governmental  ownership. 


176  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

CHAPTER  XI. 
TESTIMONY  OF  T.  F.  DAVIS,  OF  MARIETTA,  OHIO. 

Mr.  T.  F.  Davis,  of  Marietta,  Oliio,*  a  producer  of  petroleum,  who  has 
been  connected  with  the  oil  refining  business,  appeared  before  the  commis- 
sion on  June  9,  1899. 

While  Mr.  Davis  began  his  testimony  by  claiming  that  he  was  driven 
from  the  oil  refining  business  because  of  unfair  advantages  enjoyed  by  his 
competitors,  the  Argand  Refining  Company  and  the  Standard  Oil  Company, 
he  later  acknowledged,  when  asked  a  direct  question  by  Professor  Jenks, 
that  if  he  had  had  sufficient  capital  to  utilize  the  by-products  of  his  refinery 
to  the  best  advantage,  as  did  the  Standard  Oil  Company,  his  refinery  could 
have  been  run  at  a  profit  instead  of  being  closed  down  because  of  failure 
to  make  a  profit.  Vice-Chairman  Phillips  evidently  did  not  enjoy  having 
such  testimony  and  he  proceeded  to  ask  a  number  of  questions  with  the 
apparent  purpose  of  attempting  to  show  that  the  witness  could  not  have 
marketed  his  by-products  had  he  produced  them  in  a  finished  state,  but  the 
answers  of  the  witness  were  not  such  as  to  give  him  much  satisfaction. 

Mr.  Davis  said  he  could  get  materials  used  in  the  refining  of  oil  from 
the  Standard  Oil  Company  cheaper  than  from  any  one  else  and  that  the 
refiners  of  oil  in  competition  with  the  Standard  Oil  Company  generally  buy 
their  materials  from  them. 

When  the  witness  admitted  that  the  production  of  crude  oil  was  a  profit- 
able business,  Mr.  Phillips  appeared  to  be  under  the  impression  that  he,  too, 
was  on  the  stand,  as  he  remarked: 

"It  depends  on  what  you  strike;  a  thousand  barrel  well  or  a  ten  barrel 
well." 

As  will  be  seen,  the  testimony  of  Mr.  Davis  was  very  generally  based 
on  his  suspicions;  there  was  a  woeful  deficiency  of  proof. 

Mr.  Davis  had  been  a  producer  of  oil  for  20  years  in  the  vicinity  of 
Marietta.  He  had  a  large  interest  in  a  small  refining  plant  at  Marietta  about 
six  or  seven  years,  but  his  refinery  is  not  now  running.  He  first  became 
interested  in  what  is  known  as  the  Macksburg  field,  about  25  miles  from 
Marietta.  He  was  a  producer  and  undertook  the  refining  of  his  oil,  hoping 
to  market  the  product,  which  he  continued  to  do  for  about  two  years,  but  he 
was  finally  compelled  to  give  it  up.  He  was  not  able  to  market  his  product 
on  a  margin  sufficient  to  pay  for  the  plant.  He  and  his  associates  were  con- 
fined to  one  grade  of  oil  that  was  especially  desirable  for  a  particular  mar- 
ket, v.'hich  they  could  not  reach  on  account  of  not  being  able  to  combine  their 
product  with  other  grades  of  oil.  Their  oil  was  desirable  as  a  lubricating 
oil;  chiefly  desirable  for  use  by  the  railroads.  Their  competitor,  the  Argand 
Refining  Company,  produced  the  same  grade  of  oil,  and  the  Baltimore  & 
Ohio  Southwestern  Railroad  became  owners  of  a  large  block  of  the  stock  of 
the  Ar^rand  Company,  and  after  that  the  witness  could  not  sell  to  the  Balti- 
more &  Ohio  Southwestern.  At  that  time  the  Standard  Oil  Company  was  not 
connected  with  the  Argand  Company.  His  customers,  who  were  located 
along  the  lines  of  this  road,  were  supplied  with  the  same  oil  the  railroad 
company  used.  That  resulted  in  winding  up  the  trade  of  the  company  of 
the  witness. 

Q.  (By  Professor  .lENKS.)  Did  you  have  reason  to  think  they  were 
getting  a  rebate  on  freight  rates  or  getting  special  freight  rates,  or  anything 
of  that  kind?  A.  Well,  we  had  no  direct  evidence  of  it,  but  we  suspected 
very  strongly  that  they  were  getting  them;  our  evidence  was  only  circum- 
stantial. We  had  no  means  of  knowing  except  that  the  business  was  going 
on  and  we  believed  we  manufactured  as  cheaply  as  they,  and  our  freight  rates 
bein'?  equal,  we  would  have  been  able  to  control  some  of  that  trade,  but  we 
were  not  able  to. 


*Mr.  Archbold,  In  hi.s  tPstimony,  told  of  Mr.  Davis'  efforts,  before  and  after  the 
latter  testified  before  the  commission,  to  soil  his  refiiury  to  the  Standard  Oil  Com- 
pany. 


T.  F.  DAVIS.  177 

In  the  Macksburg  field  the  witness  and  his  associates  had  their  own 
pipe  line  i'rom  the  wells  to  the  railroad,  and  they  shipped  in  tank  cars  to  the 
works.  They  had  no  difficulty  as  producers.  Their  trouble  was  entirely 
with  the  refining  part  of  their  business.  Later  some  of  the  same  people 
who  had  developed  the  Macksburg  field  opened  up  the  Corning  field,  about 
40  miles  from  Macksburg,  along  the  line  of  railroad  running  from  Marietta. 
They  could  not  get  this  oil  to  their  works  over  the  railroad  at  a  satisfactory 
rate.  This  oil  was  run  through  the  Buckeye  Pipe  Line,  which  was  owned  by 
the  Standard  Oil  Company.  They  sold  this  Corning  oil  to  the  pipe  line  com- 
pany at  17  cents  a  barrel  less  than  was  paid  for  the  high  grade  of  oil  of  the 
Macksburg  field.  The  pipe  line  charged  them  35  instead  of  20  cents  a  barrel 
for  the  pipage.  The  result  of  this  was  that  it  was  as  profitable  to  sell  this 
oil  to  the  Standard  Oil  Company  and  to  buy  from  them  a  different  grade  of 
oil  at  about  the  same  price. 

The  witness  made  application  for  rates  on  the  branch  road  to  Marietta, 
and  it  was  at  least  30  days  before  he  could  get  them  to  give  a  rate  at  all,  and 
then  it  cost  to  transport  oil  one  cent  a  barrel  more  than  it  would  by  the  pipe 
line. 

Q.  (By  Professor  JENKS.)  So  your  inference  from  the  delay  was  that 
the  railroad  was  more  or  less  controlled  by  your  competitors  in  the  field? 
A.  It  seemed  to  us  so;  that  is  our  belief.     *     *     *     * 

The  witness  had  never  been  engaged  in  any  litigation  in  regard  to  freight 
rates  with  the  Standard  Oil  Company.  He  said  a  good  deal  of  oil  property 
had  been  bought  up  by  "some  of  the  different  branches  of  the  Standard  Oil 
Company."  These  companies  were  the  South  Penn,  the  Ohio  Oil,  the 
Carter  Oil,  the  United  States  Oil  Company,  and  others. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Are  all  these  companies  connected 
with  the  Standard?  A.  All  are  believed  to  be,  yes,  sir.  Of  course,  I  have  no 
positive  information  as  to  that,  only  it  is  the  common  suspicion  that  they  are. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Do  you  know,  as  a  matter  of  fact, 
that  ihe  Standard  Oil  Company  is  connected  with  large  numbers  of  produc- 
ing companies,  and  has  organized  quite  a  large  number?  A.  Well,  I  have 
no  information,  that  is  positive  information,  but  it  is  the  current  belief  of 
the  oil  people  about  Marietta  that  they  are. 

Q.  (By  Professor  JENKS.)  As  regards  the  purchase  of  these  oil  fields 
by  the  Standard  Oil  Company  or  those  companies  that  are  associated  with  it, 
T  suppose  that  simply  means  that  they  have  plenty  of  capital  and  pay  higher 
prices  than  their  competitors?     A.  Yes,  sir. 

Q.  Have  you  any  reason  for  believing  that  there  is  anything  at  all  unfair 
in  their  methods  of  dealing  in  that  way?  A.  No,  sir;  1  haven't.  I  have  known 
properties  to  be  sold  to  companies  that  are  believed  to  be  connected  with 
them.  They  have  always  uniformly  paid  very  fair  prices,  in  fact  I  might 
say  exorbitant  in  some  cases. 

Q.  It  would  seem  that  it  is  simply  a  question,  then,  of  their  having  large 
sums  of  capital  at  their  disposal?    A.  Yes,  sir. 

*Q.  And  they  are  willing  to  pay  well  for  the  territory  that  they  want  to 
get  control  of?     A.   Yes,  sir. 

The  witness  described  the  manner  in  which  the  pipe  line  companies  in 
his  section  of  the  country  charged  for  wastage  of  oil  going  through  their 
pipe  lines.  He  said  that  this  wastage  was  estimated  by  the  Standard  to  be 
2y2  per  cent. 

Q.  (By  Vice-chairman  PHILLIPS.)  Is  it  not  a  fact  that  the  Standard 
Oil  Company  have  a  large  amount  of  what  they  call  sediment  or  surplus? 
A.  Yes,  sir. 

Q.  (By  Vice-Chairman  PHILLIPS.)  How  is  that  accumulated — from  this 
^Vz  per  cent.?  A.  Of  course  we  have  no  definite  information  as  to  that.  It 
is  supposed  that  that  would  be  a  part  of  it,  and  that  they  also  charge  or 
assess  for  insurance  for  fire  losses  in  a  certain  district — occasionally  a  tank 
of  oil  is  burned  up,  the  lightning  strikes  it,  and  so  on. 

Q.  (By  Vice-chairman  PHILLIPS.)  They  assess  that  to  all  the  pro- 
ducers?   A.  All  the  producers  in  that  particular  division  or  locality. 


*Elack  faced  type  Indicates  matter  omitted,  In  the  course  of  editing,  from  the 
official  report. 

12 


178  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

Q.  (By  Vice-Chairman  PHILLIPS.)  How  is  this  assessment  collected? 
A.  Why,  just  reducing  your  credit  balance.  If  you  have  1,000  barrels  and 
it  takes  1  per  cent,  to  make  up  the  total  amount,  you  are  charged  up  with 
that. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Have  they  any  legal  authority  to 
assess  you  for  that  loss?  A.  I  think  it  is  mutual.  I  don't  know  whether  it 
would  stand  in  litigation,  but  I  have  never  known  of  any  one  objecting  to  it. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Then  you  never  knew  of  any  person 
bringing  a  suit  against  them  to  recover?  A.  No,  sir;  I  never  knew  of  any 
person  bringing  a  suit  against  them  to  recover.  They  object,  of  course,  but 
I  never  have  known  of  any  one  making  a  claim  for  it. 

Q.  (By  Vice-Chairman  PHILLIPS.)  The  fact  is  that  it  is  generally  quite 
a  small  amount  to  each  producer  and  they  do  not  feel  that  they  will  be  justi- 
fied in  going  to  law  in  regard  to  it.    A.  No,  sir. 

Q.  (By  Vice-Chairman  PHILLIPS.)  There  is  no  law  by  which  they  can 
assess  that  loss  to  you?    A.  No,  I  should  say  not. 

Q.  (By  Vice-Chairman  PHILLIPS.)  But  they  do  it  nevertheless,  all  over 
your  country?    A.  Yes,  sir;  I  think  that  is  the  custom. 

Q.  (By  Vice-Chairman  PHILLIPS.)  That  is  your  understanding?  A. 
Yes,  sir;  I  understand  so. 

The  witness  ran  a  refinery  of  from  800  to  1,000  barrels  a  week,*  or  could 
have  done  so  had  he  had  a  market  for  his  oil.  If  his  company  had  had  a 
gasoline  plant  to  run  in  connection  with  this  main  plant,  it  would  have 
materially  added  to  their  profits.  They  were  never  able  to  estimate  that  they 
got  any  profit  out  of  their  by-products. 

Q.  (By  Professor  JENKS.)  What  do  you  do  with  the  by-products  that 
you  have?  A.  Well,  we  sell  a  part  of  them  to  Scofield,  Shurmer  &  Teagle 
in  Cleveland — the  paraffines  and  benzines.  You  can  always  get  a  market  for 
them  there,  but  never  at  a  profit.  We  would  just  about  get  rid  of  carrying 
them  in  stock;  we  never  were  able,  or  at  least  we  never  estimated  that  we 
were  able,  to  get  any  profit  out  of  these  by-products. 

Q.  Can  you  give  any  idea  at  all  as  to  how  much  more  profitable  your 
establishment  would  have  been,  if  it  had  been  large  enough  so  that  you  could 
have  made  the  best  use  of  this  paraffine,  and  all  the  other  by-products  that 
you  were  compelled  to  dispose  of  substantially  at  cost?  A.  I  never  made  an 
estimate  of  that.  It  would  be  a  mere  approximation  which  I  have  never  gone 
into.  I  would  have  to  go  into  some  little  calculation  and  then  it  would  only 
be  an  approximation  and  it  might  be  a  little  way  from  the  facts  after  it  was 
figured  out. 

Q.  Supposing  I  put  the  question  to  you  in  another  way.  If  you  had  dou- 
bled or  trebled  the  amount  of  capital  that  was  in  your  plant,  making  it  so 
much  larger,  giving  these  additional  facilities  for  making  proper  use  of  the 
by-products,  do  you  suppose  that  selling  your  illuminating  oil  and  your  lubri- 
cating oil  at  the  same  prices  that  you  did  before,  that  the  added  profit  from 
the  side  products  or  the  by-products  would  have  enabled  you  to  pay  divi- 
dends on  capital  and  keep  your  establishment  running,  whereas  with  the 
experience  that  you  did  have  you  were  compelled  to  close  it  down?  A.  Well, 
I  would  think  so.  I  would  think  it  would  have  been  sufficiently  profitable  to 
have  continued  the  business  successfully  fand  made  some  money. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Is  it  or  not  a  fact  that  the  Standard 
Oil  Company  has  practically  a  monopoly  of  all  these  by-products,  so  that 
you  were  stopped?  You  could  not  have  well  found  a  market  for  lubricating 
oil,  for  Instance,  and  many  of  the  by-products.  A.  Well,  we  would  have  gone 
out  to  the  consumers  and  dealers.  Of  course  we  would  have  occasion  to  sell 
the  by-products  if  we  could  manufacture  them  and  put  them  into  the  com- 
mercial markets.  If  we  were  selling  the  crude  material  to  any  other  concern 
that  was  specially  arranged  for  using  these  by-products  in  their  crude  state, 
we  couldn't  make  any  profit  on  that,  of  course. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Suppose  you  had  the  facilities  for 
manufacturing  a  very  large  amount  of  lubricating  oils,  does  not  the  Standard 
Oil  Company  so  monopolize  the  trade  with  the  railroads  in  lubricating  oils, 
that  it  would  be  practically  impossible  for  you  to  market  it  in  competition 


•"Eipht   thousand  barrels  a  week"   in  ofTicial    reprnl. 

+Black    facei]    type   indicates   matter   omittci.  in   tiic   course  of  editing,  from  tine 
official  report. 


T.   F.  DAVIS.  179 

with  that  company?  A.  The  railroads  are  the  large  consumers  of  the  low 
grade  lubricating  oils,  and  unless  you  can  get  some  connection  with  a  rail- 
road company  that  consumes  these  large  quantities  of  the  low  grades,  it  is 
almost  impossible  to  go  around  to  the  small  dealers  and  make  any  profit.  It 
has  practically  got  so  that  you  must  get  some  railroad  in  with  you  or  sell 
your  by-products  to  some  of  their  concerns. 

Q.  (By  Vice-chairman  PHILLIPS.)  Is  it  not  conceded  by  what  we  call 
independent  or  outside  refiners  that  the  Standard  Oil  Company  has  practi- 
cally a  monopoly  of  the  lubricating  business?    A.  Yes,  sir. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Especially  along  all  the  lines  of  the 
prominent  railroads?    A.  Yes,  sir. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Would  any  corporation  independent 
of  the  Standard  Oil  Company  be  safe  in  investing  say  $.500,000  or  $1,000,000 
in  making  a  lubricating  oil.  and  would  they  have  any  certainty  of  finding  a 
market  for  it?  A.  Well,  I  should  think  it  would  be  rather  a  hazardous  under- 
taking.   That  would  be  my  judgment  about  it. 

The  witness  said  there  was  a  great  difference  in  the  price  of  lubricat- 
ing oils.  Various  grades  of  oil  would  command  a  price  as  high  as  75  or  80 
cents  a  gallon.  He  had  become  satisfied  that  the  Argand  Refining  Company 
was  selling  the  same  oil  as  oil  of  different  grades.  He  had  secured  the  infor- 
mation on  which  he  based  this  opinion  from  men  who  worked  for  him  and 
who  had  formerly  worked  for  the  Argand  Company,  or  from  men  who  had 
previously  worked  for  him  and  were  then  working  for  the  Argand  Company. 

Q.  (By  Professor  JENKS.)  You  intimated  just  now  that  your  competi- 
tors sometimes  secured  information  in  reference  to  your  way  of  doing  busi- 
ness, in  ways  that  were  ordinarily  not  considered  normal.  What  were  the 
methods  they  employed?  A.  On  one  occasion  we  had  a  boy  who  did  office 
work.  He  became  shipping  clerk,  making  shipments  of  oil  by  river  and  by 
rail.  That  young  fellow  was  approached  by  an  employe  of  the  Standard  Oil 
Company  who  offered  to  pay  him,  give  him  a  consideration,  if  he  would  report 
from  day  to  day  the  names  of  the  persons  we  were  shipping  to,  the  points 
shipped  to  and  the  invoice  of  price. 

Q.  What  was  the  result  of  this  offer  on  their  part?  A.  The  young  man 
was  very  much  surprised.  He  was  very  loyal  to  us  and  gave  us  all  the  infor- 
mation of  what  had  occurred,  and  we  advised  him  to  go  further  and  get 
further  information,  but  the  other  people  weakened.  I  guess  they  suspected 
we  were  getting  on  to  their  schemes.  At  least  they  never  accomplished  it, 
so  far  as  we  knew,  unless  it  was  done  without  our  knowledge.  In  the  after- 
noon, after  we  closed  up  the  office,  the  office  man  would  be  the  last  man 
there,  of  course,  and  he  once  or  twice  held  conferences  right  in  our  office, 
and  they  tried  to  induce  him  for  a  consideration  of  a  suit  of  clothes  or  so 
much  money  or  something  of  the  kind,  to  give  them  that  information. 

Q.  In  this  special  case  you  think  they  failed  to  get  the  information  they 
wanted?     A.  Yes,  sir;   I  think  so. 

Q.  On  account  of  the  fidelity  of  your  assistant  there?     A.  Yes.  sir. 

Q.  Do  you  know  of  any  other  cases  in  which  they  did  get  the  information 
along  these  lines?  A.  We  didn't  have  any  positive  information,  but  we  be- 
lieved that  every  barrel  of  oil  that  was  shipped  from  our  plant,  either  by 
steamer  or  by  rail,  was  in  some  way  reported  to  our  competitors.  That  was 
only  a  matter  of  belief  or  conjecture,  but  the  circumstances  pointed  strongly 
in  that  direction. 

Q.  What  were  the  circumstances  that  pointed  in  that  direction?  A. 
When  we  would  make  a  shipment  of  oil  and  send  invoices,  frequently  our 
traveling  men  would  come  in  contact  with  the  people  we  shipped  to,  who 
said  they  had  got  a  quotation  at  a  lower  price,  and  in  many  cases  we  would 
have  to  meet  that  price  or  lose  the  customer.  We  would  have  to  make  a 
reduction  on  the  invoice,  or  make  an  allowance  on  the  next  shipment,  or 
something  of  that  kind.  Of  course,  it  created  a  great  deal  of  dissatisfaction 
and  we  had  to  keep  the  men  on  the  alert  all  the  time,  traveling  from  one  little 
town  to  another  to  see  the  small  dealers. 

Q.  It  was  then,  I  infer,  practically  your  universal  experience  that 
wherever  you  had  customers  they  seemed  to  be  followed  up  regularly? 
A.  Yes,  sir. 


180  REVIEW  OF   TESTIMONY— INDUSTRIAL  COMMISSION. 

Q.  (By  Vice-Chairman  PHILLIPS.)  And  as  a  rule,  did  they  sell  lower 
than  you  were  offering  to  sell?  A.  They  would  offer  it,  and  we  would  ulti- 
mately lose  a  customer  unless  we  would  reduce  the  price. 

Q.  (By  Vice-Chairman  PHILLIPS.)  You  said  your  traveling  men  were 
followed  up  by  traveling  men  from  the  Standard  Oil  Company  and  that  they 
offered  to  sell  lower  than  your  price.  Was  the  general  effect  of  this  upon 
the  consumer  that  the  price  of  oil  was  lowered?    A.  I  think  not. 

Q.  (By  Vice-chairman  PHILLIPS.)  Why  not?  A.  Why,  the  dealer  would 
not  change  his  price.  He  would  continue  to  sell  the  oil  that  he  would  buy,  at 
the  same  price.  The  dealer  would  get  the  advantage  of  the  difference  in  the 
price. 

Q.  (By  Professor  JENKS.)  Do  you  think  that  on  the  whole,  the  lowering 
of  the  price  of  oil  resulted  in  the  dealers  getting  better  profits  than  they 
would  have  received  if  it  had  not  been  for  this  action  of  the  Standard  Oil 
Company?     A.  Yes,  sir. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Was  that  universal  or  only  in  local- 
ities? A.  In  localities  where  they  were  seeking  a  market;  it  may  have  been 
in  other  localities.     Of  course  1  had  no  information  as  to  that. 

Q.  (By  Vice-Chairman  PHILLIPS.)  You  said  that  you  were  compelled 
finally  to  go  out  of  the  business  because  of  this  fierceness  of  competition,  I 
suppose  you  might  call  it?    A.  Yes,  sir. 

Q.  (By  Vice-chairman  PHILLIPS.)  Have  you  any  reason  to  believe 
that  the  prices,  as  soon  as  you  went  out  of  business,  were  increased  to  the 
dealers?  A.  I  think  they  have  been  restored  to  more  of  a  uniform  condition, 
where  in  many  localities  they  would  get  somewhat  increased  prices. 

Q.  (By  Vice-Chairman  PHILLIPS.)  So  that  the  general  average  of  price, 
you  think,  is  probably  higher?    A.  Yes,  sir. 

Q.  (By  Vice-Chairman  PHILLIPS.)  The  cutting  of  prices  was  ordinarily 
to  special  customers  in  special  places?    A.  Yes,  sir. 

Q.  (By  Vice-Chairman  PHILLIPS.)  And  was  not  a  general  cutting.  A. 
Oh,  no. 

The  witness  said  his  company  had  special  brands  of  illuminating  oil,  one 
of  which  was  the  "Champion,"  and  they  suspected  that  their  competitors 
had  put  this  brand  on  inferior  oil. 

Mr.  Davis  said  that  the  cost  of  refining  oil  is  now  cheaper  than  it  was  a 
few  years  ago.  Fuel  is  cheaper  and  for  three  or  four  years  has  been  cheaper 
than  it  was  10  years  ago.  The  materials  used  in  the  manufacture  of  oil  are 
also  less  in  value.  For  that  reason  the  cost  of  refining  oil  had  decreased  in 
late  years.  He  had  no  difficulty  in  getting  material  that  he  used  in  the 
refining  of  oil.  His  company  had  a  contract  by  the  year  with  the  Standard 
Oil  Company  and  bought  sulphuric  acid  of  the  latter.  The  last  contract  for 
sulphuric  acid  the  witness  had  made  with  the  Standard  Oil  Company  carried 
a  cheaper  price  than  they  could  have  secured  it  from  anyone  else.  It  was  gen- 
erally true  that  refiners  of  oil  could  purchase  their  materials  from  the 
Standard  Oil  Company  for  less  than  they  could  secure  them  elsewhere. 

Referring  to  the  Argand  Refining  Company,  the  witness  said  that  their 
experience  had  led  his  company  to  understand  that  they  could  not  furnish 
oil  to  the  railroad  companies  at  any  price.  They  knew  that  the  Argand 
Company  was  selling  oil  for  12%  cents  to  other  people,  but  if  the  company 
of  the  witness  offered  it  for  less  to  the  railroads  it  could  not  make  a  sale. 
His  company  had  made  prices  to  the  railroads  lower  than  the  Argand  people 
were  making  to  their  customers,  in  order  to  satisfy  themselves  as  to  the 
condition  of  that  trade.  They  paid  no  attention  to  the  railroad  trade.  He 
said  the  railroad  officials  finally  acquired,  as  he  believed  at  least  .50  per 
cent,  of  the  stock  of  the  Argand  Refining  Company.  The  oil  his  company 
furnished  was  intended  to  be  substantially  of  the  same  grades  as  those  of 
the  Argand  Company. 

Q.  (By  Mr.  FARQUHAR.)  Then,  you  wish  the  commission  to  under- 
stand that  in  open  competition  of  that  kind  the  preference  was  given  by  the 
railroad,  on  accoiint  of  the  influence  or  interests  of  its  officers,  to  the 
Areand  Company?  Is  that  what  you  wish  to  impress  on  us?  A.  That  is  ray 
belief;  yes,  sir. 

Q.  But  you  have  no  knowledge?     A.  No  knowledge,  of  course. 


T.   F.   DAVIS.  181 

Q.  None  whatever?  A.  None.  Only  the  circumstances  which  led  us  to 
the  belief  that  that  was  the  condition  of  things  and  the  principal  reason  why 
we  were  not  favored  with  that  part  of  their  business. 

Q.  Now,  Senator  Davis,  can  you  tell  this  commission,  of  your  own 
knowledge,  whether  the  Standard  Oil  Company  offered  better  terms  than 
you  did  to  the  railroads?    A.  No,  sir. 

Q.  Well,  that  is  just  where  it  ends;  that  is  just  where  the  whole  ques- 
tion ends. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Senator,  as  I  understand  you,  you 
offered  to  sell  at  a  much  less  price  than  they  were  selling  at,  and  they 
refused  to  purchase  your  oil,  did  they  not?     A.  Yes,  sir. 

Q.  (By  Vice-Chairman  PHILLIPS.)  And  that  is  why  you  thought  it 
was  an  unfair  competition?    A.  That  is  it  exactly. 

Q.  (By  Vice-chairman  PHILLIPS.)  Believed  or  knew?  A.  Well,  we 
believed. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Because  they  would  not  purchase 
your  oil  of  equal  quality  at  a  much  less  price  than  they  were  buying  from 
others?  A.  Well,  that  influence  did  not  stop  at  that  particular  point.  The 
fact  was  known  along  the  entire  mileage  of  that  road  and  its  branches,  that 
they  were  getting  their  illuminating  and  lubricating  oil  from  this  particular 
concern,  and  we  believed  they  influenced  the  dealers  along  that  line  because 
they  could  get  it  in  small  quantities,  or  get  it  without  very  much  trouble. 
These  people  were  interested  in  the  railroad,  and  in  the  Argand  Refining 
Company,  and  all  these  influences,  we  believed,  went  in  to  make  up  quite  a 
difference  in  our  trade  along  that  line.  I  may  be  mistaken  about  that,  but 
it  so  appeared  to  us  at  the  time  it  was  going  on. 

Vice-Chairman  Phillips  asked  a  series  of  questions  which  appeared  to 
be  for  the  purpose  of  bringing  out  testimony  to  show  that  the  claims  that 
the  price  of  oil  as  a  whole  is  much  cheaper  than  it  was  20  years  ago  were 
not  well  founded  because  of  the  revenue  derived  by  refiners  from  by-pro- 
ducts. 

The  witness  said  he  thought  that  the  cheap  prices  of  crude  oil  which 
prevailed  some  years  ago  were  the  result  of  over  production. 

Q.  (By  Vice-chairman  PHILLIPS.)  Well,  Senator,  do  you  believe  that 
the  Standard  Oil  Company  has  in  a  great  many  instances  in  the  last  10,  15 
or  20  years  made  more  for  moving  and  refining  every  barrel  than  they  have 
paid  for  the  crude  oil  itself?  If  you  judge  by  their  profits  and  by  their  state- 
ments, and  by  their  dividends,  have  we  or  not  a  right  to  infer  that  they  make 
more  profit  to-day  on  every  barrel  of  oil  that  is  manufactured  than  they  pay 
for  it?  A.  1  should  hardly  think  that  they  did.  But  as  shown  by  their  state- 
ment they  make  very  considerable  out  of  the  transportation  of  the  oil  by  the 
pipe  lines.     It  is  very  profitable. 

Q.  (By  Vice-Chairman  PHILLIPS.)  I  mean,  taking  all  these  things 
together?  A.  Yes,  sir;  oftentimes  the  entire  profits  that  are  made  on  a  bar- 
rel of  oil  will  be  made  on  its  transportation  instead  of  the  manufacturing. 
*They  handle  it  from  the  well  to  the  consumer,  who  purchases  it. 

The  witness  said  the  cost  of  producing  crude  oil  had  increased  very 
much  within  three  or  four  months  from  the  time  he  gave  his  testimony.  The 
cost  of  casing,  tubing  and  machinery  had  in  some  instances  increased  90 
per  cent.  Prior  to  that  increase,  such  material  was  cheaper  than  it  had  ever 
been  before.  There  had  been  no  increased  price  of  crude  oil  in  keeping 
with  the  increased  price  of  this  material. 

Q.  (By  Professor  JENKS.)  Do  you  know  whether  the  Standard  Oil 
Company  itself  is  interested  in  the  production  of  these  supplies  or  not?  A. 
I  have  no  information  other  than  the  general  supposition  of  people  who  are 
consuming  these  products.  Quite  frequently  you  will  find  that  their  business 
relations  indicate  that  they  are  somewhat  interested,  but  I  have  no  knowl- 
edge of  my  own  as  to  that;  *it  is  only  just  common  rumor  or  report. 

*Black  faced  type  indicates  matter  omittecl,  In  the  course  of  editing,  from  tlie 
official  report. 


182  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

Q.  (By  Mr.  FARQUHAR.)  Just  one  minute,  right  on  that.  You  mean 
by  that,  I  presume.  Senator,  that  the  parties  who  hold  a  large  Standard  Oil 
Company  interest  are  interested  in  tube  works,  and  other  works  that  manu- 
facture supplies?    A.  Yes,  sir. 

*Q.   And  that  is  all?     A.  Yes,  sir. 

Q.  But  the  Standard  Oil  Company,  as  the  Standard  Oil  Company,  has 
nothing  to  do  with  it  at  all?    A.  No,  sir. 

Q.  (By  Professor  JENKS.)  The  question  I  want  to  ask  you  is  in  refer- 
ence to  the  Argand  Company.  You  spoke  of  that  company,  as  I  understood 
you,  as  your  chief  competitor  at  the  time  you  were  in  the  refining  business. 
So  far  as  your  competition  with  the  refiners  was  concerned,  your  chief  com- 
petitor was  the  Argand  and  not  the  Standard?  A.  Well,  the  Standard  had  a 
very  large  concern  at  Parkersburg  that  covered  a  part  of  the  same  territory 
that  we  were  both  covering. 

Q.  But  so  far  as  you  knew,  you  were  hampered  as  much  by  the  Argand 
as  you  were  by  the  Standard?    A.  Yes,  sir. 

Q.  The  Argand  at  that  time  was  not  owned  by  the  Standard  Oil  Company 
at  all?    A.  No,  sir. 

*Q.  It  was  an  entirely  independent  company,  as  you  thought?  A.  Yes, 
sir. 

Q.  What  has  been  the  history  of  the  Argand  Company  since?  A.  The 
Argand  Refining  Company  was  leased  some  time  within  the  year,  I  should 
say,  by  one  of  the  branches  of  the  Standard  Oil  Company — I  think  the  Sun 
Refining  Company,  perhaps — on  a  basis  of  6  per  cent,  on  $200,000  for  10 
years,  or  in  other  words,  $1,000  a  month  for  10  years.  They  had  employed 
quite  a  number  of  people,  traveling  men  and  office  men,  and  just  recently 
they  left  Ohio  and  went  into  West  Virginia,  and  have  their  office  there.  That 
was  about  the  time,  I  think,  that  Attorney-General  Monnett  brought  the  quo 
warranto  proceedings,  claiming  that  they  were  a  part  of  the  Standard  Oil 
Trust,  and  they  immediately  moved  their  office  and  oflEice  men  over  to  Par- 
kersburg. which  is  about  12  miles  from  Marietta,  on  the  West  Virginia  side 
of  the  river.  Since  then  it  has  been  understood  that  the  people  owning  the 
stock  of  the  Argand  Refining  Company  have  capitalized  it  and  sold  out  their 
entire  interest  to  the  same  people  who  leased  it;  so  that  they  in  some  way 
discounted  the  10-year  lease  by  cash  payments,  and  the  Argand  Refining 
Company  has  practically  disbanded  its  office  now  at  Parkersburg. 

Q.  Is  it  understood  that  the  purchasers  of  this  stock,  or  some  of  them  that 
have  control  of  it,  are  the  managers  of  the  Standard  Oil  Company?  A.  That 
is  the  supposition  now,  although  if  you  have  access  to  the  testimony  taken 
by  Mr.  Monnett  at  Marietta,  you  will  find  that  Mr.  Cram,  who  was  manager 
of  the  Argand  Refining  Company  at  the  time  this  lease  was  made,  testified 
as  to  just  what  was  done  in  this  leasing  process.  Since  that  time  it  is  gener- 
ally believed  that  the  stock  has  been  purchased  by  the  same  parties  that 
made  the  lease.     Perhaps  you  will  not  find  that  in  his  testimony  there. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Have  you  any  suggestions  to  make 
in  regard  to  legislation  in  regard  to  trusts  or  combinations,  to  restrict  their 
powers;  or  do  you  think  it  is  a  question  that  can  be  dealt  with  properly  by 
law?  A.  Well,  I  haven't  given  it  the  attention,  of  course,  that  other  gentle- 
men have;  but  I  realize  that  it  is  one  of  the  most  diflficult  things  to  control  by 
law.  I  have  no  suggestion  on  that  line.  If  vested  rights  are  acquired  by 
innocent  holders  of  different  corporations  and  are  thrown  together,  I  cannot 
see  how  you  can  possibly  separate  them.  There  may  be  some  way  to  do 
it,  but  I  do  not  see  how  it  is  to  be  done. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Are  you  at  all  familiar  with  the  pipe 
line  business  in  P.^nnsylvania  and  Ohio,  and  in  regard  to  the  opposition  the 
Standard  has  made  to  the  Pennsylvania  pipe  lines?  A.  No,  sir;  I  never  came 
in  contact  with  them  except  in  a  very  moderate  way. 

Q.  (By  Vice-Chairman  PHILLIPS.)  You  are  not.  then,  familiar  with  the 
early  history  of  the  Standard  in  Pennsylvania?    A.  No,  sir. 

Q.    (By  Vice-chairman  PHILLIPS.)     And  their  methods?    A.  No.  sir. 


♦Black   faced   type   inrlicates   matter   omitted,  In  the  course  of  editing,   frnm   the 
ofRclal  report. 


T.   F.  DAVIS.  183 

Q.  (By  Vice-Chairman  PHILLIPS.)  Or  their  purchases  there  of  pipe 
lines,  their  purchase  of  refineries  and  so  on?  A.  No,  sir;  I  know  nothing 
about  purchasing. 

Q.  (By  Mr.  KENNEDY.)  Has  the  Senator  stated  to  whom  he  sells  his 
product  now? 

The  WITNESS.     The  crude  oil? 

Mr.  KENNEDY.     Yes,  sir. 

A.  I  sell  the  oil  that  is  produced  in  West  Virginia  to  the  Eureka  Pipe 
Line,  and  the  oil  that  is  produced  in  Ohio  I  sell  to  the  Macksburg  division 
of  the  Buckeye  Pipe  Line. 

Q.  They  are  both  Standard  Oil  Company  lines?  A.  They  are  the  same 
parties,  and  the  same  bookkeeper  makes  out  the  check,  which  is  given  by 
one  of  their  agents  on  New  York. 

Q.  (By  Vice-chairman  PHILLIPS.)  They  are  both  owned  by  the  Stand- 
ard Oil  Company?    A.  Yes,  sir;  both  in  the  same  office. 

Q.  (By  Mr.  KENNEDY.)  They  pay  you  the  market  price  for  the  crude 
oil?    A.  Oh,  yes,  sir. 

Q.  (By  Mr.  FARQUHAR.)  How  is  the  market  price  regulated?  A. 
When  you  have  oil  to  sell  you  step  into  the  agency,  and  before  he  will  give 
you  the  price  he  wires  to  Pittsburg  (the  books  are  kept  there)  and  he  sees 
what  your  credit  balance  is  on  the  books — that  is  the  number  of  barrels  of 
oil  credited  to  your  account,  and  the  particular  grade  it  is.  When  he  gets 
that  information  the  price  is  posted  and  you  may  or  may  not  accept  it,  as 
you  see  fit. 

Q.  What  influence  has  the  independent  producer  in  this  country  on  the 
price  of  the  crude  oil?  A.  Well,  only  in  special  cases,  and  I  don't  recollect 
any  in  particular  now.  I  don't  think  they  have  any  influence  over  it  at  all 
in  our  part  of  the  country. 

Q.  None  at  all?     A.  No,  sir. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Is  the  price  of  oil  fixed  for  you  by 
the  Exchange  or  by  the  Standard  Oil  Company  direct?  A.  By  the  Standard 
Oil  Company. 

Q.  (By  Vice-chairman  PHILLIPS.)  Both  crude  and  refined?  A.  It  don't 
pay  us  to  refine;  they  fix  the  price  for  the  crude  at  Marietta. 

Q.  (By  Vice-Chairman  PHILLIPS.)  They  make  the  quotations  in  New 
York  for  the  refined  from  time  to  time,  and  they  make  the  quotations  in  all 
the  oil  fields  for  the  crude?  A.  Yes,  sir;  wherever  they  have  a  purchasing 
agent. 

Q.  (By  Vice-Chairman  PHILLIPS.)  And  it  is  wired  to  them  what  the 
price  should  be?    A.  Yes,  sir. 

Q.  (By  Vice-Chairman  PHILLIPS.)  That  day  or  that  week  and  subject 
to  change  at  any  time  by  them?  A.  The  holder  of  credit  balances  on  their 
ledgers  may  be  producers  in  Indiana,  Ohio.  West  Virginia  or  Pennsylvania, 
and  may  sell  at  any  of  their  agencies — it  don't  make  any  difference  what 
particular  one.  I  have  often  been  in  the  office  when  producers  from  Indiana 
would  come  in  and  ask  for  their  credit  balances  and  get  their  checks  just  the 
same  as  the  man  who  produced  it  within  a  mile  of  where  it  had  been  trans- 
acted. 

*Q.  (By  Vice-Chairman  PHILLIPS.)  It  is  not  so  affected  at  all  by  com- 
petition?    A.   No,  sir. 

Q.  (By  Mr.  FARQUHAR.)  Is  it  the  New  York  price  or  the  Pittsburg 
price  that  regulates  the  market? 

*Vice-Chairman   PHILLIPS.     The  Oil  City  price. 

A.  It  is  the  Oil  City  market. 

O.  (By  Mr.  FARQUHAR.)  Of  the  Standard  Oil  Company?  A.  The 
Standard  Oil  Company  is  the  one  that  controls  the  price  of  crude.  Occasion- 
ally it  is  sold  at  quotations  given  by  brokers  where  there  is  a  little  fluctua- 
tion. I  have  known  that  to  be  the  case  a  few  times  within  two  years.  I 
think.  When,  on  going  to  sell  some  of  my  crude  oil,  they  would  say:  "If 
you  will  allow  us  to  put  this  on  the  exchange  to-day  you  may  have  the  benefit 
to-morrow  of  the  average  exchange  price,  instead  of  taking  a  specific  and 


*Black  faced  type  indicates  matter  omitted,  In  the  course  of  editing,  from  the 
ofRolal  report. 


184  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

accurate  price  at  the  time."  Frequently  we  would  get  a  cent  or  a  cent  and 
a  half,  or  two  cents  a  barrel  more  by  putting  it  on  the  Exchange.  At  other 
times  the  exchange  was  lower  than  the  Standard  Oil  Company  market. 

Q.  Is  it  your  opinion  that  the  independent  refiners  are  making  money? 
A.  I  don't  know  positively  outside  of  the  concern  that  I  am  interested  in 
myself. 

Q.  Take  Scofield,  Shurmer  &  Teagle,  of  Cleveland,  for  instance.  They 
don't  own  oil  wells  at  all,  do  they?    A.  Well,  really,  I  don't  know. 

Q.  They  are  refiners  proper  of  oil  and  of  by-products?  A.  Yes,  sir;  I 
understand  so. 

Q.  It  is  quite  a  wealthy  firm,  isn't  it?    A.  Yes,  sir. 

Q.  And  has  always  been  an  independent  firm?  A.  That  has  been  the 
supposition. 

Q.  Consequently,  if  large  profits  accrue  to  a  firm  like  that  they  come  out 
of  the  producers?    A.  They  certainly  do. 

Q.  Because  a  good  many  refiners  have  gone  out  of  business  is  it  proper 
to  say  that  the  Standard  Oil  Company  drove  them  out  of  business  or  bought 
them  out— gave  them  a  good  price  to  get  out?  A.  Why,  take,  for  instance, 
our  own  experience  there,  right  in  our  own  place. 

Q.  Couldn't  you  have  sold  out  in  pretty  good  shape,  if  you  had  desired? 
A.  Well.  I  never  was  approached  in  that  direction.  I  would  be  very  glad  to 
if  I  could  get  it,  but  I  could  have  put  up  a  refining  plant  as  good  as  the  one 
that  was  practically  sold  for  $200,000  for  about  $7.5,000. 

Q.   (By  Professor  JENKS.)     That  is  the  Argand.  you  mean?    A.  Yes,  sir. 

Q.  (By  Mr.  FARQUHAR.)  Well,  that  is  reasonable.  Of  course,  the  good 
will  and  everything  else  that  goes  with  an  establishment  of  that  kind  counts 
for  almost  everything,  but  in  your  own  experience  instead  of  crushing  them 
out,  as  the  expression  is  used  occasionally  here,  hasn't  it  been  the  custom 
of  the  Standard  Oil  Company  to  buy  such  plants  at  a  reasonably  good 
figure?*    A.  They  have  done  that. 

Q.  In  a  great  many  instances,  haven't  they?  A.  In  a  great  many 
instances,  yes.  sir;  they  did  not  buy  out  Mr.  Rice's  plant. 

Q.  No,  I  understand  that.  tA.  I  have  heard  in  a  general  way  that  they 
would  have  done  so  on  several  occasions  and  perhaps  negotiations  are  pend- 
ing now.     It  is  all  hearsay.     I  don't  care  for  you  to  put  that  in  the  record. 

Q.  (By  Vice-chairman  PHILLIPS.)  Is  it  or  not  a  fact  that  the  Stand- 
ard Oil  Company  bought  a  large  number  of  refining  plants  and  wrecked 
them?    A.  Yes,  sir. 

tQ.  (By  Vice-chairman  PHILLIPS.)  Paid  good  prices  for  them  and 
wrecked  them?     A.  Yes,  sir. 

Q.  (By  Mr.  FARQUHAR.)  If  they  did.  Senator,  isn't  it  sometimes  a 
good  business  proposition  to  dismantle  a  plant  where  you  have  not  trans- 
portation facilities,  and  when  you  can  get  the  same  character  of  oil  and 
product  through  attaching  yourself  to  another  pipe  line,  and  let  it  go,  leav- 
ing nothing  but  the  bare  walls?    A.  Why,  certainly;  that  is  so. 

Q.  As  a  business  proposition  any  man  would  do  that?  A.  That  is  right; 
yes,  sir. 

Q.  (By  Mr.  KENNEDY.)  What  is  the  market  price  of  crude  oil  to-day? 
A.  The  last  quotation  on  that  I  had  was  $1.13  at  the  wells  in  our  fields. 

Q.  A  barrel?    A.  Yes,  sir. 

Q.  (By  Vice-chairman  PHILLIPS.)  That  is  white  sand  oil?  A.  Yes, 
sir;  white  sand  oil. 

Q.  (By  Mr.  KENNEDY.)  Can  you  state  to  the  commission  what  the  cost 
of  production  is?  A.  Well,  that  varies  a  good  deal;  that  is  one  of  the  uncer- 
tain quantities.  I  have  spent  a  great  deal  of  money  in  sinking  wells  and 
got  no  returns,  and  I  have  occasionally  been  fortunate  enough  to  get  a  well 


*In  the  offlcial  report  (p.  362)  this  question  appears  as  follows:  "Of  course  that 
includes  good  will  and  everythlnp;  else  that  c;ops  into  an  establishment  of  that  kind. 
But  from  your  own  experience,  do  you  know  wh<'ther  it  i.^  customary  for  the  Stand- 
ard, whrn  they  find  a  pood,  strong  refining  plant,  to  crush  it  out  nr  huy  it  up  at  a 
pretty  good  figiire?"  It  will  be  seen  that  this  change  in  the  form  of  the  question 
gives  the  answer  a  meaning  entirely  different  from  that  it  originally  had. 

i-Rlack  faced  type  indicates  matter  omitted,  in  the  course  of  editing,  from  the 
offlcial  report. 


T.  F.  DAVIS.  185 

that  was  very  cheaply  produced,  and  that  gave  very  satisfactory  return,  so 
that  you  can't  teil  just  what  that  cost  is.     It  is  impossible. 

Q.  Well,  can  you  say,  in  regard  to  the  wells  that  are  productive,  what 
the  cost  per  barrel  is.    A.  Well  that  varies  as  to  the  field. 

Q.  What  is  it  in  your  field?  A.  Well,  I  was  going  to  say,  the  nearest 
wells  to  Marietta  are  only  about  400  feet  deep,  and  they  are  very  productive, 
while  there  are  several  wells  of  oil  at  Berea,  in  the  Macksburg  field,  that 
vary  from  1,000  to  2,300  feet  deep,  so  that  you  can  see  there  would  be  quite 
a  little  difference  in  the  cost  of  wells,  and  in  some  fields  you  have  to  use  a 
great  deal  more  casing  than  you  do  in  others — three  or  four  strings  of  casing 
frequently.     In  the  shallow  fields  you  only  use  one. 

Q.  (By  Vice-chairman  PHILLIPS.)  The  cost  of  drilling  ranges  all  the 
way  from  eight  hundred  dollars  to  five  or  six  thousand  dollars  to  the  well?* 
A.  Yes,  sir. 

Q.  (By  Vice-Chairman  PHILLIPS.)  In  different  locations?  A.  Yes,  sir; 
in  different  locations. 

Q.  (By  Vice-Chairman  PHILLIPS.)  And  some  are  more  certain  than 
others?    A.  Yes,  sir. 

Q.   (By  Mr.  KENNEDY.)     What  is  your  own  total  production.  Senator? 

tThe  WITNESS.     Mine   now? 

Mr.   KENNEDY.     Yes,  sir;    the  companies  tiiat  you  are  connected   with. 

A.  Wei!,  that  varies  considerably.  It  is  now  about  100  barrels  a  day. 
tl  have  had  it  as  high  as  600  barrels  a  day. 

Q.  You  have  been  in  the  business  a  great  many  years?  A.  Yes,  sir;  I 
have  several  times  thought  I  was  in  the  business,  but  when  it  came  to  set- 
tling up.  I  found  I  was  not;  I  was  behind. 

Q.  Well,  is  it  a  profitable  business  now,  even  with  the  Standard  Oil  Com- 
pany fixing  the  price  of  the  crude  product,  as  you  say  they  do?  A.  Why,  yes, 
sir,  it  is,  as  long  as  you  keep  sufficient  production  to  pay  the  expenses  of 
operating. 

tQ.  (By  Vice-Chairman  PHILLIPS.)  It  depends  on  what  you  strike;  a 
thousand  barrel  well  or  a  ten  barrel  well.     A.  Yes,  sir. 

Q.  (By  Mr.  FARQUHAR.)  In  a  general  v/ay,  do  you  think  the  export  of 
petroleum  over  the  whole  world  has  been  of  great  benefit  to  this  country? 
A.  Yes,  sir;  I  do. 

Q.  You  think  it  has  been  one  of  the  great  factors  in  holding  a  fine 
balance  of  trade  in  favor  of  the  United  States?  A.  Yes,  sir;  it  is  stated  so, 
yes,  sir.     Of  course  there  is  no  question  about  it  in  my  mind. 

Q.  (By  Senator  MALLORY.)  Senator,  some  time  back  you  stated  that 
the  managers  of  the  railroad — the  Marietta  railroad,  I  believe — I  don't  re- 
member the  name  of  it — were  interested  in  the  Standard  Oil  Company,  and 
you  thought  that  influenced  the  dealers  along  the  line  of  that  road?  A.  They 
being  interested  in  the  Argand  Refining  Company,  the  managers  of  the  rail- 
road company  made  it  appear  to  the  ordinary  village  merchant  that  these 
people  were  controlling  that  particular  trade.  In  many  cases  they  controlled 
the  output  of  coal  which  supplied  the  fuel  for  operating  the  road,  and  the 
miners  and  operators  would  purchase  their  supplies  that  were  furnished  by 
the  companies  that  would  do  the  work.  They  controlled  in  that  way — collat- 
erally controlled;  not  directly  by  the  railroad  company,  or  directly  with  the 
merchant. 

Q.  You  mean  the  railroad  employes  and  the  employes  of  the  company? 
A.  The  coal  people,  the  coal  producers — the  coal  operators. 

Q.  Purchased  of  dealers?  A.  In  one  instance  they  were  supplying 
the  railroad  company  with  their  fuel,  and  operating  the  mines  producing  the 
coal,  and  of  course  they  were  somewhat  connected  with  them.  They  were 
not  only  supplying  the  coal,  but  the  supplies,  that  went  into  producing  the 
coal,  to  the  operators. 

Q.  What  I  wanted  to  get  at  and  understand  was.  what  influence  was  it 
that  controlled  these  dealers,  that  you  referred  to,  to  your  detriment?     A. 


♦This  question  In  the  official  report  reads:  "The  cost  of  drilling  is  about  $.1,000  to 
$6,000  to  the  well  in  different  localities?" 

tBlack  faced  type  indicates  matter  omitted.  In  the  course  of  editing,  from  the 
official  report. 


186  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

Well,  wherever  they  had  control,  or  were  connected  with  the  producing  of 
coal,  or  other  matters  that  were  associated  with  the  manager  of  the  road, 
they  seemed  to  be  able  to  keep  us  off. 

Q.  Do  you  mean  to  say  that  they  used  any  direct  influence?  A.  Oh,  no; 
not  that  we  could  directly  put  our  hands  on;  we  only  inferred  it. 

*Q.  You  found  the  fact,  did  you?  A.  And  the  circumstance  impressed 
it  upon  us,  that  it  was  going  on. 

Q.  You  found  it  to  be  a  fact  that  the  officers  of  the  company  controlled 
all  that  in  various  directions.    A.  Yes,  sir. 

Q.  In  the  various  concerns?  A.  Yes,  sir;  and  we  attribute  part  of  it  to 
that  influence. 

Q.  (By  Mr.  KENNEDY.)  A  former  witness  before  the  commission  stated 
that  he  believed — stated  it  as  a  matter  of  belief — that  a  new  system  of 
rebates  to  the  railroad  companies  had  grown  up,  and  that  it  was  this:  That 
they  furnished  lubricating  oil  to  the  railroad  companies,  and  the  railroad 
companies  paid  them  for  that  a  great  deal  more  money  than  it  was  worth  in 
the  market.  Do  you  know  anything  on  that  subject?  A.  No,  sir;  I  do  not. 
I  don't  know  anything  about  that  subject  other  than  I  have  related. 

The  witness  said  in  his  part  of  the  oil  field  expert  oil  well  drillers  get  $5 
a  day,  tool  dressers  from  $3  to  $3.50  a  day,  and  pumpers  from  $40  to  $75  a 
month.  The  contractors,  the  men  who  do  the  drilling  and  furnish  the  ma- 
chinery, get  from  60  to  80  cents  a  foot  for  drilling.  The  Standard  Oil  Com- 
pany had  nothin?  to  do  with  fixing  these  prices  except  so  far  as  they  were 
interested  in  drilling  wells. 

Q.  (By  Mr.  RATCHFORD.)  I  would  like  to  ask  the  Senator  a  plain, 
pointed  question  on  the  oil  business,  which  is  the  burning  question  just  now 
with  this  committee.  Can  you  conceive  of  any  business  method.  Senator, 
practiced  by  any  of  these  refining  companies,  that  would  not  be  practiced  by 
others  if  they  had  the  same  power?  A.  Well.  I  have  given  that  subject  a 
great  deal  of  careful  consideration,  and  I  never  have  discovered  it  yet. 

Q.  You  have  never  discovered  any?    A.  No,  sir. 

Q.  Is  it  your  opinion  that  these  rival  companies,  battling  against  each 
other,  use  every  means  at  their  command  to  gain  control  of  the  markets?  A. 
I  think  that  is  the  rule. 

Q.  What  effect  has  this  on  the  consumer  in  the  end?  A.  Well,  it  affects 
different  localities  differently.  The  further  you  get  from  the  oil  centers,  if 
you  give  any  one  concern,  or  two  concerns,  an  opportunity  of  increasing  the 
price,  my  experience  is  that  they  are  going  to  do  it,  and  do  do  it  right  straight 
throu5;h. 


CHAPTER  XII. 

TESTIMONY  OF  JOHN  D.  ARCHBOLD,  VICE-PRESIDENT 
OF  THE  STANDARD  OIL  COMPANY  OF  NEW  YORK. 

Mr.  .lohn  D.  Archbold,  of  New  York  City,  vice-president  of  the  Standard 
Oil  Company  of  New  York,  appeared  before  the  commission  on  September 
8.  1899. 

He  replied  to  questions  asked  him  by  members  of  the  commission  and 
showed  the  baselessness  of  such  charges  against  the  Standard  Oil  Company 
as  he  considered  of  sufiicient  importance  to  be  noticed,  and  which  had  been 
made  by  the  following  witnesses  who  had  preceded  him: 

Mr.  .1.  W.  Lee,  president  of  the  Pure  Oil  Trust;  Mr.  Theodore  B.  West- 
.eate,  a  director  of  the  Pure  Oil  Trust;  Mr.  M.  L.  Lockwood,  of  Zelienople, 
Pa.,  oil  producer;  Mr.  Frank  S.  Monnett,  Attorney-General  of  the  State  of 
Ohio,  and  Mr.  Theodore  F.  Davis,  of  Marietta,  Ohio,  oil  producer. 


♦niack  faced  type  Indicates  matter  omitted,  in  the  course  of  editing,  from  the 
official  report. 


JOHN   D.  ARCHBOLD.  187 

It  will  be  seen  that  when  Mr.  Archbold  read  the  voting  trust  agreement 
of  the  Pure  Oil  Company,  Mr.  Phillips  made  an  explanation,  "very  briefly" 
of  the  reasons  that  had  caused  him  to  associate  himself  with  this  trust,  the 
remarkable  character  of  which  at  another  time  caused  astonishment  on  the 
part  of  members  of  the  commission.  This  explanation  was  stricken  from  the 
official  report. 

"Under  the  existing  order  we  have  to  combine,"  said  Mr.  Phillips.  "It 
is  the  only  way.  We  are  forced  into  that  way  of  doing  business;  at  least 
that  is  my  view  of  it." 

He  continued  to  say  that  he  was  willing  to  be  brought  under  any  restrict- 
ive legislation  that  is  good  for  the  whole  people  in  the  government  of  com- 
binations and  trusts.  In  stating  that  combination  was  the  order  of  the  day 
and  that  he  was  forced  to  combine,  Mr.  Phillips  only  said  in  another  way 
what  practically  all  the  representatives  of  large  industrial  combinations  had 
said. 

Mr.  Archbold  submitted  to  the  commission  a  map  showing  in  colored 
lines,  the  lines  of  railroads  in  the  United  States  the  officials  of  which  denied 
that  there  had  been  any  discrimination  in  freight  rates  in  favor  of  the 
Standard  Oil  Company  since  the  passage  of  the  interstate  commerce  law. 
This  map  illustrated  how  extensively  the  railroads  denying  this  charge  cover 
the  entire  area  of  the  United  States,  but  although  the  commission  published 
a  number  of  illustrations,  it  omitted  to  put  this  map  in  its  report. 

It  will  be  seen  that  when  Mr.  Archbold  undertook  to  show  that  Mr.  Phil- 
lips and  others  had  approached  the  Standard  Oil  Company  with  a  proposition 
to  combine  in  such  a  way  that  they  might  not  be  competitors  in  the  usual 
sense  of  the  word,  some  members  of  the  commission  became  very  sensitive 
that  "a  character"  should  be  assailed.  The  competitors  of  the  Standard  Oil 
Company  had  previously  been  allowed  to  make  assertions  for  which  they  did 
not,  and  could  not  produce  a  particle  of  proof,  and  which  had  seriously 
reflected  on  the  character  and  business  methods  of  the  Standard  Oil  people, 
and  no  one  had  suggested  that  such  testimony  was  at  all  improper.  One 
member  of  the  commission  went  so  far  as  to  declare  that  the  name  of  Mr. 
Phillips  should  not  be  used  by  a  witness  "in  order  to  cast  any  reflection  on 
Mr.  Phillips."  It  was  a  remarkable  exemption  that  a  competitor  of  the 
Standard  Oil  Company  could  sit  at  the  head  of  a  commission  and  take  the 
leading  part  in  the  investigation  of  his  rival,  while  he  himself  could  not  be 
referred  to  in  rebuttal.  The  discussion  which  took  place  among  members  of 
the  commission  when  Mr.  Archbold  gave  his  testimony  appears  in  the  follow- 
ing pages,  though  it  was  stricken  from  the  official  report. 

Mr.  Phillips  claimed  that  if  he  should  be  named  in  the  testimony  he 
should  have  a  right,  not  to  cross-examine  the  witness,  but  to  "make  a  state- 
ment," so  that  it  might  be  reported  in  the  newspapers,  together  with  the 
remarks  of  the  witness.  Week  after  week  the  commission  had  taken  the 
testimony  of  men  who  assailed  the  character  of  Standard  Oil  officials  by 
charging  that  they  had  been  guilty  of  the  most  contemptible  acts  and  dis- 
reputable business  methods,  but  it  had  never  been  suggested  that  anyone 
had  a  ricrht  to  defend  them  at  the  time,  in  order  that  the  explanation  and 
contradiction  of  such  statements  might  go  to  the  public  together  with  the 
charges. 

When  Mr.  Phillips  was  reminded  that  it  was  customary  to  swear  wit- 
nesses, and  that  a  member  of  the  commission  would  object  to  the  chairman 
or  any  other  member  giving  testimony  without  being  called  as  a  witness  and 
being  sworn,  Mr.  Phillips  suggested  that  "the  chair  probably  erred  in  the 
last  statement  that  he  made." 

It  will  be  seen  that  when  Mr.  A.  L.  Harris  suggested  that  the  witness 
give  the  amount  of  taxable  property  of  the  oil  counties  in  Pennsylvania  at 
that  time,  together  with  a  similar  statement  relating  to  the  period  prior  to 
the  oil  development,  in  order  to  answer  the  charge  of  Mr.  Lee  that  "these 
counties  are  not  as  well  off  as  they  would  have  been  had  they  never  produced 
a  barrel  of  oil,"  Mr.  Phillips  promptly  suggested  that  that  would  not  be  a  fair 
comparison,  as  an  "advance  has  occurred  all  along  in  other  sections  of  the 
country  during  the  same  period."  This  valuable  suggestion  by  Mr.  Phillips 
was  stricken  from  the  official  report. 


188  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

The  complete  stenographic  report  of  Mr.  Archbold's  testimony  taken 
before  the  Industrial  Commission  September  8,  1899,  follows: 

Mr.  PHILLIPS.  I  will  state  to  the  commission  that  Mr.  John  D.  Arch- 
bold,  a  gentleman  whom  I  have  known  for  many  years,  connected  with  the 
Standard  Oil  Company,  is  present  to  give  us  testimony  and  information  in 
regard  to  the  Standard  Oil  Company.  I  am  pleased  to  present  Mr.  Archbold 
to  the  commission.  Professor  Jenks  will  take  the  lead  in  asking  questions 
of  him. 

Q.  (By  Professor  JENKS.)  Will  you  kindly  give  your  name  and  address 
to  the  stenographer?    A.  John  D.  Archbold,  New  York  City. 

Q.  What  is  your  relation  to  the  Standard  Oil  Company  at  the  present 
time?  A.  I  am  vice-president  of  the  Standard  Oil  Company  of  New  York  at 
the  present  time. 

Q.  How  long  have  you  been  connected  with  the  Standard  Oil  Company? 
A.  Since  1875. 

Q.  Have  you,  in  anticipation  of  the  examination,  prepared  any  special 
statement  for  the  use  of  the  commission?     A.  I  have. 

Q.  I  shall  be  glad,  Mr.  Archbold,  if  you  will  give  that  first,  and  we  will 
supplement  that  with  questions  afterwards.  A.  Well,  the  general  statement 
that  I  have  made  known  to  you  already.  Professor,  in  answer  to  the  specific 
inquiries,  proves  to  be  not  quite  ready,  and  that  will  be  furnished  you  within 
a  few  days. 

Q.  You  mean  answers  to  the  general  schedule?  A.  Answers  to  the  gen- 
eral schedule,  yes,  sir. 

Q.  (By  Mr.  SMYTH.)  I  think  it  would  be  well  if  we  would  ask  Mr.  Arch- 
bold just  at  this  stage  to  give  us  some  detailed  account  of  the  organization 
of  the  Standard  Oil  Company,  and  its  different  departments.  We  do  not 
want  the  names  of  the  individuals,  but  your  transportation  department,  for 
instance,  how  it  is  managed?  A.  That  will  all  be  furnished — all  a  part  of 
the  statement  which  is  in  course  of  preparation. 

Professor  JENKS.  If  you  will  give  a  general  statement  in  your  own  way 
and  begin  with  the  points  that  you  care  to  bring  out,  we  would  thank  you. 

Mr.  PHILLIPS.  The  chair  would  state  that  there  was  a  resolution 
passed  some  time  ago  that  any  written  matter  that  was  to  be  presented  to 
the  commission  would  be  furnished  two  or  three  days  in  advance,  that  \\e 
might  get  more  information  on  which  to  base  inquiries  on  certain  points, 
because  it  would  not  interrupt  the  reading  afterwards,  and  all  the  questions 
could  be  better  brought  out  by  the  commission.  There  were  a  few  members 
who  were  not  present  when  that  resolution  providing  that  the  written  state- 
ments of  the  witnesses  should  be  furnished  to  the  commission  two  or  three 
days  in  advance,  was  passed.  We  have  not  adhered  to  that  resolution 
strictly,  so  that  the  chair  would  not  consider  it  out  of  order  for  any  member 
of  the  commission,  or  Professor  Jenks,  to  ask  Mr.  Archbold  to  pause  during 
the  reading  of  the  written  statement,  to  give  information  on  any  given  point. 

Professor  JENKS.  Perhaps  I  should  say,  Mr.  Chairman,  that  Mr.  Arch- 
bold has  kindly  shown  this  statement  to  me  beforehand  in  the  order  in  which 
it  is  to  be  presented,  and  he  will,  of  course,  give  us  an  opportunity  from  time 
to  time,  as  he  presents  it,  to  ask  whatever  questions  we  see  fit. 

The  WITNESS.  It  will  be  a  matter  of  preference  to  me,  and  I  think  it 
will  make  what  I  have  to  say  more  intelligible  to  you  all  if  I  might  first  be 
allowed  to  answer  the  criticisms  of  the  witnesses  who  have  appeared,  and 
so  let  my  answers  lead  up  to  such  other  general  statement  on  the  subject 
which  I  may  make. 

Mr.   PHILLIPS.     Certainly. 

The  WITNESS.     Shall  I  proceed? 

Mr.  PHILLIPS.     Yes,  sir. 

The  WITNESS.  I  answer  first  the  testimony  of  Mr.  J.  W.  Lee,  of  Pitts- 
burg. It  is  ratheif  remarkable,  gentlemen,  that  the  first  witness  to  appear 
before  you  as  a  special  critic  of  our  business,  on  the  ground  of  its  being  a 
trust,  should  at  the  outset,  have  acknowledged  himself  to  bo  not  only  a  mem- 
ber of,  but  the  real  head  of  a  trust.  This  Mr.  TiOe  specifically  does  acknowl- 
edge, and  I  may  say  for  your  information,  that  Mr.  Lee  and  his  associates 
have  gone  a  step  further  than  any  other  company  I  know  of  in  that  they 


JOHN  D.  ARCHBOLD.  189 

have  bound  themselves  together  not  only  by  the  ordinary  trust  ties,  but  in  a 
voting  trust  made  up  of  a  majority  of  the  stock  of  their  principal  companies, 
with  a  view  to  perpetuating  their  faction  in  power  indefinitely,  and  practi- 
cally disfranchising  the  minority.  I  make  this  statement,  gentlemen,  not  as 
a  criticism,  but  as  rather  a  striking  evidence  of  the  irresistible  tendency 
towards  combination.  I  have  here  a  copy  of  the  voting  trust  of  the  United 
States  Pipe  Line  Company,  the  original  trustee  under  which  was  a  Mr.  Wood, 
who  has  since  died.  He  has  been  succeeded  under  this  voting  trust  by  three 
trustees,  namely,  Thomas  W.  Phillips,  L.  Emery,  Jr.,  and  Hugh  King. 

Agreement  made  April  26,  1893,  is  as  follows: 

"Whereas,  each  of  the  undersigned  is  a  subscriber  to  the  capital  stock  of 
the  United  States  Pipe  Line  Company,  and  is  now  a  stockholder  thereof,  and 
each  is  interested  pecuniarily  in  the  oil  business  either  as  refiner,  producer 
of  crude,  exporter,  owner  of  terminal  facilities  at  or  near  tidewater,  or  deal- 
ers in  petroleum  and  its  products  for  domestic  consumption; 

"And,  whereas,  we  have  each  of  us  entered  into  the  organization  of  the 
said  United  States  Pipe  Line  Company  for  the  purposes  expressed  in  its 
charter,  and  with  the  further  intent  and  purpose  to  secure  and  furnish  to  each 
of  us  an  independent  outlet  for  our  products,  both  crude  and  refined,  not 
controlled  or  influenced  by  others  hostile  to  our  respective  business  interests, 
and  to  secure  cheaper  and  better  transportation  facilities  and  available  mar- 
kets for  our  respective  products; 

"And,  whereas,  to  that  end.  the  owners  of  several  oil  refineries  located 
in  the  interior  and  at  the  seaboard,  in  which  said  refineries  some  of  the 
undersigned  are  owners  in  whole  or  in  part,  have  by  agreements  based  upon 
lawful  and  sufficient  considerations  entered  into  contracts  to  furnish  to  the 
said  United  States  Pipe  Line  Company  the  product  of  said  refineries  for 
transportation,  and  said  company  has  also  contracts  for  crude  oil  for  trans- 
portation from  the  wells,  and  for  furnishing  terminal  and  export  facilities 
at  tidewater,  as  by  said  contracts  and  agreements  will  fully  appear; 

"Now,  therefore,  in  consideration  of  the  premises  and  of  good,  lawful, 
and  sufficient  pecuniary  and  other  considerations  mutually  and  severally 
received,  and  in  order  to  secure  the  successful  completion  of  the  oil-pipe 
lines  projected  and  now  being  laid  by  the  said  United  States  Pipe  Line  Com- 
pany, with  storage  tanks,  terminal,  transportation,  and  export  facilities,  and 
to  each  of  us  in  his  business,  the  benefits  of  the  several  contracts,  agree- 
ments, plans  of  operation,  secured  or  being  negotiated,  made  or  in  contem- 
plation, and  to  keep  the  control  of  the  stock  of  the  United  States  Pipe  Line 
Comnany  in  hands  friendly  to  the  interests  of  the  undersigned  as  aforesaid, 
we  the  undersigned  do  bind  ourselves,  each  for  himself,  severally  and  not 
jointly,  and  each  to  the  others  jointly,  to  the  following  stipulations,  cove- 
nants, and  agreements,  each  in  the  sum  of  one  hundred  ($100)  dollars  for 
each  share  of  stock  now  he'd  by  each  subscriber,  the  amount  of  which  is  by 
him  now  placed  opposite  his  signature  hereto,  to-wit: 

"1.  We  and  each  of  us  agree,  in  manner  aforesaid,  that  all  of  our  inter- 
ests as  subscribers  to  the  capital  stock  of  the  United  States  Pipe  Line  Com- 
pany, and  our  rights  under  our  respective  contracts  of  subscription,  and  all 
of  our  stock  as  soon  as  paid  up.  the  certificates  therefor  and  the  receipts  for 
the  installments  paid,  be  vested  in  and  issued  to  A.  D.  Wood,  trustee,  who 
shall  hold  the  same  for  each  of  us  proportionately  in  trust  for  the  term  of 
five  years  from  the  first  day  of  April.  1893,  at  which  date,  unless  this  agree- 
ment should  be  extended  for  a  further  term,  said  trustee  shall  assign  and 
transfer  to  each  of  us  the  stock  and  certificates  so  held,  unless  sooner  ter- 
minated by  a  vote  of  three-quarters  of  the  stock  so  held  in  trust. 

"2.  We  further  agree  and  bind  ourselves  that  each  of  us,  not  more  than 
30  days  prior  to  each  regular  annual  meeting  of  stockholders,  or  before  any 
lawfully  called  special  meeting  thereof,  will  make  and  mail  or  deliver  to 
said  trustee  a  power  of  attorney  or  proxy  to  vote  for  each  of  us  at  any  such 
meeting  or  any  adjournments  thereof,  and  in  case  said  trustee  shall  not 
receive  said  power  of  attorney  or  proxy  in  time  for  use  at  the  same,  each 
hereby  constitutes  the  said  A.  D.  Wood  attorney  in  fact  to  make  and  sign 
said  proxy  or  power  of  attorney  in  our  names  for  each  of  us,  empowering 
him,  the  said  trustee,  to  vote  at  said  meeting  or  meetings  for  each. 


190  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

"3.  It  is  further  agreed  that  upon  request  in  writing  of  any  of  the  under- 
signed to  said  trustee,  that  he  as  the  equitable  owner  of  said  stock  or  inter- 
est in  capital,  desires  to  pledge  the  same  for  a  loan  of  money  to  the  said 
equitable  owner,  the  said  trustee  shall,  within  48  hours  after  receiving  notice 
of  the  name  and  location  of  the  lender  of  said  money,  acquaint  a  majority  of 
the  board  of  directors  of  said  request  and  of  the  name  and  address  of  said 
proposed  lender,  and  shall  within  thirty  (30)  days  thereafter  either  lend  or 
furnish  to  the  said  applicant  an  equal  amount  of  money,  upon  the  same  time, 
at  the  same  rate  of  interest,  upon  the  security  of  said  stock  or  interest  in 
capital,  or  else  shall  in  proper  legal  form  assign  or  pledge  the  said  stock  or 
part  thereof,  to  the  lender  designated  by  the  said  equitable  owner  of  said 
stock. 

"4.  It  is  further  agreed  that  no  sales  of  stock  so  held  in  trust  shall  be 
made  by  the  equitable  owner  thereof  during  the  continuance  of  this  trust. 

"5.  In  the  event  of  the  death,  resignation  or  disability  of  the  trustee 
herein  named,  his  successor  shall  be  appointed  by  the  vote  of  three-quarters 
in  interest  of  the  signers  hereof.  The  said  successor,  when  appointed,  shall 
have  all  the  powers  and  shall  perform  the  duties  of  the  trustee  herein  desig- 
nated, failing  to  do  which  he,  or  the  trustee  hereby  appointed,  may  be 
removed  by  a  three-quarter  vote  of  the  stock  in  interest  hereof. 

"In  the  event  of  suit  being  brought  to  enforce  this  agreement,  or  for  the 
stipulated  damages  for  breach  thereof,  the  same  shall  be  in  the  name  of  the 
said  trustee  and  for  the  benefit  of  all  not  delinquent,  as  hereinbefore  pro- 
vided. 

"The  said  trustee,  who  shall  be  a  stockholder  in  the  United  States  Pi:)e 
Line  Company,  shall  not  be  held  liable,  personally,  except  for  gross  ne  ;li- 
gence  or  for  the  violation  of  this  agreement  in  its  letter  or  spirit.  He  shall, 
before  entering  upon  his  duties,  accept  this  appointment  in  writing,  and  at  the 
same  time  enter  into  a  bond  or  obligation  of  five  thousand  ($5,000)  dollars 
that  he  will  faithfully  discharge  his  duties  in  accordance  with  the  terms  and 
spirit  of  this  contract. 

"It  is  further  understood  and  agreed  that  in  voting  said  stock  the  parties 
hereto  and  said  trustee  shall  vote  for  persons  as  directors,  interested  in  the 
business  of  refining,  producing  and  exporting  oil,  as  herein  stated  and  as 
near  as  may  for  members  of  each  in  proportion  to  the  interest  of  each  class 
of  capital. 

"In  witness  whereof  the  said  parties  have  hereunto  set  their  hands  and 
seals  the  day  and  year  first  above  written. 

"I named  as  trustee  in  the  foregoing  instrument,  do 

hereby  accept  the  duties  of  the  trust,  and  bind  myself  to  perform  the  same 
in  accordance  with  law  and  the  letter  and  spirit  of  said  agreement,  in  the 
sum  of  five  thousand  ($.5,000)  dollars,  to  be  paid  upon  breach  hereof. 

(L.  S.) 

"April  1893." 

T  present  also,  as  being  perhaps  more  easily  understood,  a  printed  copy 
of  the  voting  trust  agreement  of  the  Pure  Oil  Company* 

tQ.  (By  Vice-Chairman  PHILLIPS.)  Will  you  just  allow  a  remark  there? 
My  name  is  mentioned  in  this,  and  I  will  just  explain  to  the  commission  that 
I  am  connected  with  this  combination,  and  I  have  sold  out  my  interest  in 
two  combinations. 

Professor  JENKS.      How   is  that? 

Vice-Chairman  PHILLIPS.  I  am  connected  now  with  a  combination  (as 
my  name   has  appeared)    formed   under  the   laws  of  the  State  of  New  Jersey. 

Mr.  SMYTH.  Do  you  wish  this  to  go  down  as  evidence,  as  testimony, 
Mr.   Phillips? 

Vice-Chairman  PHILLIPS.  Well,  I  would  like  to  make  that  statement  to 
the  commission  and  I  have  no  objection  to  its  being  taken  down  very  briefly, 
very  briefly.  Under  the  existing  order  we  have  to  combine.  It  is  the  only  way. 
We  are  forced  into  that  mode  of  doing  business;  at  least  that  is  my  view  of 


♦This  voting  trust  agreement,  together  wilh  a  modified  form  as  furnished  tn  the 
cnmmission  by  J.  'W.  Lee,  will  be  found  iii  Ch.TPtor  IIT. 

tRlack  faced  type  indicates  matter  omitted.  In  the  course  of  editing,  from  the 
oflflcial  report. 


JOHN  D.   ARCHBOLD.  191 

it.  But  I  am  perfectly  willing  to  come  under  any  restrictive  legislation  that 
is  good  for  the  whole  people,  in  governing  these  combinations  or  trusts.  That 
is  public  and  understood.  I  was  in  the  State  of  New  Jersey  last  week  in 
connection  with  the  combination  there,  and  am  the  trustee  as  stated. 

A.  (Mr.  ARCHBOLD  continuing.)  Mr.  Lee  charges  that  we  fought  the 
passage  of  the  free  pipe  line  bill  in  the  Pennsylvania  Legislature,  and  that 
we  caused  dodgers,  or  small  hand  bills,  to  be  circulated,  saying  that  if  the 
free  pipe  bill  became  a  law  the  orchards  would  be  destroyed,  springs  pol- 
luted, death  lurk  at  their  door-sills,  and  so  forth  and  so  forth.  I  want  to 
deny  that  in  toto.  In  those  early  days  to  which  he  referred  we  were  in  favor 
of  the  passage  of  the  free  pipe  law  in  the  State  of  Pennsylvania.  We 
desired  it.  We  were  entering  the  pipe  line  business  and  fully  understood  its 
great  importance  to  the  future  of  the  petroleum  trade,  and  it  is  not  likely 
that  we  would  have  prejudiced  our  own  cause  by  any  such  action  as  Mr. 
Lee  claims. 

Q.  (By  Representative  LIVINGSTON.)  You  deny  the  issuing  of  the  cir- 
cular? A.  I  deny  the  issuing  of  the  circular  in  toto.  I  never  knew  of  the 
circular  until  it  was  referred  to  in  his  testimony. 

Q.  Do  you  know  if  such  circulars  were  issued?  A.  I  do  not.  I  never 
heard  of  that  before. 

Q.  You  do  not  know  who  issued  them?  A.  I  do  not  know  that  they  were 
issued.  Mr.  Lee  refers,  in  the  way  of  criticism,  to  our  course  regarding  our 
relations  with  the  Pennsylvania  road,  in  connection  with  the  Empire  Trans- 
portation Company's  refinery.  I  may  say,  in  a  word  of  explanation,  that,  at 
the  time  specified,  people  prominent  in  oflficial  relations  with  the  Pennsyl- 
vania Railroad  engaged  in  the  petroleum  business  on  their  own  account. 
We,  deeming  that  outside  of  the  regular  province  of  a  railroad  company  of 
which  we  were  large  patrons,  discontinued  our  shipments  over  the  Pennsyl- 
vania road,  transferring  them  to  the  other  great  lines.  This  loss  of  traffic 
fi.nally  brought  the  Pennsylvania  officials  proper  to  a  negotiation  regarding 
this  special  refinery  business  to  which  I  have  referred,  and  these  negotia- 
tions resulted  in  our  purchase  of  those  refineries,  and  in  our  again  becoming 
patrons  in  the  way  of  transportation  of  the  Pennsylvania  Railroad.  That  is 
the  exact  history  of  the  case,  simply  told. 

Q.  (By  Mr.  SMYTH.)  Are  you  walling  to  state  what  those  negotiations 
were?  A.  Well,  I  would  be  glad  to  if  I  had  them  in  mind,  but  it  is  a  trans- 
action of  nearly  20  years  ago,  and  I  cannot  give  any  really  exact  outline  of  it. 

Q.  AVere  there  considerable  advantages  offered  to  the  Standard  Oil  Com- 
pany over  other  shippers?  A.  There  was  no  advantage  offered  to  the  Stand- 
ard Oil  Company.  The  advantage  was  in  favor  of  their  own  people,  as  we 
felt  it  to  be,  and  that  was  the  main  reason  for  our  discontinuing  our  ship- 
ments on  that  road. 

Q.  After  these  negotiations  did  the  Standard  Oil  Company  secure  better 
rates  than  other  refiners?  A.  I  go  into  that  very  fully  in  answer  to  the 
specific  charge  in  that  respect. 

Q.  (By  Mr.  FARQUHAR.)  Were  the  Pennsylvania  Railroad  holders  of 
oil  participants  with  you  in  transportation  at  the  s?.me  time  you  made 
arrangements  with  the  Pennsylvania?     A.  No,  their  relations  ceased. 

Q.  (By  Professor  JENKS.)  Can  you  furnish  that  account  more  in  de- 
tail?   A.  Oh,  undoubtedly,  if  you  desire  it. 

The  Empire  and  Green  Line  were  corporations  doing  business  over  the 
Pennsylvania  Railroad,  the  stock  of  which  was  owned  by  the  officers  and 
managers  of  the  railway.  Through  these  companies  the  railway  became 
interested  both  in  transportation  of  oil  by  pipe  lines  and  in  the  refining  of 
oil.  The  Standard  Oil  Company  claimed  that  the  railway  discriminated  in 
freights  in  favor  of  its  own  refineries,  and  refused  to  ship  over  that  road. 
This  led  to  negotiations  for  the  sale  of  the  pipe  lines  and  refineries  to  per- 
sons interested  in  the  Standard.  This  sale  took  place  October  1,  1877.  The 
railway  first  purchased  from  the  Empire  and  Green  Lines  all  the  pipe  lines 
and  refineries  which  they  owned,  which  it  was  empowered  to  do  by  virtue 
of  an  existing  contract,  and  then  conveyed  the  pipe  lines  and  refineries  to 
the  Standard  parties.* 


*This  statement  was  furnished  in  accorc!:ince  with  the  request  by  Professor  Jenks 
and  inserted  in  testimony  afterward. 


192  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

Mr.  Lee  goes  quite  into  detail  in  reference  to  the  allegations  regarding 
preferential  railroad  rates  that  he  claims  were  given  to  us  during  that  early 
period  of  the  oil  business.  I  want  to  answer  all  charges  made  at  different 
times  during  his  testimony  at  once  and  as  definitely  as  possible.  He  treated 
first  the  well  worn  statement  regarding  the  deductions  originally  made  by 
Mr.  Emery,  or  alleged  to  have  been  made  by  him,  from  the  testimony  of  Mr. 
Cassatt,  an  official  of  the  Pennsylvania  Railroad,  covering  alleged  rebates 
paid  to  our  company  for  a  certain  period.  I  have  here  and  I  desire  to  leave 
witli  you  a  statement  of  the  analysis  of  Mr.  Cassatt's  testimony  in  that 
regard,  prepared  by  our  counsel  at  the  time,  showing  the  utter  falsity  of  Mr. 
Emery's  statement. 

Mr.  Emery's  statement  was  made  on  an  absolutely  false  hypothesis 
throughout.  There  never  was  any  foundation  for  it.  It  was  one  of  those 
catching  statements,  lies,  you  might  term  them,  which  take  hold  and  travel 
fast.  It  has  been  denied  over  and  over  again,  but  the  people  who  agitate 
these  questions  have  adopted  it  as  one  of  their  stoclt  features  in  trade,  and 
have  kept  on  repeating  it  *until  I  believe,  at  this  time,  nearly  20  years  since 
it  was  made,  even  Mr.  Emery  himself  begins  to  believe  it  to  be  true.  I  have 
no  right  to  say  that,  but  there  is  a  suspicion  that  that  may  be  true.  I  desire 
to  submit  this  analysis,  which  I  will  read,  as  it  is  so  important  to  the  ques- 
tion:    (Reading.) 

"The  assertion  that  Mr.  Cassatt  testified  that  $10,000,000  was  paid  to  the 
Standard  Oil  Company  as  rebates  from  October  17,  1877,  to  March  31,  1879, 
was  first  made  by  Mr,  Lewis  Emery,  and  in  an  examination  before  the  Com- 
mittee on  Manufactures  of  the  Fiftieth  Congress,  May,  1888,  he  shows  how 
he  deduced  these  figures  from  the  testimony  referred  to.  I  quote  from  page 
241  of  the  volume  containing  that  testimony: 

"  'Q.  (By  Mr.  GOWEN.)  You  were  also  the  authority,  were  you  not,  for 
the  statement  which  is  referred  to  in  Mr.  Dodd's  book  that  it  was  proved 
during  that  examination  that  in  a  period  of,  I  think,  17  months 

" 'The  WITNESS  (Mr.  EMERY),  (interrupting).  Seventeen  and  one-half 
months. 

"  'Q.  (Continuing)  the  four  railroad  companies  had  paid  to  the  Stand- 
ard Oil  Company  $10,000,000  as  rebates  on  the  oil  carried  by  them,  were 
you  not?     A.  Yes,  sir. 

"  'Look  at  that  paper  (handing  paper  to  witness)  and  state  whether  you 
made  an  analysis — an  examination  of  the  testimony  given  by  Mr.  Cassatt, 
the  Standard  Oil  Company  people  and  other  railroad  officers  in  that  suit,  in 
order  to  ascertain  what  the  total  amount  of  money  paid  over  as  discrimina- 
tion during  that  period  of  seventeen  and  one-half  months  was?    A.  I  did.' 

Mr.  ARCHBOLD  (Continuing).  "The  witness  then  presented  a  paper 
prepared  by  himself,  which,  if  true,  showed  a  rebate  to  the  Standard  Oil 
Company  of  64 1/^  cents  per  barrel  on  refined  oil,  29  cents  on  crude  oil  from 
one  district,  26%  cents  on  crude  oil  from  another  district,  and  221/^  cents  per 
barrel  on  crude  oil  paid  to  the  American  Transfer  Company.  He  added  these 
figures,  divided  them  by  three,  and  claimed  55  cents  as  the  average  rebate 
to  the  Standard.  He  then  took  the  total  consumption  of  oil  from  October  18. 
1877.  to  March  31,  1879,  to-wit,  18,556,277  barrels,  and  multiplying  by  55 
cents  produced  $10,155,218.  which  he  claimed  showed  was  the  amount  of  dis- 
criminatory rebates  paid  to  the  Standard  in  17  months. 

"Mr.  Emery  did  not  pretend  to  have  any  personal  knowledge  of  the  sub- 
ject. He  pretended  to  compile  his  figures  from  the  evidence  of  Mr.  Cassatt. 
That  evidence  is  published  in  the  same  volume  which  contains  Mr.  Emery's 
evidence.  To  reach  this  result,  Mr,  Emery  had  to  make  these  absurdly  false 
assumptions: 

"1.  That  all  oil  consumed  was  shipped  eastward  over  four  trunk  lines, 
and  was  all  shipped  by  the  Standard  Oil  Company. 

"2.  That  all  these  trunk  lines  paid  the  same  rebate  as  the  Pennsylvania 
Railroad  Company. 


*BIaok   faced   type  Indicates   matter   omitted,  In  the  course  of  editing,   from  the 
official  report. 


JOHN  D.  ARCHBOLD.  193 

"3.  That  the  shipments  of  oil  of  the  class  on  which  the  rebate  was  64i/^ 
cents  was  equal  to  the  shipments  of  oil  of  the  class  on  which  the  rebate  was 
261/^  cents. 

"Eliminate  these  gratuitous  assumptions  from  Mr.  Emery's  statements, 
and  his  conclusion  is  shown  to  be  ridiculous. 

"These  gratuitous  assumptions  are  as  nothing,  however,  compared  to 
the  gratuitous  falsehoods  embraced  in  the  figures  given.  The  claim  is  that 
a  discriminating  rebate,  averaging  55  cents  was  paid  to  the  Standard  Oil 
Company  from  October,  1877,  to  March  31,  1879,  by  four  trunk  lines. 

"The  evidence  of  Mr.  A.  J.  Cassatt,  which  is  referred  to  for  the  truth  of 
these  statements,  refers  only  to  one  trunk  line,  the  Pennsylvania  Railroad, 
and  shows: 

"1.  That  the  Standard  Oil  Company  shipped  no  oil  over  the  Pennsylvania 
Railroad  until  July,  1875.  That  the  Pennsylvania  Railroad  was  then  inter- 
ested in  refining  in  competition  with  the  Standard,  and  not  only  allowed  the 
Standard  no  preference,  but  discriminated  against  it  to  such  an  extent  that 
the  Standard  stopped  shipping  over  the  road  in  March,  1877. 

"2.  That  in  October,  1877,  the  Pennsylvania  Railroad  and  the  Standard 
entered  into  an  agreement  by  which  the  Standard  Oil  Company  was  to  have 
a  commission  of  10  per  cent,  on  all  freight  furnished  by  It  in  consideration 
of  the  Standard  agreeing  to  equalize  oil  freights  on  the  four  trunk  lines. 

"3.  That  this  agreement  did  not  effect  a  discrimination  even  to  that 
extent  as  against  other  shippers  over  the  Pennsylvania  Railroad  prior  to  May 
1,  1878,  because  said  shippers  had  contracts  extending  to  that  date,  which 
were  excepted  in  the  contract  with  the  Standard. 

"4.  That  the  Pennsylvania  Railroad  was  willing  and  offered  to  carry  oil 
for  all  shippers  on  the  same  terms  with  the  Standard,  excepting  only  the  10 
per  cent,  commission  for  which  it  demanded  like  considerations. 

"5.  That  it  did  continue  to  carry  for  all  shippers  who  did  all  their  busi- 
ness over  its  line  as  low  as  for  the  Standard,  commission  included. 

"6.  That  shippers  not  using  the  Pennsylvania  Railroad  were  able,  after 
May  1,  1878,  to  get  oil  east  by  the  Erie  Canal  lower  than  by  rail,  and  shipped 
their  oil  by  that  route,  in  consequence  of  which  the  Pennsylvania  Railroad 
shippers  were  paying  greater  freight  rates  than  other  shippers. 

"7.  In  consequence,  the  Pennsylvania  rate  was  reduced  to  those  who 
continued  to  ship  by  that  line  44 1/^  cents  on  refined,  making  the  net  rate  $1; 
said  44V2  cents  being  paid  as  rebate. 

"8.  For  the  same  reason,  namely,  to  meet  canal  rates,  in  July,  1878,  the 
rate  to  those  who  shipped  by  rail  was  further  reduced  20  cents,  the  20  cents 
being  paid  as  a  rebate,  and  refunded  back  to  May  1,  1878. 

"9.  That  these  rebates  were  paid  to  all  shippers  who  shipped  entirely 
by  rail  and  were  for  the  express  purpose  of  putting  them  on  equality  with 
those  wlio  shipped  by  canal. 

"10.  The  same  is  true  of  the  rebate  allowed  on  crude  oil  during  the  same 
period,  except  10  per  cent,  paid  to  the  Standard  and  22^/^  cents  paid  to  the 
American  Transfer  Company,  the  latter  being  the  pipe  line's  share  of  a 
through  rate. 

"11.  That  the  rebates  which  were  paid  from  May  1,  1878,  to  equalize  rail 
and  canal  shipments  were  discontinued  December  8  of  the  same  year,  when 
the  canal  was  closed. 

"12.  All  payments  of  rebates  entirely  ceased  March  31,  1879. 

"The  result  of  the  testimony  is  that  while  there  was  an  agreement  for  a 
10  per  cent,  commission  between  the  dates  referred  to  there  was,  in  fact,  no 
discrimination  against  shippers  by  the  Pennsylvania  Railroad,  that  the 
rebates  were  paid  to  all  shippers  over  that  line  and  that  they  were  paid  to 
put  shippers  on  that  line  on  an  equality  with  shippers  by  canal." 

Q.  (By  Mr.  SMYTH.)  Do  you  put  that  in  as  a  part  of  your  testimony? 
A.  I  make  that  as  a  part  of  my  testimony,  and  I  hope  it  will  be  in  the  record 
of  the  proceedings  of  this  commission,  as  a  final  answer  to  those  lusty  old 
lies  about  the  $10,000,000  rebate. 

Q.  (By  Representative  LIVINGSTON.)  Do  you  say  now,  in  your  place 
as  witness,  that  there  have  never  been  any  rebates  in  favor  of  the  Standard 
Oil  Company  of  any  amount  at  any  time?  A.  I  am  proceeding  with  the 
statement. 

13 


194  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

Q.  I  understand  that  you  deny  everything  that  has  been  said  here  before 
about  rebates? 

*Mr.   FARQUHAR.     Oh,  no. 

The  WITNESS.     This   is  specifically  the  Cassatt  matter. 

Representative  LIVINGSTON.  I  don't  want  specifically  anything.  I 
want  to  know. 

Mr.  PHILLIPS.  I  understand  that  Mr.  Archboid  will  take  that  up  after- 
wards. 

The  WITNESS.  Oh,  yes,  sir;  I  will  go  right  into  that  and  be  glad  to 
answer  any  questions  about  it. 

Mr.  Lee  maizes  the  statement  that  the  railroad  companies  are  now  sys- 
tematically robbed  by  their  own  officers  through  the  making  of  discrimina- 
tory contracts  with  the  Standard  Oil  Company  for  lubricating  oils.  *Mr. 
Lee  and  his  coadjutors  seem  rather  to  have  reached  the  conclusion  that  the 
old  lies  about  special  tariffs  have  been  pretty  well  worked  out.  and  they  had 
to  work  up  something  new.  I  had  never  heard  of  this  allegation  until  it  was 
brought  out  here  by  Mr.  Lee  and  some  other  witnesses  who  have  appeared 
before  you.  I  want  to  deny  it  absolutely  and  entirely  as  being  utterly  untrue, 
and  I  challenge  them  to  produce  a  scintilla  of  evidence  in  support  of  their 
allegation. 

Q.  (By  Professor  JENKS.)  Perhaps,  Mr.  Archboid,  you  will  note  that 
Mr.  Lee  says  he  does  not  state  that  to  be  absolutely  true,  but  it  is  a  matter 
of  belief  with  him.  A.  It  is  the  same  old  method,  yes  sir;  the  same  old 
method.  He  does  not  know  it  to  be  true,  and  he  could  not  know  it  to  be 
true,  and  I  challenge  him  to  make  any  showing  of  any  such  thing  at  any 
place  or  at  any  time. 

Q.  You  say  that  it  is  not  true?  A.  I  say  that  it  is  not  true.  In  giving 
the  answer  as  to  whether  the  Standard  Oil  Company  is  now  receiving  dis- 
criminatory rates,  he  does  not  answer  directly,  but  goes  back  to  the  1889 
case,  in  which  the  Standard  Oil  Company  was  in  no  way  involved,  was  not 
in  the  case  referred  to  by  Mr.  Lee,  and  the  same  is  true  in  a  number  of 
other  cases  also.  It  was  not  shown  that  there  was  any  discrimination  in 
favor  of  the  Standard  Oil  Company,  and  as  a  matter  of  fact  the  Standard 
Oil  Company  was  not  given  any  such  discriminatory  rates.  I  make  that 
answer  more  specifically  in  reference  to  the  case  of  the  period  to  which 
he  refers  in  his  testimony  at  that  time. 

Q.  If  there  had  been  any  such  rates,  Mr.  Archboid,  you  would  have 
known  of  them?     A.  I  would  have  known  of  them. 

Q.  It  would  be  impossible  for  any  such  rates  to  be  in  existence  without 
your  knowing  it?  A.  It  would.  I  would  have  known  it.  Further,  the  cases 
referred  to  in  Mr.  Lee's  testimony  as  pending  in  the  United  States  Court  to 
recover  discriminations,  are  really  cases  to  recover  freight  which  the  rail- 
roads charged  the  refiners  on  barrels.  The  Interstate  Commerce  Commis- 
sion decided  that  railroads  carrying  in  both  tank  cars  and  barrels  should 
carry  barrels  free,  and  the  railroads  refusing  to  accept  such  a  decision,  are 
testing  the  question  in  the  United  States  Court.  It  is  fair  to  say  that  the 
same  charge  for  carrying  barrels  was  made  against  the  Standard  Oil  Com- 
pany, and  if  the  refiners  are  successful  in  recovering,  the  Standard  Oil  Com- 
pany will  have  a  claim  for  a  very  large  amount. 

Q.  Against  the  railroads?  A.  Against  the  railroads.  We  wall  be  in  pre- 
cisely the  same  position  as  the  other  shippers,  if  it  is  decided  in  the  interest 
of  the  refiners. 

Q.  (By  Mr.  SMYTH.)  You  would  claim  a  rebate  of  the  freight  on  the 
barrels  of  the  refined?  A.  Yes,  sir;  we  are  in  the  same  position  as  they  are 
on  that  question.  I  may  say,  in  my  opinion,  it  is  a  most  unjust  decision  for 
any  court  to  make,  but  it  is  not  for  me  to  decide  it. 

In  answer  to  the  query  as  to  whether  the  Standard  Oil  Company  was 
paid  rebates  on  shipments  of  other  people,  Mr.  Lee  answers  in  an  untruthful 
and  disingenuous  way,  and  refers  finally  to  the  Rice  case  as  the  one  possible 
support  to  his  assertion.  The  Rice  case  will  be  fully  answered  in  connection 
with  the  testimony  of  another  witness.    It  is  fair  to  say  here,  and  I  will  make 


♦Black   faced   type  Indicates  matter  omitted,  In  the  course  of  editing-,   from  the 
ofncial  report. 


JOHN  D.   ARCHBOLD.  195 

this  statement  covering  ttie  entire  question  of  freight  rates  prior  to  the  pas- 
sage of  the  interstate  commerce  law  in  1887,  that  the  shipments  of  oil  or  any 
considerable  freight  over  the  roads  was  a  question  of  special  contract.  While 
tariffs  were  nominally  issued,  every  shipper  knew  that  a  special  contract 
could  be  had,  and  it  was  uniformly  the  rule  that  special  contracts  were  made 
for  the  shipment  of  any  considerable  freight.  Since  the  passage  of  the  inter- 
state commerce  law,  we  have  strictly  obeyed  it.  I  want  to  say  further  in 
this  connection  that  during  the  period  before  the  passage  of  the  interstate 
commerce  law,  every  and  any  rate  of  freight  was  uniformly  considered  in 
the  fixing  of  prices  at  which  the  oil  was  sold,  *so  that  as  a  matter  of  fact 
the  advantage  of  the  rates  went  to  the  consumer  and  not  to  the  shipper  of 
oil.  We  were  not  averse  to  the  passage  of  the  interstate  commerce  law,  and 
indeed  were  greatly  in  favor  of  it,  believing  as  we  did  that  uniform  rates 
would  be  better  for  the  business,  and  there  could  be  no  stronger  proof  of 
the  correctness  of  this  belief  than  the  fact  that  our  greatest  prosperity  in 
the  business  has  been  realized  since  the  passage  of  the  interstate  commerce 
law. 

Q.  (By  Representative  LIVINGSTON.)  Are  your  books  open  to  verify 
that  statement?  A.  To  the  very  utmost.  I  have  thought  it  worth  while,  in 
view  of  the  hard  downing  of  this  old  ghost,  to  go  into  some  considerable 
collateral  proof  to  show  the  falsity  of  the  charges  in  reference  to  discrim- 
inatory rates,  and  I  now  beg  leave  to  submit  them  to  you,  and  I  will  of 
course  leave  them  with  you. 

Q.  Is  there  a  suit  or  suits  pending,  or  anything  of  the  kind  on  the  part 
of  the  Interstate  Commerce  Commission  against  the  Standard  Oil  Company 
for  rebates  now,  or  have  there  been  since  the  passage  of  the  act?  A.  There 
have  been  various  actions  instituted  regarding  some  special  features  of  the 
carrying  law,  but  I  do  not  know  that  there  are  any  now  pending.  I  think 
that  they  have  all,  so  far  as  related  to  our  interest  directly,  been  adjudicated. 
I  submit  here  in  answer  to  direct  queries,  and  they  are  only  a  very  small 
part  of  the  entire  number  that  I  might  have  had  for  the  asking,  letters  from 
prominent  railroad  officials  representing  the  railroads  of  this  country,  north, 
south,  east  and  west,  answering  on  their  own  part  and  over  their  own  signa- 
.tures,  in  reference  to  the  charge  of  discrimination  in  any  way.  These  letters 
on  this  subject  are  of  the  most  specific  character.  I  thought  it  best  not 
simply  to  rest  on  our  own  denial  on  the  charge  of  discriminations,  but  to 
leave  these  with  you  as  collateral  evidence  of  the  falsity  of  these  statements 
which  our  enemies  and  competitors  in  the  business  are  continually  making 
on  this  question.  I  will,  with  your  permission,  read  some  few  of  these  let- 
ters, and  I  will  submit  a  map  colored  in  lines  showing  the  different  sections 
of  the  country  reached  by  the  railroads  represented  in  these  letters  all  deny- 
ing any  preferential  relations  with  the  Standard  Oil  Company.  I  will  not 
worry  you,  unless  it  is  your  desire,  by  reading  all  these  letters.  I  will  sim- 
ply read  two  or  three  of  them,  if  I  may,  as  samples,  and  leave  the  rest 
with  you. 

Q.  (By  Mr.  FARQUHAR.)  Give  us  the  titles  of  the  roads  from  which 
the  letters  come  first,  and  then  give  the  samples.  A.  I  will  read  first  the 
list:     (Reading.) 

Atchison,   Topeka   &   Santa   Fe  Railway— Paul  Morton,  Second  Vice-President,   Chi- 
cago, 111. 
Baltimore  &  Ohio  Railroad— Oscar  G.  Murray,   First  Vice-President,  Baltimore.  Md. 
Boston  &  Maine  Railroad— W.  P.  Berry,  Second    Vice-President    and    General    Man- 
ager,  Boston,   Mass. 
Chicago  &  Alton  Railroad— C.  A.  Chappell,  Vice-President  and  General  Manager,  Chi- 
cago, 111. 
Chicago,  Milwaukee  &  St.  Paul  Railway— A.  J.  Earling,  Second  A'lce-President,  Chi- 
cago, 111. 
Chicago,   Burlington   &  Quincy  Railroad— Thomas    Miller,    General    Freight    Agent, 

Chicago,  111. 
Cleveland,   Cincinnati,   Chicago  &  St.   Louis    Railway— E.    E.    Cost,    Freight    Traffic 

Manager,  Cincinnati,  Ohio. 
Delaware,   Lackawana   &   Western   Railroad — W.     H.     Truesdale,     President,     New 
York,  N.  Y. 


*Black   faced   type  indicates   matter   omitted,  in  the  course  of  editing,   from  the 
official  report. 


196  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

Erie  Railroad— G.  G.  Cochran,  Fourth  Vice-President,  New  York,  N.  Y. 

Great  Northern  Railway— D.  Miller.  Second  Vice-President,  St.  Paul,  Minn. 

Lake  Shore  &  Michigan  Southern  Railway— W.    H.    Newman,    President,    Cleveland, 

Ohio. 
Louisville  &   Nashville  Railroad— S.   R.   Knott,  First  Vice-President,  Louisville,  Ky. 
New  Y'ork  Central  &  Hudson  River  Railroad— S.  R.  Callaway,  President,  New  York, 

N.  Y. 
Northern  Pacific  Railway— C.  S.  Mellen,  President,  St.  Paul,  Minn. 
Pennsylvania  Railroad— \V.  H.  Joyce,  Freight  Traffic  Manager,  Philadelphia,  Pa. 
St.  Louis  &  San  Francisco  Railroad— D.  B.  Robinson,  President,  St.  Louis,  Mo. 
Southern  Pacific  Company— J.   C.   Stubbs,  Third  Vice-President,   San  Francisco,  Cal. 
Southern  Railway— J.  M.  Culp,  Traffic  Manager,  Washington,  D.  C. 
Union  Pacific  Railroad— H.  G.  Burt,  President,  Omaha,  Neb. 
Wabash  Railroad— S.   B.   Knight,  General  Freight  Agent,  St.  Louis,  Mo. 
Western  New  York  &  Pennsylvania  Railway— F.  T.  Johnson,  General  Freight  Agent, 

Buffalo,  N.  Y. 

The  following  letter  was  sent  to  the  railroad  companies  enumerated  in 
the  above  list: 

Standard  Oil  Company,  26  Broadway,  New  York. 

Dear  Sir— During  May  and  June  of  this  year  the  Industrial  Commission  (a  body 
appointed  by  Congress)  had  a  hearing  in  Washington.  Before  this  body  appeared  a 
number  of  oil  producers  and  refiners  who  testified,  generally,  that  it  was  their  belief 
that  the  railroads  of  the  United  States  were  givit.g  the  Standard  Oil  Company  and 
its  interests  many  advantages  on  its  shipments  of  petroleum  and  its  products  as 
compared  with  those  of  other  oil  shippers. 

We  are  now  and  have  been,  as  you  know,  large  shippers  of  petroleum  and  its 
products  over  your  rails,  and  we  would  be  glad  if  you  would  write  me  a  letter  stat- 
ing as  fully  as  you  can  whether  or  not,  since  the  passage  of  the  Interstate  Commerce 
law,  you  have  in  any  way  given  to  the  Standard  Oil  Company  or  any  of  its  repre- 
sentatives any  lower  rates  of  freight,  either  by  direct  tariff,  rebate,  underbilling,  or 
in  any  way  given  to  it  or  its  representatives  any  advantage  on  the  carriage  of  its 
shipments  over  your  rails  as  against  any  other  shipper.  In  other  words,  have  not 
the  Standard  Oil  Company  and  its  interests  paid  the  same  rate  per  100  pounds  on  its 
shipments,  whether  in  tank  cars,  carloads,  or  less  than  carloads,  as  you  have 
charged  other  shippers  between  the  same  points,  and  has  there  been  since  the  pas- 
sage of  the  Interstate  Commerce  law,  or  is  there  now,  any  arrangement  or  device  by 
which  the  Standard  Oil  Company  have  in  any  way  received  any  advantage  in  the 
transportation  of  its  oil,  per  KX)  pounds,  as  compared  with  any  other  shipper  over 
your  road  between  the  same  points? 

If  you,  yourself,  have  not  full  knowledge  of  the  matter  referred  to,  we  would  be 
glad  if  you  would  confer  with  your  traffic  department  before  answering.  It  may  be 
that  we  will  show  this  letter  and  your  reply  to  the  Industrial  Commission,  and  would 
like  for  your  reply  to  be  as  full  and  explicit  as  possible.  Kindly  reply  at  your  ear- 
liest convenience  and  oblige. 

Yours  truly, 

HOWARD  PAGE, 

I  will  read,  if  you  please,  letters  representing  the  different  sections  of 
the  country.  Here  is  a  letter  from  New  England,  from  the  Boston  &  Maine 
Railroad,  and  dated  at  Boston,  August  18,  1899: 

Mr.  Howard  Page,  26  Broadway,  New  York,  N.   Y. : 

Dear  Sir— Replying  to  your  esteemed  favor  of  the  15th  inst.  You  ask  me  to  state 
whether  or  not,  since  the  passage  of  the  Interstate  Commerce  law,  the  Boston  & 
Maine  Railroad  have  in  any  way  given  to  the  Standard  Oil  Company  or  any  of  its 
representatives,  any  lower  rate  of  freight,  either  by  direct  tariff,  rebate  or  under- 
billing,  than  has  been  openly  quoted  to  all  other  shippers  of  oil,  and  I  am  pleased 
to  be  able  to  state  that  we  have  not. 

Yours  truly, 

W.  P.  BERRY, 
Second  Vice-President  and  General  Traffic  Manager. 

Also  a  letter  of  Mr.  S.  R.  Callaway,  president  of  the  New  York  Central 
&  Hudson  River  Railroad  Company,  under  date  of  August  17,  1899: 
Mr.  Howard  Page,  The  Standard  Oil  Company,  26  Broadway,  New  York: 

Dear  Sir— Referring  to  your  letter  of  the  15th  Inst.  You  may  state  explicitly,  for 
this  company  and  also  for  the  Lake  Shore  &  Michigan  Southern  Railway  Company, 
of  which  I  was  president  and  am  now  a  director,  that  no  discrimination  in  the  mat- 
ter of  rates  has  been,  since  the  passage  of  the  Interstate  law,  extended  in  favor  of 
the  Standard  Oil  Company  over  either  of  these  lines.  So  far  as  my  knowledge  goes, 
no  application  has  ever  been  made  by  any  of  the  officers  of  the  Standard  Oil  Com- 
pany for  any  discriminating  rate. 

Yours  truly, 

S.  R.  CALLAWAY. 


JOHN  D.   ARCHBOLD.  197 

Also  a  letter  from  Mr.  Joyce,  the  general  traffic  manager  of  the  Pennsyl- 
vania Railroad  Company,  dated  August  28,  1899: 
Mr.  Howard  Page,  26  Broadway,  New  York  City: 

My  Dear  Mr.  Page— In  reply  to  your  recent  Inquiry,  in  which  you  call  my  atten- 
tion to  statements  in  the  newspapers  relating  to  the  inquiry  of  the  Industrial  Com- 
mission, in  which  statements  witnesses  say  that  the  railroad  companies  pay  rebates 
to  tlie  Standard  Oil  Company  and  permit  preferences  by  undergauging  tank  cars  and 
by  paying  fictitious  prices  for  oil  supplies;  I  beg  to  say  that  if  said  assertions  are 
meant  to  apply  to  this  company,  in  its  relation  to  the  Standard  Oil  Company,  they 
are  wholly  groundless  and  without  foundation  in  fact. 

Yours  truly, 

W.  H.  JOYCE, 
Freight  Traffic  Manager. 

And  from  Mr.  Newman,  president  of  the  Lake  Shore  &  Michigan  South- 
ern Railway  Company,  dated  Cleveland,  Ohio,  August  17,  1899: 
Mr.  Howard  Page,  Vice-President  Standard  Oil  Company,  New  York  City: 

Dear  Sir— Replying  to  your  favor  under  date  15th,  relating  to  rates  charged 
Standard  Oil  Company  on  traffic  as  compared  with  charges  on  similar  traffic  from 
other  shippers. 

The  Lake  Shore  Company  does  not  now,  and  has  not  heretofore,  so  far  as  can 
be  ascertained  from  the  records  for  a  period  cf  years,  charged  the  Standard  Oil 
Company  any  less  rate  per  lOO  pounds  on  its  property,  whether  oil  or  products,  in 
tanks  or  barrels,  carloads  or  less,  than  charged  to  the  tradie  in  general  on  such  prop- 
erty; in  other  words,  the  Standard  Oil  Company  has  not  received  any  lower  rates  on 
the  vast  traffic  handled  by  that  company  than  any  other  shippers  of  the  same  com- 
modities, regardless  of  quantity. 

I  would  further  state  that  the  Standard  Oil  Company  nor  its  representatives  have 
at  any  time  asked  that  we  give  them  any  form  of  concession,  but,  on  the  other 
hand,  have  insisted  that  the  full  authorized  tariff  rates  be  charged  on  its  shipments, 
and  that  all  other  shippers  of  similar  commodities  be  treated  likewise. 

The  conditions  in  that  respect  do  not  iiffer  from  ihe  practice  during  the  time 
I  was  connected  with  the  Chicago  &  Northwestern  Railway,  as  the  Standard 
Company  insisted  then,  as  it  does  now,  on  application  of  the  tariff  rates  on  all  ship- 
ments of  petroleum  and  its  products. 

Very  respectfully  yours, 

W.  H.  NEWMAN, 

President. 

The  next  is  from  the  Chicago  &  Alton  Railroad  Company  and  is  as  fol- 
lows : 

Chicago,  111.,  August  17,  1S99. 
Mr.  Howard  Page,  Standard  Oil  Company,  26  Broadway,  New  York: 

Dear  Sir— I  take  pleasure  in  stating  to  you,  as  I  have  frequently  stated  to  others 
and  am  willing  to  state  before  the  Interstate  Commerce  Commission,  or  any  other 
authority,  that  in  my  judgment  the  Standard  Oil  Company  has  obeyed  the  Interstate 
law  better  than  any  other  large  shipper  in  the  country. 

So  far  as  the  Chicago  &  Alton  is  concerned,  the  Standard  Oil  Company  has  not 
only  declined  to  accept  concessions  of  any  name  or  nature,  but  has  used  its  influ- 
ence with  the  railroads  to  maintain  agreed  and  tariff  rates,  and  there  has  been  no 
arrangement,  device  or  any  other  plan  by  which  the  Standard  Oil  Company  received 
less  rates  than  any  other  shippers.  The  rates  granted  the  Standard  Oil  Company 
have  been  the  same  that  all  other  oil  shippers  have  had,  whether  in  tank  cars,  car 
loads  or  less  than  car  loads. 

I  have  frequently  stated  to  the  Interstate  Commerce  Commission,  and  to  others, 
that  if  all  the  large  shippers  of  the  country  would  co-operate  in  the  enforcement 
of  the  Interstate  law  as  the  Standard  Oil  Company  has  done,  we  would  have  an  ideal 
condition. 

Yours  very  truiy, 

C.  A.  CHAPPELL, 
Vice-President   and  General   Manager. 

I  will  now  read  the  letter  from  the  Southern  Pacific  Railroad  Company. 
I  do  not  want  to  tire  you  with  these  letters,  but  wish  to  make  out  this  case: 

San  Francisco,   August,  23,  1S99. 
Mr.  Howard  Page,  Standard  Oil  Company,  26  Broadway,  New  York: 

Dear  Sir— I  am  in  receipt  of  your  letter  of  August  15,  in  which  you  refer  to  the 
Industrial  Commission  which  recently  met  in  "Washington  and  before  which  ap- 
peared a  number  of  oil  producers  and  refiners,  who  testified  Generally  that  it  was 
their  belief  that  the  railroads  of  the  United  States  were  giving  the  Standard  Oil 
Company  and  its  interests  many  advantages  on  its  shipments  of  petroleum  and  its 
products  as  compared  with  those  of  other  oil  shippers. 


198  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

I  respond  to  your  invitation  to  state  the  facts  bearing  upon  this  question  in  its 
relation  to  the  Soutliern  Pacific  Company,  not  only  because  I  believe  the  Standard 
Oil  Company  is  entitled  to  it,  but  I  believe  that  it  is  my  duty  to  my  own  company 
and  to  the  railroad  interests  of  the  United  States  that  these  facts  should  be  pub- 
lished. 

Since  the  passage  of  the  Interstate  Commerce  law,  the  Standard  Oil  Company 
has  not  solicited  nor  received  from  the  Southern  Pacific  Company  any  lower  rate  of 
freight  for  the  transportation  of  oil  or  of  the  products  of  petroleum  or  anything  else 
in  which  the  Standard  Oil  Company  deals  than  the  lawful,  published  tariff  rales, 
which  at  the  same  time  were  given  to  every  other  shipper  of  like  commodities  for 
similar  and  contemporaneous  service,  nor  has  the  Standard  Oil  Company,  in  its  use  of 
the  transportatiiin  lines  of  the  Southern  Pacific  Company,  employed  any  device  such 
Hs  misrepresentation  of  the  contents  of  packages  or  cars,  or  underbilling  in  weights, 
in  order  to  avoid  the  tariff  or  to  gain  advantage  over  its  competitors.  I  say  that  the 
Standard  Oil  Company  has  not  employed  these  devices,  because  it  has  not  been  de- 
tected in  any  such  attempts,  and  our  system  of  inspection  has  been  such  that  I  do 
not  believe  such  attempts  could  have  escaped  detection;  in  other  words,  according 
to  my  observation  and  experience,  and  I  iiave  full  knowledge  of  its  transactions 
with  the  Southern  E'acific  Company,  the  Standard  Oil  Company  has  obeyed  the  law 
in  its  spirit  as  well  as  letter. 

Yours  trulv, 

J.  C.  STUBBS. 

Now  a  letter  of  the  St.  Louis  &  San  Francisco  Railroad  Company,  of 
which  Mr.  D.  B.  Robinson  is  president,  dated  St.  Louis,  Mo.,  August  25,  1899: 
Howard  Page,  Esq.,  Standard  Oil  Company,  26  Broadway,  New  York  City: 

Dear  Sir— Absence  from  home  has  prevented  an  earlier  reply  to  yours  of  the  15th 
instant. 

Since  the  passage  of  the  Interstate  Commerce  law,  there  has  been  no  time  that 
the  Standard  Oil  Company,  or  any  of  its  subordmate  companies,  have  enjoyed  any 
lower  basis  of  rates  on  the  business  handled  by  our  lines,  than  that  which  has  been 
charged  all  other  oil  companies  doing  business  with  us.  Tills  statement  is  made 
absolutely,  and  without  qualification  of  any  kind  or  cliaracter. 

In  all  of  our  dealings  with  the  Standard  Oil  Company  we  have  found  it  to  be 
the  rule  that  they  have  never  in  any  instance  asked  us  for  any  lower  basis  of  rates 
than  was  enjoyed  by  any  other  company. 

Yours  very  truly, 

D.  B.  ROBINSON, 

President. 

I  will  read  the  letter  of  Mr.  Culp,  of  the  Southern  Railway  Company, 
dated  Washington,  D.  C,  August  21,  1899: 
Mr.  Howard  Page,  26  Broadway,  New  York: 

Dear  Sir— Replying  to  your  favor  of  the  15th  instant.  Since  the  organization  of 
the  Southern  Railway  Company,  I  have  been  in  charge,  as  traffic  manager,  of  its 
traffic  interests,  including  the  establishment  and  promulgation  of  all  rates  used  by 
it  in  the  transportation  of  passengers  and  freight  over  its  line  of  railway,  and  I 
am  prepared  to  say.  unhesitatingly  and  without  qualification,  that  the  Southern 
Railway  Company  has  at  no  time  given  to  tiie  Standard  Oil  Company,  or  any  of  its 
representatives,  any  lower  rates  of  freight  in  the  carriage  of  shipments  made  by 
that  company  over  our  rails,  either  by  direct  tariff,  refund,  or  otherwise,  than  to 
any  other  shippers  of  similar  commodities. 

Our  rates,  as  issued  from  time  to  time,  are  published  and  filed  with  the  Interstate 
Commerce  Commission,  and  with  the  several  commissions  of  States  traversed  by  the 
Southern  Railway,  and  the  Standard  Oil  Company  has,  in  no  instance,  been  given  the 
benL-Ht  of  anything  less  than  the  rates  so  published  and  filed  with  these  commis- 
sions, and  which  are  the  same  figures  as  are  charged  all  other  shippers  of  petroleum 
and  its  products. 

The  policy  pursued  by  the  Southern  Railway  Company  is  to  treat  all  of  its 
patrons  alike,  and  to  fully  observe  its  obligations  under  the  law,  and  this  policy 
api)lieK  as  well  to  shipments  of  petroleum  as  to  other  classes  of  freight,  between 
points  on  our  line. 

Yours  truly, 

J.   M.   CULP, 
Traffic  Manager. 

Q.   (By  Mr.  FARQUHAR.)     Read  the  Santa  Fe  letter.    A.  This  is  a  letter 
from  Mr.  Paul  Morton,  second  vice-president  of  the  Santa  Fe  system.     It  is 
dated  Ausrnst  17,  1899: 
Standard  Oil  Company,  New  York  City: 

Gentlemen — It  is  with  a  great  deal  of  pleasure  and  satisfaction  that  I  write  you 
in  regard  to  the  general  belief  that  the  railroads  of  the  United  States  are  giving  the 
Standard  Oil  Company,  and  its  interests,  many  advantages  on  its  shipments  of 
petroleum    and    its    products,    as    compared    with   shipments   of   other   oil   producers. 


JOHN  D.  ARCHBOLD.  199 

For  nearly  four  years  I  have  had  charge  of  the  freight  business  of  this  company 
and  never  in  all  that  time  has  the  Standard  Oil  Company's  representatives  asked 
for  or  received  better  rates  than  other  shippers  of  oil  secure.  From*  my  own  expe- 
rience, I  know  that  the  Standard  Oil  Company  does  not  ask  for  rebates  and  I  know 
further  that  the  chief  aim  of  the  freight  representative  of  your  company  has  been  to 
have  the  railroads  of  the  West  absolutely  maintain  the  tariff.  I  wish  that  other 
large  shippers  would  take  the  same  position  in  regard  to  this  matter  that  your  com- 
pany does.  If  the  terrible  pressure  from  gigantic  shippers  for  inside  rates  could  be 
relieved,  the  transportation  problem  in  the  country  woUid  be  a  very  easy  one  to 
solve. 

The  position  of  your  company  in  not  asking  for  special  rates  and  in  declining  to 
receive  rebates  and  its  effort  to  keep  the  rates  on  oil  and  its  products  up  has  been  a 
common  topic  of  discussion  among  western  traffic  men  ever  since  the  Interstate 
Commerc3  law  became  enacted. 

I  take  this  occasion  to  thank  you,  on  behalf  of  the  railroad  I  represent,  for  the 
broad  gauged  position  that  you  have  taken  in  this  matter. 

Yours  truly, 

PAUL,  MORTON, 
Second  Vice-President. 


Do  you  desire  me  to  read  the  letter  from  the  Louisville  &  Nashville 
Railroad  Company? 

Q.   (By  Mr.  FARQUHAR.)  Yes,  sir;  if  you  please.    A.  This  letter  is  from 
the  Louisville  &  Nashville,  signed  by  S.  R.  Knott,  first  vice-president,  dated 
Lousiville,  August  19,  1899: 
Mr.  Howard  Page,  care  Standard  Oil  Company,  New  York: 

Dear  Sir— Please  refer  to  your  favor  of  the  15th  instant.  Having  been  since 
January,  1S98,  in  one  position  or  another  charged  with  the  direct  supervision  of  the 
traffic  affairs  of  the  Louisville  &  Nashv'lle  Company,  and  having  been  for  several 
years  prior  to  that  time  directly  connected  with  that  department  of  the  company's 
business,  I  feel  I  am,  in  position  to  speak  most  authoritatively  upon  the  subject 
mentioned  in  your  letter. 

I  beg  to  say  that  the  Lou'sville  &  Nashville  Railroad  Company  has  not  in  any 
way  given  the  Standard  Oil  Company,  or  any  of  its  representatives  or  allied  inter- 
ests, any  lower  rates  of  freight,  either  by  direct  tariff,  rebate,  refund,  un- 
derbilling  or  any  other  subterfuge  or  device,  than  it  was  at  the  same  time  extending 
to  any  and  all  other  shippers  handling  the  same  or  similar  traffic,  and  subject  to  the 
same  rules,  regulations  and  conditions.  In  other  words  the  Standard  Oil  Company 
has  been  required  to  pay  and  has  paid  to  the  Louisville  &  Nashville  Railroad  Com- 
pany the  same  charges  for  the  same  transportation  rendered  as  any  other  shipper, 
and  there  is  no  arrangement  between  it  or  any  of  its  agents  and  the  Louisville  & 
Nashville  Railroad  Company  by  which  any  advantage  accrues  to  it  over  any  other 
shipper  handling  similar  traffic  between  the  same  points  over  this  company's  rails. 

Yours  truly, 

S.  R.  KNOTT. 
First  Vice-President. 


(Great  Northern  Railway  Company,  Office  of  Second  Vice-President.) 

St.  Paul,  Minn.,  August  23,  1899. 
Dear  Sir— Replying  to  your  favor  of  the  15th  instant,  I  herewith  hand  you  a  let- 
ter from  our  general  traffic  manager,  Mr.  F.  B.  Clarke,  under  date  of  the  21st  inst., 
which  1   think  covers   your   inquiry   fully  so  far  as  this  company  is  concerned. 

I  have  no  hesitancy  in  stating  that  since  my  connection  with  this  company,  in 
November  last,  the  Standard  Oil  Company  have  paid  the  full  legal  tariff  on  all  ship- 
ments made  by  it  over  this  line,  and  there  have  been  no  arrangements  by  which 
any  less  rates  were  secured. 

I  can  also  make  the  same  statement  with  regard  to  the  shipments  of  the  Stand- 
ard Oil  Company  over  the  Missouri,  Kansas  &  Texas  Railroad  during  my  connec- 
tloi  with  that  road  from  May,  1893,  to  November,  1898. 

If  there  is  any  further  information  desired  kindly  advise  and  I  will  take  pleas- 
ure in  furnishing  same. 

Yours  truly, 

D.  MILLER, 
Second  Vice-President. 
Mr.  Howard  Page,  Standard  Oil  Company,  New  York  City. 


200  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

(Great  Northern  Railway,  Traffice  Department.) 

St.  Paul,  Minn.,  August  21,  1899. 
Dear  Sir— Referring  to  the  enclosed  inquiry  from  the  Standard  Oil  Company  with 
respect  to  the  rates  charged  on  shipments  forwarded  over  the  Great  Northern  Rail- 
way since  the  passage  of  the  Interstate  Commerce  law. 

My  connection  with  this  company  dates  from  December,  1896,  since  which  time 
I  knovv-  personally  that  the  Standard  Oil  Company  has  paid  our  company  full  tariff 
rates  on  all  shipments  we  have  carried  for  them.  I  have  made  inquiry  of  those  con- 
nected with  the  general  freight  department  who  were  in  the  service  prior  to  my  con- 
nection with  the  company  and  who  have  had  opportunities  to  know  what  rates  were 
being  charged  on  the  shipments  of  the  Standard  Oil  Company,  and  have  received 
assurances  that  the  Standard  Oil  Company  has  always  paid  our  company  the  full 
published  tariff  rates  on  their  shipments,  and  that  we  have  yet  to  receive  the  first  inti- 
mation that  the  Standard  Oil  Company  desired  less  than  the  published  tariff  rates 
charged  other  shippers  of  the  same  class  of  goods. 

Yours  truly, 

F.  B.  CLARKE, 
General  Traffic  Manager. 
Mr.  D.  Miller,   Second  Vice-President. 

(Erie  Railroad  Company,  21  Cortlandt  Street,  New  York.) 

August  29,  1899. 
Dear  Sir— In  answer  to  your  letter  of  the  15th  instant  to  President  Thomas,  I 
desire  to  say,  in  his  absence,  that  the  Standard  Oil  Company  has  evinced  the  strong- 
est disposition  to  co-operate  with  the  railroad  companies  to  the  extent  of  paying  fair 
and  reasonable  rates  for  transportation  of  all  of  its  products,  based  upon  and  in  con- 
formity with  the  Interstate  Commerce  act,  and  based  on  my  own  knowledge  and 
information  obtained  from  other  officers  of  this  company  that  said  Standard  Oil 
Company  has  not  been  afforded  lower  rates  of  freight  upon  such  traffic  than  the 
tariffs  open  to  and  offered  for  the  carriage  of  like  products  between  the  same  points 
to  any  other  shippers  of  oil  over  this  company's  lines. 

Yours  truly, 

GEORGE  G.  COCHRAN, 

Fourth  Vice-President. 
Mr.  Howard  Page,  26  Broadway,  City. 

(Delaware,  Lackawanna  &  Western  Railroad  Company,  Office  of  President.) 

August  22,  1899. 

Dear  Sir— I  noted  with  some  interest  that  during  a  hearing  before  the  Industrial 
Commission  in  Washington  during  May  and  June  of  this  year  certain  parties  ap- 
peared before  that  body  who  testified  in  a  general  way  that  they  believed  that  the 
railroad  companies  of  the  United  States  were  giving  the  Standard  Oil  Company,  or 
its  interests,  many  advantages  on  its  shipments  of  petroleum  oil  and  its  products 
over  those  accorded  other  shippers  of  similar  commodities. 

These  statements  or  this  testimony,  as  it  may  be  so  considered,  is  so  much  at 
variance  with  the  facts  and  the  truth  as  I  know  them  to  be  that  I  feel  compelled 
to  write  you  and  state  the  facts  as  I  know  them  to  exist,  and  to  say  that  I  am 
willing  you  should  make  use  of  this  letter  as  you  may  desire  in  refuting  the  false 
statements  referred  to. 

This  company  has  not,  since  the  passage  of  the  Interstate  Commerce  act,  so- 
called,  given  the  Standard  Oil  Company  or  any  of  its  interests  or  anyone  for  it  any 
reduced  rates  or  advantages  of  any  character  whatever  on  its  shipments  of  petro- 
leum oil  and  its  products  different  or  in  any  way  more  favorable  than  was  at  the 
same  time  accorded  other  shippers  of  similar  commodities.  As  I  am  advised  by  our 
people,  no  one  for  the  Standard  Oil  Company  has,  since  the  passage  of  said  act,  ever 
solicited  any  concession  in  any  way,  shape  or  form  from  the  regular,  established 
rates,  rules  and  regulations  governing  the  transportation  of  petroleum  oil  and  its 
products. 

Furthermore,  I  take  pleasure  In  certifying  that  at  the  time  of  the  passage  of  the 
Interstate  Commerce  act  and  until  1894  1  was  in  charge  of  the  Minneapolis  &  St. 
Louis  Railway,  and  from  1894  until  1899  was  vice-president  and  general  manager  of 
the  Chicago,  Rock  Island  &  Pacific  Railway  Company,  in  charge  of  its  freight  traf- 
fic; that  during  my  connection  with  the  Minneapolis  &  St.  Louis  and  the  Chicago, 
Rock  Island  &  Pacific  Railways,  as  aforesaid,  neither  of  those  companies  ever  grant- 
ed to  the  Standard  Oil  Company  or  anyone  in  Its  interests  or  for  it  any  concessions 
from  the  regular  established  rales  on  its  shipments  of  petroleum  oil  and  its  products, 
nor  did  any  official  of  the  Standard  Oil  Company  or  anyone  else  in  Its  interests  ever 
ask  special  rates  or  advantages  on  its  shipments,  as  against  those  accorded  other 
shippers  of  the  same  commodities. 


JOHN  D.  ARCHBOLD.  201 

Should  it  be  found  necessary  or  desirable  to  have  the  foregoing  statement  of 
facts  put  in  the  shape  of  an  affidavit  or  deposition,  I  shall  be  very  much  pleased 
indeed  to  put  my  knowledge  of  this  matter  in  that  shape  and  place  it  at  your  dis- 
posal for  such  use  as  you  deem  best. 

Yours  truly, 

W.  H.  TRUESDALE, 

President. 
Mr.  Howard  Page,  Standard  Oil  Company,  26  Broadway,  City. 

(Cleveland,  Cincinnati,  Chicago  &  St.  Louis  Railway  Company.) 

August  28,  1S99. 

Dear  Sir — 1  have  your  letter  of  the  loth  in  relation  to  certain  testimony  that 
was  given  before  the  Industrial  Commission  during  May  and  June  of  this  year 
regarding  shipments   of  petroleum  and   its  products. 

If  I  mistake  not,  this  company  is  the  recipient  of  a  fair  share  of  the  traffic 
shipped  by  your  company  in  all  directions,  and  we  can  most  positively  state,  and 
are  prepared  to  support  same  by  an  affidavit,  that  we  have  not,  since  the  inception 
of  the  Interstate  law,  paid  the  Standard  Oil  Company  or  any  of  its  agents  or 
branches  in  any  manner,  shape  or  form  one  mill  for  the  purpose  of  influencing  busi- 
ness via  our  line;  and  that  the  Standard  Oil  Company  have  paid  full  tariff  rates  on 
all  shipments  over  the  lino  of  the  Cleveland,  Cincinnati,  Chicago  &  St.  Louis  Rail- 
way, wnetiier  in  tanks,  carloads,  or  less  than  carloads. 

I  do  not  know  what  further  I  can  say  on  this  subject,  only  that  if  the  other 
large  shipping  interests  would  pursue  the  same  policy  as  the  Standard  Oil  Com- 
pany in  relation  to  the  strict  maintenance  of  published  rates,  it  would  eliminate 
the  strife  and  contention  among  the  railroad  companies  which  often  produces  un- 
healthy competition  and  ruinous  rates. 

Very  truly  yours, 

E.  F.  COST. 

Mr.  Howard  Page,  26  Broadway,  New  York. 

(Chicago,  Milwaukee  &  St.  Paul  Railway  Company,  Office  of  Second  Vice- 
President.) 

Chicago,  August  18,  1899. 
Dear  Sir— In  the  absence  of  President  Miller,  your  letter  of  the  15th  instant  has 
been  handed  to  me.  In  reply  I  desire  to  say  that  since  the  passage  of  the  Interstate 
Commerce  act  the  Chicago,  Milwauke  &  St.  Paul  Railway  has  carried  a  satisfactory 
share  of  the  business  of  the  Standard  Oil  Company  to  all  competitive  points 
reached  by  its  lines,  and  I  also  desire  to  say  that  the  full,  lawfully  published  tariff 
rates  have  at  all  times  been  exacted,  and  that  no  concessions  or  deviations  from 
such  lawfully  published  rates  have  been  granted  by  this  company  in  any  manner  or 
device  whatsoever;  nor  has  the  Standard  Oil  Company  asked  for  any  concessions 
or  suggested  any  deviations  from  the  lawfully  published  tariffs.  I  wish,  further,  to 
state  that  there  has  been  no  discrimination  practiced  by  this  company  in  connec- 
tion with  the  business  of  the  Standard  Oil  Company  and  that  of  other  shippers  of 
petroleum  and  its  products. 

Yours  truly, 

A.  J.  EARLING. 

(Chicago,  Burlington  &  Quincy  Railroad  Company,  General  Freight  Depart- 
ment.) 

Chicago,  August  22,  1899. 
Dear  Sir— Answering  your  letter  of  the  15lh  instant,  I  have  to  say  that  there 
never  has  been  a  request  made  by  anyone  representing  the  Standard  Oil  Company 
since  the  passage  of  the  Interstate  Commerce  law  for  a  reduction  in  our  tariff  rates, 
directly  or  indirectly,  either  by  tariff,  rebate,  underbilling  or  otherwise,  and  no  con- 
cessions have  been  m.ade  by  this  company,  of  any  character  whatsoever,  on  the 
business  transported  by  us  for  account  of  the  Standard  Oil  Company.  It  has  all 
been   done  at  published   tariff  rates,   which  are  open  to  the  inspection  of  everybody. 

Yours  truly, 

THOMAS  MILLER, 
General  Freight  Agent. 
Mr.  Howard  Page,  Standard  Oil  Company,  New  York. 

(The  Baltimore  &  Ohio  Railroad  Company.) 

Baltimore,  Md.,  August  22,  1899. 
Dear  Sir— Replying  to  your  favor  of  August   19,   in   relation   to    rates  charged    to 
and  collected  from  the  Standard  Oil  Company   on   their   shipments   of   oil    over   the 
road,    we    invite    your    attention    to    next  attached    communication    from    our    man- 
ager freight  traffic,  Mr.  Wight. 


202  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

With  reference  to  the  Cleveland,  Cincinnati,  Chicago  &  St.  Louis  Railroad,  as 
you  know,  it  lias  been  a  number  of  years  since  my  connection  with  that  company 
was  Levered,   and  it  is  therefore  suggested  you  take  the  matter  up  direct  with  them. 

Yours  very  truly, 

OSCAR  G.  MURRAY, 

First  Vice-President. 
Mr.  Howard  Page,  Standard  Oil  Company,  New  York,  N.  Y. 

(The  Baltimore  &  Ohio  Railroad,  Office  of  Manager  of  Freight  Traffic.) 

Baltimore,  August  21,  1S99. 
Dear  Sir— With  return  of  attached  letter  from  Mr.  Howard  Page,  of  the  Stand- 
ard Oil  Company,  would  advise  that  since  the  Interstate  Commerce  law  became 
effective  the  Baltimore  &  Ohio  Railroad  has  not  to  my  knowledge  given  the  Standard 
Oil  Company  or  any  of  its  representatives  any  rate  less  than  published  tariffs  on 
oil,  whether  in  tank  cars  or  barrels  or  by  any  subterfuge  whatever,  all  such  tariffs 
being  filed  with  the  commission  and  the  rates  named  therein  being  applicable  on  all 
shipments,  whether  made  by  the  Standard  Oil  Company  or  its  competitors. 

Yours  truly, 

C.  S.  WIGHT, 
Manager  Freight  Traffic. 
Oscar  G.  Murray,  First  Vice-President. 

(Western   New    York   &    Pennsylvania   Railway   Company,   General   Freight 
Department,  Mooney-Brisbane  Building.) 

Buffalo,  N.  Y.,  August  29,  1899. 

Dear  Sir— I  am  in  receipt  of  your  letter  of  22d  instant,  relative  to  testimony 
given  by  Oil  Creek  producers  and  refiners  before  the  Industrial  Commission  in 
Washington. 

In  reply  to  your  letter,  would  say  that  on  any  shipments  of  petroleum  and  its 
products  forwarded  by  the  Standard  Oil  Company,  from  or  via  Western  New  York 
&  Pennsylvania  Railway,  the  Standard  Oil  Company  have  not  and  are  not  obtain- 
ing any  advantage  in  any  way,  shape  or  manner,  as  compared  with  other  shippers  of 
petroleum  and  its  products.  The  shipments  of  the  Standard  Oil  Company  are 
charged  exactly  the  same  rates  and  the  same  weights  as  the  shipments  of  any 
producer  or  refiner  between  the  same  points,  and  no  lower  rates  are  given  the 
Standard  Oil  Company,  or  to  any  of  its  representatives,  or  through  any  other  party, 
either  through  tariff,  rebate,  underbilling-  in  quantity  or  in  weight,  or  through  any 
device  whatever;  and  the  charges  on  such  shipments  against  the  Standard  Oil  Com- 
pany have  been  upon  exactly  the  same  basis  between  the  same  points  as  charged 
any  other  refiner  or  producer  since   the   Interstate  Commerce  law  was  put  in  force. 

If  it  is  desired,  I  am  willing  to  appear  before  any  United  States  Commissioner 
In  Buffalo  and  make  affidavit  to  the  above  facts. 

Yours  truly, 

EuWARD  T.  JOHNSON, 

General  Freight  Agent. 

Mr.  Howard  Page,  26  Broadway,  New  York  City. 

(The  Wabash  Railroad  Company.) 

St.  Louis,  August  IS.  1S99. 
Dear  Sir— I  note  that  in  the  course  of  the    investigation    before    the    Industrial 
Commission,  during  May  and  June  of  this    year,    evidence    was    submitted    to    the 
effect   that    the   Standard    Oil    Company   had  received  advantages  in  the  shipment  of 
petroleum  and  its  products  as  compared  with  other  oil  shippers. 

I  do  not  understand  that  specific  reference  was  made  to  any  railroads  thus 
favoring  the  Standard  Oil  Company,  but  I  would  like  to  testify  in  defense  of  the 
Wabash  Railroad  Company  that  we  have  not  contributed  in  a  discriminatory  man- 
ner to  the  Standard  Oil  Company,  and  that  we  have  not,  since  April  5.  1887- when 
the  Interstate  Commerce  law  became  effective— deviated  from  our  published  tariffs 
in  the  way  of  rebates  or  irregular  departure  from  said  tariff  in  a  single  instance  in 
the  handling  of  shipments  of  the  Standard  Oil  Company.  We  have  had  but  one 
tariff,  which  applies  alike  to  all  oil  shipments  handled  by  the  Wabash  Railroad 
Company  from  that  period  up  to  the  present  time. 

Yours  truly, 

S.  B.  KNIGHT, 
G€neral  Freight  Agent. 
Mr.   Howard  Page,  Standard  Oil  Company,  26  Broadway,  New  York. 


JOHN  D.   ARCHBOLD.  203 

(Union  Pacific  Railroad  Company,  Office  of  President.) 

Omaha,  Neb.,  August  25,  1899. 
My  Dear  Sir— Returning  to  Omaha  after  an  absence,  I  find  your  letter  of  the  15th 
instant. 

In  reply,  permit  me  to  say  that  as  far  as  my  personal  knowledge  is  concerned, 
and  from  all  the  Information  I  am  able  to  obtain  from  other  officers  of  this  com- 
pany, the  Standard  Oil  Company  has  at  all  times  since  the  passage  of  the  Interstate 
Commerce  act  evinced  the  strongest  disposition  to  co-operate  heartily  with  the  rail- 
roads to  the  extent  of  paying  fair  and  reasonable  rates  for  transportation  of  all  of  its 
products.  I  am  unaware  that  the  Standard  Oil  Company  has  been  in  any  manner 
afforded  lower  rates  of  freight  than  the  tariffs  open  to  and  offered  for  the  carriage 
of  like  products  for  any  other  shippers  of  oil  over  this  company's  lines. 

Yours  truly, 

HORACE  G.  BURT, 

President. 
Mr.   Howard  Page,  Standard  Oil  Company,  New  York  City. 

(Northern  Pacific  Railway  Company,  Office  of  the  President,  St.  Paul,  Minn.) 

New  York,  August  23,  1899. 
Dear  Sir— In  reply  to  your  favor  uf  August  15,  I  take  pleasure  in  saying  that  so 
far  as  the  Northern  Pacific  road  is  concerned  it  has  not  in  any  way  allowed  you  any 
rebate  or  concession  on  your  shipments  of  oil  as  compared  with  any  other  shipper 
of  oil  between  the  same  points;  and  there  is  no  arrangement  or  understanding,  ex- 
pressed or  implied,  by  which  you  receive  any  concession  or  consideration  not  open 
to  every  other  shipper  of  the  same  commodities  between  the  same  points  upon  our 
line. 

The  same  is  also  true,  so  far  as  I  can  recall,  with  regard  to  the  relation  of  your 
company  with  the  New  York,  New  Haven  &  Hartford  Railroad,  during  the  time  I 
was  connected  with  the  same  as  second  vice-president,  in  charge  of  its  traffic. 

Yours  truly, 

C.  S.  MELLEN, 

President. 
Mr.  Howard  Page,  26  Broadway,  New  York  City. 

Q.  (By  Mr.  SMYTH.)  You  state  very  plainly  that  no  rebates  or  advan- 
tages in  rates  have  been  given  to  the  Standard  Oil  Company.  Have  they 
been  given  any  advantages  in  reference  to  the  quicker  movement  of  freight — 
immediate  dispatch?    A.  None  that  I  am  aware  of. 

Q.  You  have  not  asked  for  any?  A.  We  have  not  asked  for  any.  I  do 
not  know  of  any  such  preferential  arrangements. 

Q.  (By  Professor  JENKS.)  Does  this  general  statement  that  you  make 
cover  the  entire  period  since  the  passage  of  the  Interstate  Commerce  law? 
A.  Yes,  sir. 

Q.  That  the  Standard  Oil  Company  has  not  in  any  way  had  any  preferen- 
tial relations  as  regards  freight,  with  any  of  the  railroads?  A.  That  is  my 
particular  statement. 

Q.  Preferential  relations  would  seem  to  cover  it.  In  reference  to  the 
period  immediately  preceding  that,  you  said  that  before  that  time  for  some 
years  the  freight  rates  made  to  large  shippers  were  made  on  special  con- 
tracts, and  that  you  had  them  and  presumably  others  had  also?  A.  Yes,  sir; 
and  presumably  others  had  them  also. 

Q.  Did  I  understand  you  to  say.  however,  that  so  far  as  the  Standard 
Oil  Company  was  concerned,  the  prices  to  consumers  were  based  upon  the 
freight  rate  in  part,  so  that  the  consumers  received  the  benefit  of  any  prefer- 
ences that  you  had?    A.  I  make  that  statement  very  particularly. 

Q.  You  make  the  statement  unqualifiedly  that  the  Standard  Oil  Company 
did  not  receive  any  benefits  from  their  preferential  rates?  A.  On  the  other 
hand,  I  think  the  old  system  in  vogue  among  the  railroads  prior  to  the 
passage  of  the  interstate  commerce  law  was  altogether  inefficacious. 

Q.  And  contrary  to  the  financial  interests  of  the  Standard  Oil  Company? 
A.  And  contrary  to  the  interests  of  the  Standard  Oil  Company.  And  I  repeat 
again  that  the  strongest  evidence  of  that  lies  in  the  statement  that  I  have 
made  that  our  greatest  prosperity  has  come  since  the  passage  of  the  inter- 
state commerce  law. 


204  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

Q.  (By  Representative  LIVINGSTON.)  In  your  answer  a  moment  ago, 
you  said,  "in  any  way  covered  by  the  interstate  commerce  law."    A.  Yes.  sir. 

Q.  Are  you  getting  rebates  in  any  way  not  covered  by  the  interstate 
commerce  law?  A.  No,  sir.  There  may  be  local  shipments  within  a  State 
where  the  tariffs  are  not  issued,  and  that  I  am  not  familiar  with  at  all;  but 
not  to  my  knowledge  in  any  way  that  would  debar  any  other  shipper  in  the 
same  business,  if  there  was  any  such  another  shipper,  from  having  the  same 
thing;  no  preference  at  all. 

Q.  There  is  some  testimony  here  that  on  the  Pennsylvania  Railway, 
between  two  given  points,  that  a  charge  on  a  tank  of  oil  was  $1.80  and  that 
the  Standard  Oil  Company  got,  or  the  railroad  gave  back,  80  cents,  and  put 
a  dollar  into  their  treasury,  and  with  the  independent  companies,  kept  the 
whole  $1.80.     How  about  that?    A.  I  do  not  know  of  any  such  case. 

Q.  Would  that  be  a  violation  of  the  interstate  commerce  law?  A.  Well, 
if  it  was  within  the  State  it  might  not  be,  but  I  have  never  heard  of  any  such 
case  as  :^'ou  say. 

Q.  You  say  they  charged  them  all  the  same  rates?  A.  Every  shipper 
could  have  had  the  same  thing.  To  my  knowledge  I  never  knew  of  any  such 
case.     I  do  not  know  the  case  you  refer  to. 

Q.  (By  Mr.  FARQUHAR.)  Are  there  not  many  railroads  that  are  not 
under  the  interstate  commerce  law,  whose  lines  are  within  a  State  and  which 
are  not  in  the  interstate  commerce  business?  A.  There  may  be,  but  I  do  not 
recollect.     It  is  possible  that  it  is  so.* 

tRepresentative  LIVINGSTON.  But  if  they  work  in  the  United  States 
they  are  under  the  law. 

Mr  FARQUHAR.  But  a  road  doing  a  State  business  and  chartered  under 
the   State   law,   is   not  under  the   interstate  commerce    law. 

The  WITNESS.  I  do  not  know  of  any  arrangement  on  our  part  that 
would   be   exclusive  in   connection  with   any  such   railroad   facilities. 

Q.  (By  Professor  JENKS.)  Do  you  wish  to  make  further  reference  to 
this  freieht  question?    A.  I  think  that  is  all. 

Q.  (By  Mr.  KENNEDY.)  Mr.  Archbold,  in  one  of  these  letters  your 
correspondent  spoke  of  your  policy  in  refusing  rebates.  Have  any  of  the 
railroad  companies  ever  offered  the  Standard  Oil  Company  rebates  in  con- 
sideration of  securing  their  business?  A.  Well,  that  would  be  a  very  difR- 
cult  question  for  me  to  go  into.  That  the  Standard  Oil  Company  during  the 
past  10  or  11  years,  since  the  passage  of  the  interstate  commerce  law.  has 
not  secured  large  amounts  of  rebate,  but  that  they  may  have  been  offered 
them  at  times  is  undoubtedly  true.  I  have  no  specific  cases  to  state.  fWe 
have  knowledge  of  such  cases  on  the  part  of  our  competitors.  It  is  one  of 
our  duties  to  keep  looking  after  them  all  a  little  bit,  and  we  are  usually  the 
shining  n:ark.  We  know  we  couldn't  take  them  even  if  we  were  desirous, 
and  we  are  not  desirous,  even  if  we  dared,  tbut  we  have  to  keep  looking  after 
them  pretty  sharply,  with  reference  to  our  competitors. 

Q.  But  you  state  positively  that  you  have  not  accepted  them  in  general? 
A.  I  state  positively  that  we  have  not  accepted  them  in  general,  and  I  think 
that  I  make  a  pretty  good  case  by  the  railroads'  replies. 

Q.  (By  Professor  JENKS.)  Your  statement  applies  also  to  your  ship- 
ments within  a  State.  A.  Yes,  sir;  and  I  speak  of  this  from  general  knowl- 
edge. I  know  of  no  specific  cases  where  we  have  any  arrangement  that 
would  debar  any  other  shipper  from  being  on  precisely  the  same  basis. 

Q.  (By  Mr.  FARQUHAR.)  Under  the  old  rule  of  special  contracts  was 
it  or  was  it  not  a  fact  that  the  Standard  Oil  Company,  or  any  other  great 
company,  never  needed  to  solicit  special  contracts  from  railroads,  but  that 
all  railroads,  bidding  among  themselves,  offered  the  special  contract  and 
even  got  below  their  original  contracts  themselves?     A.  Unquestionably. 

Q.  That  was  the  character  of  all  the  traffic  business  before  the  inter- 
state commerce  law?     A.  Yes,  sir. 


•In  the  offlcial  report  thi.s  answer  appears  as  follows:  "A.  There  may  be,  but  I 
do  not  know.  I  do  not  know,  on  our  part,  of  nny  .irran^ement  that  would  he  exclu- 
sive  in   connection   with   any   such   railroad,  if  there  is  such." 

tl^lack  faced  type  indicates  matter  (  mittrd,  in  the  course  of  editing,  from  the 
oflBcial  report. 


JOHN   D.   ARCHBOLD.  205 

Q.  (By  Mr.  SMYTH.)  That  was  proved  by  the  case  of  the  Pennsylvania 
Railroad  that  you  spoke  of,  when  you  shipped  by  the  Erie  Canal?  *A.  Yes, 
sir. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Do  we  understand  you  that  large 
shippers  never  solicited  low  rates;  that  they  were  always  solicited  on  the 
part  of  the  railroads?  A.  I  answer  the  question  by  saying  that  a  business 
so  large  as  ours  was  always  solicited  by  the  railroads. t 

Q.  (By  Professor  JENKS.)  In  one  of  the  letters  you  read,  a  statement 
was  made  to  the  effect  that  the  Standard  Oil  Company,  by  not  asking  for 
rebates  and  adhering  strictly  to  the  established  or  published  freight  rates, 
had  aided  in  keeping  the  freights  up.  Is  it  your  opinion  that  the  railroads, 
generally  speaking,  feel  that  the  Standard  Oil  Company  is  aiding  them  in 
keeping  their  freight  rates  up  so  as  to  make  them  good  paying  roads?  A. 
That  is  true;  all  the  railroads  will  say  so,  if  they  are  frank  enough  to  say 
so,  *as  some  of  them  are;  and  any  of  you  who  have  contracts  with  any  of 
the  railroad  officials  of  this  country,  if  you  will  talk  with  them  on  that  sub- 
ject, will  find  that  to  be  the  case. 

Q.  (By  Vice-Chairman  PHILLIPS.)  How  would  keeping  the  rates  up 
affect  the  general  public?  Would  it  be  for  the  interest  of  the  general  public? 
A.  It  is  to  the  interest  of  the  general  public  to  have  a  uniformity  of  rates 
under  the  interstate  commerce  law.  as  the  public  consider  it,  *and  I  think 
they  are  right. 

Q.  You  are  in  favor  of  the  interstate  commerce  law  *and  its  being  en- 
forced?   A.  Yes,  I  am,  decidedly. 

Q.  (By  Mr.  RATCHFORD.)  Mr.  Archbold  has  made  himself  very  clear, 
I  believe,  in  reference  to  rebates  on  the  shipments  of  the  Standard  Oil  Com- 
pany. We  have  received  specific  testimony  to  the  effect  that  the  Standard  Oil 
Company  received  rebates  from  the  shipments  of  other  companies.  What 
do  you  know  oi  that?     A.  Not  true,  I  reply  to  that,  if  you  will  allow  me. 

*IVlr.  RATCHFORD.     Indeed  I  will  be  very  glad  to  have  you  say  so. 

Q.  (By  Vice-Chairman  PHILLIPS.)  You  stated  that  since  the  passage  of 
the  interstate  commerce  law  your  profits  had  been  greater  than  they  were 
prior  to  that  time.  Now,  was  that  due  to  the  passage  of  the  interstate  com- 
merce law,  or  on  account  of  the  larger  business  and  less  competition?  A  The 
principal  cause  may  have  been  the  growth  of  the  business.  One  of  the 
causes  is  the  better  settled  condition  of  the  business  incident  to  the  passage 
of  the  interstate  commerce  law.  I  think  that  my  assertion  that  the  con- 
sumer was  given  the  benefit  of  the  reduced  rates  of  freight  was  not  only 
true,  but  the  effect  was  greater  than  I  have  stated  it,  for  in  the  constant 
anxiety  the  manufacturer  was  necessarily  under,  that  perhaps  his  neighbor 
might  get  a  lower  rate  than  he  was  getting,  sellers  of  oil  were  always  very 
anxious.  I  think  that  oftentimes  the  price  was  made  lower  than  it  needed 
to  be  because  of  the  belief  or  expectation  that  lower  rates  of  freight  were 
offered  or  made.     I  think  the  business  was  sacrificed  on  that  account. 

Q.  But  you  do  not  wish  to  leave  the  impression  that  your  greater  pros- 
perity or  greater  income  or  greater  profits  were  due  wholly  to  the  passage 
of  the  interstate  commerce  law?  A.  No,  sir;  only  because  the  business  has 
been  vigorous. 

Q.  And  perhaps  competition  has  not  been  so  extensive?  A.  I  think  com- 
petition has  been  quite  as  vigorous.  I  think  so.  Mr.  Lee  made  a  statement 
as  to  the  course  of  prices  for  domestic  refined  oil  in  New  York,  or  Greater 
New  York,  during  the  period  from  March,  1896,  to  July,  1896,  I  think  it  was. 
He  made  the  assertion  that  the  Pure  Oil  Company,  the  company  with  which 
he  is  connected,  having  made  its  advent  into  the  market  of  Greater  New 
York  in  March  of  the  year  1896,  they  found  the  prices  which  we  were 
charging  to  the  people  of  that  great  metropolis  to  be  nine  and  a  half  cents 
a  gallon,  and  because  of  their  advent  and  their  supposed  competition,  we 


*Bla.?k  faced  type  indicates  matter  omitted,  in  the  course  of  editing,  from  the 
official  report. 

tin  the  offlcial  report  this  answer  appears  as  follows:  "A.  I  answered  that  ques- 
tion by  saying  that  a  business  as  large  as  ours  is  sought  for  by  railroads.  I  do  not 
say  other  shippers  do  not  solicit  rates;  I  have  no  doubt  they  secure  them." 


206  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

dropped  the  price  there,  until  in  July  of  the  same  year,  it  was  five  and  a 
half  cents.  He  spoke  of  this  as  illustrating  not  only  our  method  of  attack 
as  against  competitors,  but,  I  believe,  claimed  some  credit  from  the  people 
of  Greater  New  York  to  the  Pure  Oil  Company,  because  of  their  advent 
there.  I  will  read  from  the  list  prices  of  the  period  named  as  they  prevailed 
at  the  time  and  show  that  to  all  the  trade  in  Greater  New  York  and  its 
vicinity  our  selling  price,  in  March,  1896,  averaged  seven  and  ninety-eight 
hundredths  cents,  as  against  his  statement  of  nine  and  a  half  cents. 

Q.  (By  Professor  JENKS.)  In  that  immediate  territory?  A.  In  that 
immediate  territory. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Was  it  immediately  before  or  during 
the  time  of  the  advent  of  the  company?  A.  Their  advent  there  was  in 
March,  according  to  his  statement. 

Q.  Will  you  give  us  a  statement  of  the  month  previous  to  that?  A.  I 
only  made  it  for  the  period  covered  by  him  in  his  testimony.  I  can  give  you 
the  other,  and  I  will  also  quote  from  that  statement  as  showing  the  relation 
between  the  two,  the  crude  oil  prices  as  they  prevailed.  At  this  time,  in 
March,  the  average  price  of  crude  oil  in  lots  per  barrel  of  42  gallons  was 
$1.33  a  barrel.  In  April  our  average  price  for  refined  oil  was  seven  and 
thirty-one  hundredths  cents,  the  average  price  of  crude  oil  being  $1.22.  In 
May,  the  average  price  of  refined  oil  was  six  and  ninety-four  hundredths 
cents,  and  the  average  price  of  crude  was  $1.19.  In  June,  the  price  of  refined 
oil  was  six  and  seventy-two  one-hundredths  cents,  and  the  price  of  the  crude 
was  $1.15.  In  July,  the  price  was  six  and  twenty-three  hundredths  cents  and 
the  price  of  crude  oil  was  $1.09. 

This  is  only  an  illustration  of  the  carelessness  which  marks  the  state- 
ments which  our  competitors  make  in  reference  to  any  feature  of  the  busi- 
ness regarding  which  they  want  to  make  a  point.    It  is  unimportant  in  itself. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Did  you  sell  any  oil  in  March  as 
high  as  nine  cents  per  gallon?    A.  I  give  the  average  price  of  the  period. 

Q.  It  may  have  been  sold  at  10  or  11  cents  in  the  beginning  and  three  or 
four  cents  at  the  close.     A.  The  following  month  would  show  that. 

Q.  (By  Professor  JENKS.)  You  give  these  average  prices  for  Greater 
New  York.  The  statement  has  been  made  at  different  times  that  it  was 
your  custom  to  find  the  customers  of  your  competitors  and  make  special  cut 
rates  to  them,  which  you  could  very  easily  do,  and  that  therefore  they 
were  obliged  to  reduce  the  price  to  them  lower  than  what  you  had  offered 
and  that  you  did  that  with  a  good  many  special  customers  to  whom  the  Pure 
Oil  Company  was  trying  to  sell;  also  that  the  reduction  would  be  as  low  as 
five  and  a  half  cents.  Can  you  make  any  definite  statement  as  to  that?  A. 
I  cannot  make  any  definite  statement,  but  I  reply  broadly  that  it  would  be 
utterly  impossible  for  us  to  have  any  great  variation  in  prices  to  the  vari- 
ous customers  in  any  locality.  It  would  be  utterly  impossible  and  it  would 
be  dishonesty  in  the  treatment  of  the  customers.  I  want  to  say  that  dishon- 
est men  will  not  succeed  in  the  oil  business,  or  in  any  other  business.  We 
have  our  hold  on  the  oil  trade  during  30  years  relations  with  it  because  we 
treat  the  trade  honestly  and  not  dishonestly. 

Q.  You  would  be  safe  in  stating  that  in  May.  1896,  no  oil  was  sold  to 
any  customer  for  less  than  six  or  six  and  a  half  cents?  A.  Not  for  less  than 
six  and  three-quarters.  Mr.  Lee  makes  a  statement  regarding  the  difficulty 
of  his  pipe  line,  the  United  States  Pipe  Line,  in  crossing  railroads  and  secur- 
ing the  right  of  way  to  the  seaboard,  and  he  makes  a  general  statement 
implying  that  we  have  instituted  and  carried  out  great  obstructions  to  their 
progress.  I  want  to  make  a  general  denial  of  this  statement  and  to  say  that 
we  have  not  at  any  time  had  any  relation  whatever  to  any  obstructions,  or 
made  any  effort  to  obstruct  their  line  that  would  not  attach  to  any  competitor 
in  the  line  of  any  business  engaging  against  another.  In  reference  to  the 
crossing  of  the  Delaware  &  Lackawanna  Railroad  in  New  Jersey,  referred 
to  by  Mr.  Lee,  and  with  which  he  attempts,  by  implication,  at  any  rate  to 
connect  us.  I  want  to  say  that  the  contention  in  that  respect  was  entirely 
at  the  hands  of  the  railroad,  and  not  at  our  hands,  in  any  possible  respect. 
They  went  there  surreptitiously  and  endeavored  to  force  their  way  on  a 
Sunday  over  land  where  they  had  no  right,  either  by  private  purchase  or  by 


JOHN  D.   ARCHBOLD. 


207 


a  public  franchise,  and  having. accomplished  the  crossing  of  the  road  in  that 
surreptitious  way,  they  stationed  there  an  armed  force  to  prevent  the  rail- 
road company  from  asserting  its  right  and  taking  out  their  line,  and  they 
kept  that  force  there  for  a  long  period.  The  railroad  company  went  about 
it  in  a  peaceful  way  in  the  courts,  and  the  result  is  that  after  carrying  it 
finally  to  the  Supreme  Court  of  the  State  the  decision  is  against  the  line,  and 
they  must  of  course  remove  their  lines.  But  any  statements  on  Mr.  Lee's 
part,  or  on  the  part  of  any  other  witness,  that  we  had  anything  to  do  with 
that  matter,  or  with  any  of  the  difficulties  of  their  progress  to  the  seaboard 
with  their  line,  are  absolutely  false. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Did  the  company  own  in  fee  simple 
the  tract  of  ground,  or  right  of  way  reserved  to  the  landowner,  through  pur- 
chase by  them?  Was  that  the  case?  A.  Mr.  Phillips,  it  was  not  my  case,  and  I 
am  not  conversant  with  the  details  regarding  it.  After  having  been  fought  in 
the  newspapers  and  in  the  courts  for  a  term  of  years  and  seeking  the  sym- 
pathy of  the  public  as  well  as  of  judges,  the  Supreme  Court  of  the  State 
finally  ruled  against  them  and  that,  I  think,  is  the  best  evidence  that  the 
railroad  company  was  right  on  the  question.  I  want  to  say  in  reference  to 
our  own  pipe  lines  that  we  never  undertake  to  cross  another  man's  line 
without  first  seeing  him  about  it. 

Q.  Still,  did  they  not  go  through  the  railroad  on  their  own  ground,  and 
was  not  the  final  decision  that  they  had  not  a  right  to  lay  the  pipe  line  whej-e 
a  man  had  reserved  a  right  of  way  under  the  ground?  A.  It  was  not  only 
decided  that  they  had  no  right  there,  but  they  were  ordered  to  remove.  I 
want  also  to  present  a  statement  showing  the  rate  of  freight  which  Mr.  Lee's 
United  States  Pipe  Line  enjoys  from  the  Central  Railroad  of  New  Jersey  on 
the  crude  and  refined  oil  also  transported  over  that  line  from  the  terminal 
point  of  their  pipe  line  to  the  seaboard;  it  being  a  lower  freight,  I  think, 
than  the  Standard  Oil  Company  ever  had  for  an  equal  distance  at  any  time 
in  the  history  of  their  business.  (Witness  here  read  a  letter  from  the  Central 
Railroad  of  New  Jersey.) 

Central  Railroad  of  New  Jersey's  rate  to  United  States  Pipe  Line,  Hampton 
Junction,  N.  J.,  to  Bayonne,  N.  J. 

Distance,  52%  miles;  mileage,  %  cent  each  way,  equals  78  cents  per  car;  empty 
car  returned   free.     Weight  per  gallon,   crude  oil,  6  2-3  pounds;  refined  oil,  614  pounds. 


Rate  per 

barrel  of 

50  gallons. 

Actual 

weight  per 

barrel  of 

50  gallons. 

Rate  per 
100  pounds. 

Rate  per 
car  of  10 
barrels. 

Rate  per 
car,  less 
mileage. 

Crude 

0.0692 
.0769 

333 
325 

0.0208 
.02366 

.$8.20 
9.22 

$7.42 

Refined 

8.44 

The  above  shows  that  this  oil  is  being  carried  52%  miles  in  tank  cars, 
averaging  120  barrels  or  20  tons  to  the  car,  at  a  gross  average  revenue  to  the 
railroad,  on  the  crude  and  refined  oil,  of  $7.93  per  car,  and  out  of  this  rev- 
enue the  railroad  returns  the  empty  car  free. 

The  contract  between  the  railroad  and  the  pipe  line  is  for  100  years 
from  January  1,  1894,  and  provides  for  various  -rates  from  different  points 
along  the  line  of  the  Central  Railroad  of  New  Jersey  to  tidewater.  The  oil 
is  now  (and  has  been  for  three  years)  shipped  from  Hampton  Junction,  and 
the  above  rates  are  being  paid. 

The  contract  further  provides  the  right  upon  the  part  of  the  Pipe  Line 
Company  to  abrogate  the  arrangement  upon  five  years'  notice  at  any  time 
during  the  100  years.  The  railroad  has  no  right  to  cancel,  excepting  for 
violation  of  lease. 

Q.  (By  Mr.  SMYTH.)  The  lease  is  on  record?  A.  Yes.  sir;  it  would 
seem  that  if  there  ever  was  a  preferential  contract  that  is  one  of  them. 

Q.  (By  Professor  JENKS.)  You  say  this  is  on  record?  A.  It  is  not  a 
lease;   it  is  a  contract. 

Q.  (By  Vice-chairman  PHILLIPS.)  You  do  not  pretend  to  say  that  it 
would  be  an  illegal  contract?    A.  I  am  not  a  lawyer,  Mr.  Phillips.    I  am  not 


208  REVIEW   OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

passing  on  the  legality  of  the  question.  I  now  want  to  call  attention  to  Mr. 
Lee's  testimony  in  which  he  claims,  at  great  length  and  with  great  particu- 
larity, that  we  have  at  different  times  done  our  best  to  buy  them  out,  offered 
them  large  inducements  in  the  way  of  extraordinary  prices  for  their  business, 
and  have  done  our  best  to  get  them  out  of  the  business  by  purchases  of  that 
kind.  I  want  to  say  that  any  propositions  of  that  kind  that  have  been  made 
have  come  from  Mr.  Lee's  side  to  us,  and  I  want  to  say  now  that  these  offers 
for  purchases  of  that  kind  have  been  made  by  pretty  much  every  person  in 
connection  with  his  company,  every  prominent  person  in  connection 
with  his  company,  at  various  times,  including  not  only  Mr.  Lee, 
but  Mr.  Phillips,  Mr.  Collins,  Mr.  Murphy,  Mr.  Jennings,  Mr.  King.  Mr.  Mc- 
Donnell, and  as  I  said  pretty  nearly  every  gentleman  prominent  in  the  affairs 
of  that  company.  I  want  to  say  further  that  we  have  persistently  declined 
to  consider  any  such  combination  with  them,  on  the  ground,  first,  as  we 
have  stated  to  them  at  various  times,  of  its  illegality,  and,  second,  and  this 
would  have  been  enough  in  itself,  because  of  our  unwillingness  to  enter  into 
any  business  relations  with  them,  because  of  our  lack  of  faith  in  them.  We 
had  had  experience  with  the  gentlemen,  different  ones  of  them  at  different 
times,  and  we  would  have  known  better,  even  if  there  was  not  the  illegality 
in  the  way  of  such  a  combine  that  it  was  impossible  for  us  to  have  entered 
into  any  such  relation  with  them.  I  make  the  fullest  possible  denial  of  Mr. 
Lee's  statements  that  we  have  gone  after  them  in  reference  to  any  pur- 
chase or  combination,  and  1  make  the  further  statement  that  they  have,  up 
to  within  this  very  day,  or  within  the  period  of  the  sittings  here  of  this 
commission,  approached  us  upon  this  question 

Q.  (By  Vice-Chairman  PHILLIPS.)  Do  you  mean  to  include  all  of  them? 
A.  I  mean  to  include  the  gentlemen  that  1  have  named,  and  others  that  I 
have  not  named. 

Q.  Have  any  persons,  either  a  gentleman  or  gentlemen,  never  come 
direct  from  your  office  to  solicit  the  selling  of  these  interests  to  you?  A.  No, 
sir;  I  say  promptly,  no,  sir;  the  approaches  that  have  been  made  have  come 
from  the  other  side  of  the  case,  and  the  answer  is  as  broad  as  I  can  make  it. 
Q.  You  have  no  knowledge  of  a  person  coming  from  your  office  and  so- 
liciting a  transaction  with  these  people?  A.  I  have  knowledge  of  persons 
coming  to  our  office — you  came  there  in  the  interest  of  different  people. 
You  came  there  in  connection  with  it,  if  that  is  what  you  mean. 

Q.  Was  not  that  to  stop  the  litigation  that  was  going  on  in  New  Jersey, 
and  to  have  a  right  to  live  as  a  company?  A  I  do  not  know  what  yoii 
mean  by  that. 

Mr.  ROGERS.     May  I  have  the  privilege  of  prompting  Mr.  Archbold? 
Vice-Chairman  PHILLIPS.     Certainly,  you  have  the  privilege. 
Mr.  SMYTH.     I  should  think  so,  certainly. 

Vice-Chairman  PHILLIPS.  Any  information  of  that  kind  is  entirely  ad- 
missible. 

A  (After  conference  with  Mr.  Rogers.)  I  answer  broadly  again,  after 
conference  with  Mr.  Rogers,  that  we  have  never  sent  anybody  to  you  for 
any  such  purpose. 

Q.  (By  Representative  LIVINGSTON.)  Now,  have  you  got  their  propo- 
sitions to  you  so  that  we  can  see  them?  A.  No,  they  were  all  oral.  You 
don't  catch  them  making  any  written  propositions.  They  are  too  crafty  for 
that. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Do  you  say,  Mr.  Archbold,  that  you 
were  approached  by  a  person,  or  those  persons,  at  all  in  an  unfair,  unjust  or 
wrong  way?  A.  No,  I  do  not  say  so.  I  do  not  say  so  at  all.  It  may  have  been 
entirely  fair  and  just  in  their  view,  but  their  proposition,  in  our  view,  was 
illegal  and  not  to  be  entertained. 

Q.  Was  that  not  after  you  had  purchased  a  large  amount  of  stock,  a 
controlling  interest,  in  the  Producers'  Oil  Company,  Limited,  and  also  had 
purchased  a  large  amount  of  the  United  States  Company's  stock,  and  was 
it  not  to  make  some  fair,  honorable  and  just  contract  that  would  leave  those 
companies  the  privilege  of  living  and  doing  business,  years  ago,  when  they 
were  badly  crippled  by  the  opposition  of  the  Standard  Oil  Company,  by  the 
lowering  of  prices  in  Europe  and  other  places?     A.  In  using  your  own  case. 


JOHN  D.  ARCHBOLD.  209 

Mr.  Phillips,  as  an  illustration,  and  you  can  hardly  find  fault  with  that,  I  do 
not  think  that  at  the  time  you  came  to  Mr.  Rogers  and  myself  you  raised  any 
question  whatever  in  reference  to  any  possible  minority  ownership  in  any 
of  those  companies  on  our  part,  but  your  proposition  was  simply  that  a 
division  of  the  business  be  made,  so  that  you  would  have  a  percentage,  and 
we  a  percentage,  and  we  would  co-operate  in  the  marketing  of  the  oil,  and 
in  all  that  appertains  to  the  welfare  of  the  business.     Is  it  not  so? 

Q.  Well,  was  it  not  to  get  the  privilege  to  handle  the  capacity  of  the 
lines  that  then  existed,  and  to  cease  further  opposition,  and  to  do  away 
with  the  opposition  which  was  very  badly  crippling  these  companies?  Had 
you  not  at  that  time  lowered  the  price  of  oil  in  Germany  so  as  to  make  it 
entirely  unprofitable?  The  refiners  had  lost  very  large  sums  of  money,  and 
you  had  bought  out  a  per  cent  of  the  refineries  that  were  engaged  in  these 
independent  lines.  A.  Nothing  of  this  kind  existed.  Our  business  was  en- 
tirely satisfactory,  was  on  a  profitable  basis  in  Germany  and  elsewhere,  so 
far  as  I  am  aware,  and  we  had  no  special  desire  for  a  combination  with  you, 
as  was  evidenced  by  the  fact  that  we  were  unwilling  to  entertain  it;  and 
I  now  state  that  the  further  reason  why  we  were  unwilling  to  entertain  it 
was  not  only  because  of  its  illegality,  but  because  of  our  lack  of  faith  in 
the  individuals  representing  it.   There  can  be  no  question  about  that  answer. 

Q.  There  was  a  purchasing  agency  established  by  these  independent 
companies  abroad,  and  Mr.  Poth  was  managing  that  business  for  them  there. 
Did  he  not  sell  out  to  the  Standard  Oil  Company  all  the  tankage  procured 
in  Germany,  so  that  these  companies  could  not  do  business,  and  did  they 
not  re-establish  connections  and  send  agents  there,  and  build  entirely  new 
tankage,  so  that  oil  could  be  received  and  distributed  in  Germany?  For 
several  years  did  you  not  put  the  price  so  there  was  no  profit,  and  during 
that  period  did  you  not  buy  out  a  number  of  the  largest  refineries  that  were 
connected  with  these  companies?  A.  My  answer  is  that  none  of  these 
questions  had  anything  to  do  with  the  propositions  for  combining.  You  came 
to  us,  seeking  this  combination.  That  is  my  statement,  and  you  dare  not 
deny  it;   it  is  true,  every  word  of  it. 

*Vice-Chairman  PHILLIPS.  Well,  I  will  state  to  the  commission  that 
there  were  persons  connected  with  these  companies  that  went  there,  but 
they  did  not  go  there  to  make  any  illegal  propositions  to  the  Standard  Oil 
Company. 

Mr  SMYTH.  Is  that  testimony?  I  don't  think  a  member  of  the  com- 
mission has  any  right  to  make  a  statement  like  that  without  going  on  the 
stand  as  a  witness.  I  think  Mr.  Phillips  can  take  the  stand  as  a  witness,  and, 
if  he  desires  to  do  so,  and  rebut  what  Mr.  Archbold  has  said,  we  will  be  de- 
lighted to  hear  from  him  at  any  time. 

Vice-chairman   PHILLIPS.     Well,  I  will  at  a  later  time. 

Mr.  SMYTH.  We  want  to  be  perfectly  fair  about  it,  and  let  you  make 
your  statement,  Mr.  Phillips,  but  I  do  not  think  the  witness  ought  to  be  in- 
terrupted. 

Vice-Chairman  PHILLIPS.  I  would  not  have  done  it  at  all  had  not  my 
own  name  been  brought  in  in  this  case. 

Mr.  SMYTH.  Yes,  sir;  I  think  you  ought  to  be  afforded  every  oppor- 
tunity. 

Vice-Chairman   PHILLIPS.     Now,  you  can   resume,   Mr.  Archbold. 

A.  I  answer  to  a  query  regarding  gentlemen  prominent  in  the  Standard 
Oil  Company.  Mr.  Lee  saw  fit  to  speak  of  them  in  a  most  depreciatory  way. 
It  is  not  amiss  for  me  to  ask  these  gentlemen  to  think  for  a  moment  of  J.  D. 
Rockefeller,  William  Rockefeller,  H.  M.  Flagler.  William  G.  Warden, 
Charles  Pratt.  J.  A.  Bostwick.  Benjamin  Brewster,  Henry  H.  Rogers.  W.  H. 
Tilford.  .Tames  McGee,  and  I  might  mention  scores  of  others  prominent  in 
the  Standard  Oil  connection,  whose  business  genius  and  boundless  energy 
have  been  given  to  the  building  up  of  the  petroleum  industry.  Will  you 
think  of  these  gentlemen  in  comparison  with  the  men  who  have  appeared 
here  to  defame  them?  I  might  justly  go  further,  and  speak  of  the  benefi- 
cent use  these  gentlemen  are  making  of  their  substance,  but  they  require  no 
such  eulogy  at  my  hands. 


•Black   faced   type  indicates  matter  nmitted.  in  the  course  of  editing,  from  the 
official  report. 

14 


210  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION, 

*Mr.  A.  L.  HARRIS.  I  think  personalities  should  be  avoided  in  this  com- 
mission as  far  as  possible.  It  certainly  will  cause  personality  again  in  re- 
turn. Where  will  we  stop  if  personalities  are  brought  in.  Individual  mem- 
bers of  this  commission  have  been  named,  and  it  does  seem  to  me  that  the 
orderly  rules  of  taking  testimony  in  court  should  be  observed  by  this  com- 
mission, and  that  a  character  should  not  be  assailed  personally.  The  facts 
may  be  stated,  but  I  do  not  think  it  is  proper  that  individual  character  should 
be  assailed  in  the  way  that  is  being  done.  I  merely  make  that  as  a  state- 
ment. It  will  necessarily,  of  course,  reflect  to  some  extent  upon  the  com- 
mission, upon  the  chairman  of  the  commission,  and  he  feels  when  these 
attacks  are  made  that  then  is  the  better  time  to  explain.  Now,  I  really  be- 
lieve that  we  will  make  better  progress,  and  while  this  is  a  heated  contest 

Representative  LIVINGSTON.  I  want  to  make  a  suggestion  to  you.  Gov- 
ernor. 

Mr.  A.  L.  HARRIS.  When  I  am  through  I  will  listen  to  a  suggestion, 
but  what  I  wanted  to  say  was  that  we  should  proceed  in  an  even-tempered 
way. 

The  WITNESS.  I  have  no  other  possible  desire  than  that  I  am  only 
answering  what  has  already  been  said. 

Representative  LIVINGSTON.  I  think  that  this  commission  had  better 
have  an  executive  session  for  a  little  while,  and  see  how  we  will  conduct  this 
examination.  We  are  getting  into  difficulties  here.  This  is  a  public  commis- 
sion, and  I  deprecate  them,  and  I  say  it  ought  not  to  be.  Whether  these  ques- 
tions are  pertinent  or  not.  I  want  them  in  the  proper  way.  I  think  the 
commission  had  better  determine  the  line  of  investigation  plainly  and  dis- 
tinctly and  then  call  this  gentleman  back  and  go  on.  It  is  not  very  com- 
mendable that  the  commission  should  get  into  a  quarrel  between  ourselves, 
and  I  suggest  that  this  be  done. 

Mr.  A.   L.   HARRIS.     I   think  that  is  a  good  idea. 

Mr.  SMYTH.  Our  custom  has  been  to  allow  the  witnesses  full  freedom 
in  giving  their  testimony.  There  have  been  some  very  serious  charges  against 
the  Standard  Oil  Company  by  Mr.  Clark  and  others,  and  they  have  gone 
on  unchecked  and  unchallenged,  and  I  think  when  they  come  forward  to 
rebut  that  testimony   they  ought   not  to   be   interrupted  or  called   down. 

Representative  LIVINGSTON.  I  think  the  Standard  Oil  Company  ought 
to  have  every  opportunity  and  every  chance  of  rebutting  any  statement  which 
has  been  made  against  them  on  this  floor,  and  I  do  not  care  whether  it  is 
against  the  chairman  or  no,  or  this  whole  commission.  I  think  they  should 
have  that  opportunity. 

Vice-chairman   PHILLIPS.     That   is  perfectly   right. 

Representative  LIVINGSTON.  But  we  do  not  want  to  quarrel  among 
ourselves  about  how  this   investigation  shall   proceed. 

Mr.  SMYTH.  But  the  other  side  have  had  full  swing  with  their  wit- 
nesses. 

Vice-Chairman  PHILLIPS.  When  an  individual  is  named,  that  goes  out 
to  the  press,  and  creates  an  impression,  and  if  the  person  is  present  it  does 
seem  to  me  that  he  ought  to  have  the  right  to  explain  so  that  the  explanation 
would  come  along  at  the  time  the  person  is  attacked,  especially  if  he  be  a 
member  of  the  commission. 

Mr.  KENNEDY.  I  want  to  suggest  that  we  do  not  limit  the  witness,  and 
when  the  testimony  is  through  we  individually  ought  to  have  the  right  to 
cross-examine  that  witness  to  the  utmost  extent. 

Mr.   SMYTH.      I   think   so. 

Vice-chairman  PHILLIPS.  If  we  agree  on  that,  we  can  go  on.  But  when- 
ever a  member  of  the  commission  is  mentioned  in  the  testimony,  whenever 
that  part  is  finished  by  the  witness,  he  shall  be  at  liberty  to  cross-question, 

Mr.   SMYTH.     But  not  to   make  a   statement,  or  to   give  testimony. 

Mr.  A.  L.  HARRIS.  It  is  due  to  this  commission,  if  a  member  of  this 
commission  is  assailed,  that  he  should  have  the  privilege  to  make  a  state- 
ment, and  make  it  at  once  if  necessary,  because  it  goes  out  to  the  press  at 
once  when  he  is  assailed,  and  if  he  waits  a  day  for  the  cross-examination  to 


•Black   faced   type  Indicates  matter  omitted,  in  the  course  of  editing,  from   the 
official  report. 


JOHN  D.  ARCHBOLD.  211 

*defend  himself,  it  has  all  gone  to  the  public  and  his  answer  may  not  be 
read  in  connection  with  what  has  been  already  issued.  I  want  to  protect  this 
commission   itself. 

Mr.  FARQUHAR.     He  can  have  the  opportunity  the  same  day. 

Mr.  RATCHFORD.  I  do  not  think  there  is  any  necessity  for  the  com- 
mission to  go  Into  executive  session.  If  we  follow  the  rules  we  have  laid 
down  in  the  past,  it  seems  to  me  we  can  take  the  testimony  of  this  gentleman 
without  embarrassing  the  commission  or  any  of  its  members.  I  have  no- 
ticed for  the  past  few  days  that  personalities  have  crept  into  the  testimony. 
I  shall  at  the  proper  time  seek  to  have  them  expunged  from  the  testimony 
of  our  witnesses.  I  believe  it  is  unfair,  absolutely  unfair,  that  the  name  of 
Mr.  Phillips  should  be  used,  unless  where  it  appears  as  a  stockholder  or  an 
officer  of  this  company.  It  should  not  be  used  in  order  to  cast  any  reflection 
upon  Mr.  Phillips.  In  other  words,  I  believe  that  the  testimony  of  the  wit- 
nesses should  not  be  made  weaker  by  striking  it  out  where  it  is  necessary, 
but  where  it  is  unnecessary,  the  name  should  not  be  used.  The  testimony 
that  has  been  given  against  the  Standard  Oil  Company  by  Mr.  Lee  and 
others  has  been  given  against  the  company,  and  I  believe  the  testimony  of 
the  company  in  rebuttal  should  be  against  Mr.  Lee's  company,  and  not  against 
Mr.  Lee.  I  believe  that  personalities  should  not  be  indulged  in,  and  I  hope 
at  the  proper  time  that  they  will  be  stricken  out  of  the  testimony,  so  that 
they  will  amount  to  nothing.  I  hope  they  will  not  be  indulged  in  any  fur- 
ther. 

Vice-Chairman  PHILLIPS.  Without  objection,  the  witness  will  proceed 
and  will  try  to  avoid  personality  in  his  explanation  as  much  as  possible,  but 
the  chair  insists  that  if  he  is  named  personally  he  should  have  a  right,  as  soon 
as  that  part  of  the  testimony  is  given,  to  make  a  statement,  so  that  it  will 
go  out  with  the  other  side,  as  Governor  Harris  suggests. 

Representative  LIVINGSTON.  Not  only  the  chairman  may  be  assailed, 
but  any  member  of  this  commission;  is  that  right?  Not  to  interrupt  the 
testimony  while  it  is  being  given,  but  wait  in  an  orderly  way  until  the  latter 
part  of  it  is  complete. 

Mr.  SMYTH.  I  don't  object  to  the  cross-examination,  but  I  do  object  to 
the  chairman  or  any  member  of  the  commission  giving  testimony  without 
being  called  as  a  witness,  or  without  being  sworn.  We  swear  our  witnesses. 
This  testimony  is  being  given  under  oath,  and  I  do  not  think  it  is  proper 
for  a  member  of  the  commission  to  contradict  the  witnesses  or  to  give  testi- 
mony. I  deprecate  these  personalities  as  much  as  anyone,  but  I  can  under- 
stand very  readily  how  one  can  fall  into  them.  It  seems  to  me  that  the  wit- 
ness has  a  right  to  give  his  testimony  in  the  way  that  he  wants. 

Vice-Chairman  PHILLIPS.  Yes,  sir;  that  is  true,  and  I  think  the  chair 
probably  erred  in  the  last  statement  that  he  made,  but  when  the  chair  alluded 
to  the  circumstances  that  led  up  to  this  conversation  and  how  it  came  about, 
and  in  view  of  the  great  opposition  these  people  were  meeting  with  at  that 
time  both  in  Europe  and  America,  in  the  purchase  of  stock  and  so  on,  I  had  a 
right  to  ask   Mr.  Archbold  whether  these  things  were   not  facts. 

Mr.  SMYTH.  I  think  you  had  a  right  to  ask  the  question.  It  was  your 
testimony  I  objected  to.  The  situation  is  this,  as  I  understand  it:  The  Pure 
Oil  Company  stated  that  overtures  came  from  the  Standard  Oil  Company  to 
buy  them  out  and  consolidate.  The  Standard  Oil  Company  denied  that  and 
said  that  the  overtures  came  from  the  Pure  Oil  Company.  That  is  simply  a 
matter  of  testimony. 

Mr.  A.  L.  HARRIS.  Did  the  Pure  Oil  Company  name  any  price  to  the 
Standard,  or  was  it  the  Standard? 

Mr.  SMYTH.  I  don't  know  that  the  Standard  even  named  a  price  when 
they  came  to  them. 

Mr.  A.  L.  HARRIS.     Without  naming  a  price. 

Representative  LIVINGSTON.  Yes,  sir;  that  is  in  contradiction  to  the 
statement  that  was  made  on  the  other  side.  I  would  suggest  as  to  these 
inquiries,  that  one  party  is  sworn  and  the  other  is   not. 

Mr.  SMYTH.     One  is  a  witness  and  the  other  is  not  a  witness. 

♦Black  faced  type  indicates  matter  omitted,  In  the  course  of  editing,  from  the 
official  report. 


212  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

^Representative  LIVINGSTON.  Now,  if  the  chairman  or  any  member  of 
this  commission  wants  to  contradict  a  statement,  let  him  be  sworn. 

Vice-Chairman  PHILLIPS.  The  chair  would  be  perfectly  willing  to  be 
sworn  to  the  fact  that  he  was  approached  by  persons  who  said  they  came  on 
that  question,  and  they  deny  it. 

Mr.  SMYTH.     I   move  that  the  witness  proceed  with  his  testimony. 

Vice-Chairman  PHILLIPS.  It  is  not  necessary  for  a  motion.  Mr.  Arch- 
bold,  you  will   please  proceed. 

A.  (Mr.  ARCHBOLD,  resuming.)  Mr.  Lee  said  ttie  prices  of  the  refined 
products  would  be  lower  all  over  the  world  if  the  Standard  Oil  Company 
w^ere  abandoned  or  dismantled.  I  will  not  occupy  your  time  by  any  long 
argument  in  refutation  of  the  most  absurd  position  that  it  we  were  really 
out  of  existence,  and  had  out  of  existence  that  which  represents  to-day  two- 
thirds  or  three-quarters  of  the  active  capital,  energy  and  equipment  em- 
ployed in  the  manufacture  and  distribution  of  oil,  the  price  would  go  lower, 
but  I  would  call  your  attention  to  what  Mr.  Lee  said  in  practically  the  same 
breath,  as  showing  his  utter  inconsistency.  He  gives  it  as  his  opinion  that 
if  the  Standard  Oil  Company  were  out  of  the  way  prices  would  be  lower,  and 
in  the  same  breath  testifies  that  he  wants  them  out  of  the  way  because  for 
five  years  he,  in  his  own  business,  has  not  made  a  fair  manufacturing  profit. 
The  utter  inconsistency  of  his  testimony  is  shown  by  this  question  and 
answer.     (Reading  from  Mr.  Lee's  testimony.) 

"Q.  (By  Mr.  NORTH.)  What  do  you  call  a  fair  manufacturing  profit? 
A.  They  (the  independents)  would  be  entirely  satisfied  to  do  this  business 
at  10  cents  a  barrel  on  crude  oil  that  runs  through  the  refinery.  I  think  the 
Standard  Oil  Company  makes  from  $1.50  to  $2  on  every  barrel  that  goes 
through  their  works." 

If  it  is  true  that  the  Standard  Oil  Company  makes  $1.50  to  $2,  and  they 
cannot  make  10  cents,  they  are  not  good  people  to  serve  the  public. 

He  says  the  quality  of  Standard  oil  has  deteriorated  because  of  using 
Ohio  crude,  and  that  the  reason  is  that  Lima  oil  contains  arsenic  and  sulphur. 
I  want  to  say  of  the  gentlemen  connected  with  the  companies  represented  by 
Mr.  Lee  that  they  have  from  the  very  beginning  of  the  great  production  of 
oil  in  Ohio  and  in  Indiana,  and  because  of  their  small  interest  in  competition 
in  the  Pennsylvania  region,  done  their  very  utmost  toi  depreciate  and  dis- 
credit the  standing  of  the  products  of  Ohio  oil  in  the  markets  of  the  world. 
They  came  to  New  York,  and  before  the  New  York  Produce  Exchange  made 
a  very  vigorous  effort  to  have  the  exchange  rule  that  refined  oil  produced 
from  Ohio  crude  should  not  be  a  good  delivery  in  the  markets  of  the  world. 
Their  course  is  thoroughly  indefensible  in  respect  to  the  great  interests 
involved  in  those  States,  and  nothing  but  the  most  active  effort  on  our  part 
has  saved  to  those  States  the  markets  which  are  to-day  giving  them  a  profit 
that  is  inuring  to  them  in  the  production  of  the  oil  in  those  States.  And  I 
want  to  say  that  this  is  in  spite  of  the  fact,  which  they  must  have  known, 
or  could  have  known  if  they  had  any  intelligence  on  the  subject  whatever, 
that  after  the  sulphur  element  in  the  Ohio  oil  was  conquered — and  it  was  a 
difficult  work  to  conquer  it,  but  which  we  applied  ourselves  to  successfully — - 
the  average  quality  of  the  refined  oil  produced  from  the  Ohio  crude  has  been 
and  is  equal  to  that  produced  from  the  Pennsylvania  crude.  That  is  now 
admitted  by  all  buyers  and  in  all  markets  and  it  is  known  to  consumers, 
where  they  know  anything  about  it  at  all. 

The  talk  which  the  agents  of  the  Pure  Oil  Company  have  made,  and 
continue  to  make,  as  to  the  superior  quality  of  their  products  over  even  that 
which  we  make  from  the  Ohio  crude  is  entire  nonsense;  it  is  not  true. 

I  want  to  call  attention  to  Mr.  Lee's  testimony  given  somewhat  in  detail, 
indicating  that  we  ol)tain  higher  prices  for  oil  al)road  than  we  do  in  this 
country.  If  that  is  so — and  I  do  not  admit  that  it  is  so,  but  admitting  for 
the  sake  of  the  argument  that  it  is  so — it  is  a  pretty  good  argument  that  the 
consumers  in  the  United  States  are  being  very  well  treated  by  the  Standard 
Oil  Company. 

He  makes  a  long  talk  about  foreign  governmental  control,  which  is  as 


•Bl.Tok   facfd   type  indicates  matter   emitted,  in  the  course  of  editing,   from   the 
offlrial  rr>port. 


JOHN  D.  ARCHBOLD.  213 

silly  as  anybody  ever  listened  to,  and  I  will  not  take  the  time  to  comment 
on  \t.  He  makes  a  statement  regarding  the  comparative  population  and  oil 
consumption  in  Germany  and  France,  and  I  refer  to  his  statement  only  to 
show  you  how  exceedingly  careless  he  is  in  respect  to  statements  made 
before  this  body  on  matters  in  which  he  seeks  to  influence  your  minds  and 
that  of  the  public.     (Reading.) 

"Q.  Abroad  where  the  oils  of  the  independent  refineries  go  which  are 
not  of  such  a  standard  as  to  be  consumed  in  the  States  here,  does  it  come  in 
competition  with  the  oil  sent  abroad  and  sold  by  the  Standard  Oil  Company? 
A.  Oh,  yes,  sir;  the  Standard  has  a  very  large  business  in  Germany.  Ger- 
many is  the  largest  oil  market  in  the  world.  I  think  the  population  is  about 
the  same  as  France,  and  it  uses  probably  twenty  times  as  much  oil  as 
France.     I  think  I  am  not  far  wrong  in  that." 

The  relative  population  of  Germany  and  France  by  the  last  census  of 
1891  was,  German  population,  49,421,803;  French,  38,343,192.  The  consump- 
tion of  oil  in  the  year  1898,  the  last  year  of  record,  in  barrels  of  50  gallons, 
was,  Germany,  3.357,297  barrels,  and  in  France,  1,683,146.  Mr.  Lee  said  that 
it  was  twenty  times  as  great  in  one  as  the  other,  and  their  population  was 
about  the  same.    I  submit  this  statement  to  the  commission. 

He  makes  the  statement  that  the  Standard  fixes  its  own  prices  at  which 
it  buys  coal,  and  is  thus  enabled  to  oppress  not  only  labor  in  its  own  line  of 
business,  but  also  coal  labor,  The  statement  is  absolutely  absurd  and 
untruthful.  The  Standard  Oil  Company  buys  its  coal  on  competitive  offer- 
ings, and  if  the  price  is  so  low  as  to  compel  low  prices  for  labor,  it  is  the 
result  of  competition. 

He  claims  that  prices  were  fixed  by  the  South  Improvement  Company 
when  he  knows  well  that  the  South  Improvement  Company  never  did  any 
business. 

He  goes  into  an  elaborate  argument  to  prove  that  the  prices  paid  for 
crude  oil  have  been  unremunerative  to  producers.  This  charge,  which  is 
more  spQcifically,  and  I  might  say  hysterically,  made  by  Mr.  Lockwood,  I 
will  answer  when  I  reach  Mr.  Lockwood's  testimony.  In  answer  to  a  query, 
Mr.  Lee  says  that  the  Standard  Oil  Company  largely  supplied  Eastern  mar- 
kets with  Russian  oil  and  made  their  tin  cans  abroad.  Our  business  in  the 
carrying  of  oil  for  the  markets  where  the  oil  must  be  put  into  tin  cans  and 
packed  into  wooden  boxes  for  the  market,  has  been  a  very  important  feature 
from  the  beginning.  It  is  a  business  in  which  we  have  perhaps  expended 
as  much  or  more  industry  in  keeping  and  maintaining  the  markets,  as  in. 
all  other  sections  of  the  world  combined,  because  in  those  sections  we  have 
found  our  great  competitor,  Russia,  most  active.  In  answer  to  Mr.  Lee's 
statement  that  we  have  practically  abandoned  this  business,  or  that  we  are 
buying  Russian  oil  in  bulk,  and  making  tin  cans  abroad  in  which  to  put  it 
and  send  it  to  market.  I  present  this  statement,  being  a  memorandum  of  our 
manufacture  of  tin  cans  for  the  five  years  beginning  in  1894  and  ending  in 
1898.*  In  the  five  years  beginning  in  the  year  1894  we  manufactured  in  the 
United  States,  223,116,660  tin  cans,  which  we  packed  in  boxes  holding  two 
tins  each,  the  requirement  being  in  boxes  made  in  this  country  from  our 
Canadian  pine,  the  lumber  being  bought  here,  and  the  labor  being  employed 
here,  involving  the  use  of  111,558,330  boxes  of  wood,  holding,  as  I  say,  two 
cans  each.  And  we  used  in  this  manufacture  4,590,285  boxes  of  tin  plate. 
The  only  business  that  we  do  outside  of  the  United  States  in  the  manufac- 
ture of  tin  cans  is  where  we  are  compelled  to  do  it  by  the  exigencies  of 
freight:  In  Mexico  City,  being  a  small  business;  in  Vera  Cruz.  Mexico,  a 
small  business;  and  in  Tampico,  Mexico,  the  grand  total  of  which  is  entirely 
inconsiderable.  We  also  do  a  little  canning — a  very  little — in  the  exporta- 
tion of  bulk  oil  and  the  manufacture  of  tin  cans  in  Italy,  at  Venice  and 
Savona,  where  the  tariff  and  the  freight  question  make  it  necessary  that  we 
do  all  canning  there.  There  is  in  this  great  industry  employed  in  steady, 
remunerative  labor,  2,500  good  Americans.     I  present  here  also  a  statement 


*The  witness  presented  a  tabulated  statement  showing  the  extent  of  the  manu- 
fucture  of  tin  cans  by  the  Standard  Oil  Company,  wliich  is^published  on  page  533  of 
the  official  report. 


214  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

to  show  the  exports  of  refined  oil  in  cans  from  Batoum,  Russia,  from  1894 
to  1898,  inclusive.*  I  present  this  statement  for  the  purpose  of  having  you 
understand  something  of  the  menace  which  attaches  to  this  business  at  the 
hands  of  this  great  Russian  competitor.  Our  aggregate  in  all  this  great 
business  with  the  East  which  we  have  made  such  a  fight  to  retain  for  the 
American  petroleum  industry,  is  now  109,000,000  cases  for  the  five  years,  as 
against  Russia's  53,000,000.  But  for  the  year  1898— which  perhaps  I  should 
read  to  you  as  showing  the  change  in  the  matter — their  shipment  was 
10,728,603  cans  against  our  shipment  of  22,479,745.  I  also  present  here  a 
statement  which  you  gentlemen  can  look  at  at  your  leisure,  and  I  think  you 
will  find  great  interest  in  studying  it,  showing  the  enormous  exportation  of 
this  particular  packing  of  oil  in  tins  and  cases  to  the  markets  of  the  world. 
It  is  a  business,  as  I  say,  competed  for  by  these  foreign  countries  most  vigor 
ously,  requiring  the  fullest  encouragement  on  the  part  of  everything  pertain- 
ing to  the  business  from  America. 

Q.  (By  Mr.  SMYTH.)  Is  there  any  competition  from  America?  A. 
There  is  practically  no  competition  from  America.  I  do  not  know  but  that 
these  gentlemen  do  some  small  amount  of  business,  but  it  is  almost  incon- 
siderable, as  shown  by  the  fact  that  we  did  not  even  know  that  they  were 
doing  it. 

Q.  The  principal  competition,  then,  comes  from  Russia?  A.  The  prin- 
cipal competition  comes  from  Russia,  and  now  also  from  the  far  East,  as  I 
may  explain  a  little  further  along.  There  is  getting  to  be  a  large  production 
of  oil  especially  in  the  Dutch  East  Indies,  but  I  will  go  into  that  in  another 
place.  I  will  read  the  list  to  show  you  where  the  distribution  of  oil  of  this 
character  goes: 

Great  Britain,  Holland,  Belgium,  German  North  Sea,  Sweden  and  Nor- 
way, Denmark,  Russian  Baltic,  France,  Portugal,  Gibraltar,  Italy,  Malta, 
Greece  and  the  Greek  Archipelago,  Turkey,  Egypt,  north  coast  of  Africa, 
Indian  Archipelago  and  islands  of  the  China  Sea,  west  coast  of  Africa,  Bast 
India.  .Tava,  China,  Japan,  south  coast  of  Africa,  east  coast  of  Africa,  islands 
of  the  Indian  Ocean,  Arabia,  Sandwich  Islands  and  islands  in  the  Pacific, 
Australia,  New  Zealand,  British  North  America,  Mexico,  Central  America, 
Cuba,  West  Indies,  northeast  coast  of  South  America,  Brazil,  southeast 
coast  of  South  America,  west  coast  of  South  America.  And  I  may  add,  gen- 
tlemen, just  by  way  of  a  word  of  explanation,  that  I  think  in  all  of  those 
countries  to  which  we  send  oil  we  have  our  own  active  American  agents, 
on  the  alert  for  the  American  oil  trade  and  the  American  industry,  and  this 
gentleman  comes  here  and  states  that  we  are  not  doing  this  business. 

In  answer  to  a  query,  or  in  pursuing  an  argument  rather,  that  the  Stand- 
ard had  so  governed  the  price  for  crude  oil  as  to  have  made  it  an  unre- 
munerative  business  in  the  oil  country,  Mr.  Lee  made  the  most  astonishing 
statement  that  the  counties  producing  oil  are  not  as  well  off  as  though  they 
had  never  produced  a  barrel  of  oil.  fThat  a  man  witth  any  knowledge  of  the 
oil  producing  section  of  Western  Pennsylvania  and  West  Virginia  should 
have  made  such  a  statement  is  incredible.  That  section,  prior  to  the  opening 
of  the  oil  production,  was  a  comparative  wilderness,  noted,  if  it  was  noted 
at  all,  principally  for  its  hemlock  and  buckwheat.  The  oil  production  has 
made  it  a  world-renowned  center  of  marvelous  activity.  It  has  taken  there 
a  population  of  tens  of  thousands.  I  may  say  hundreds  of  thousands  of  pros- 
perous, contented,  happy  people,  the  like  of  which  probably  does  not  exist 
in  the  same  territory  on  God's  footstool.  The  oil  production  has  built  towns 
and  cities,  it  has  built  railroads  and  has  given  steady,  remunerative  employ- 
ment to  thousands  of  American  workingmen  during  all  this  period,  and  for  a 


♦These  statempnts  were  submitted  lo  the  commission  and  are  printed  on  pages 
534-.537  of  the  official  report. 

tn)ark  faced  type  indicates  matter  omitted,  in  the  course  of  editing,  from  the 
official  report. 


JOHN  D.   ARCHBOLD.  215 

man  who  comes  from  that  section,  with  a  knowledge  of  the  conditions  as 
they  exist  there,  to  stand  up  here  and  make  such  a  statement,  is,  as  I  say, 
utterly  incredible. 

Q.  (By  Representative  LIVINGSTON.)  In  connection  with  the  state- 
ment you  have  just  made,  will  you  give  the  commission  the  amount  of  cap- 
ital invested  in  the  Standard  Oil  Company,  and  a  list  of  all  the  stockholders 
and  the  profits  on  that  investment?  A.  The  figures  in  reference  to  all  the 
specific  questions  are  being  made  up,  as  Professor  Jenks  knows. 

Q.  The  list  of  the  stockholders? 

Professor  JENKS.  The  list  of  the  stockholders,  I  may  say,  was  not 
asked  for  in  the  general  schedule. 

Representative  LIVINGSTON.  Well,  I  am  asking  for  it  now.  A.  I  can- 
not answer  as  to  that. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Would  you  be  willing  to  meet  the 
commissioner's  request  and  furnish  a  list  of  these  stockholders  of  the  Stand- 
ard Oil  Trust  as  it  originally  existed,  and  the  combination  as  it  now  exists? 
A.  I  cannot  answer  that  without  further  conferring  in  reference  to  that 
statement. 

Q.  Will  you  promise  the  commission  that  you  will  confer  with  the 
authorities  and,  if  these  things  are  not  inconsistent  or  impracticable,  you 
will  let  us  have  them?  A.  I  will,  of  course.  I  will  give  any  information  that 
is  not  inconsistent  or  impracticable. 

Q.  (By  Mr.  A.  L.  HARRIS.)  Would  not  the  best  testimony  in  refuting 
the  statements  made  by  Senator  Lee  be  the  amount  of  taxable  property  of 
these  counties  previous  to  the  discovery  of  oil  and  at  the  present  time?  A. 
I  think  it  would  be  very  interesting. 

*Q.  (By  Vice-chairman  PHILLIPS.)  That  would  hardly  be  a  fair  com- 
parison, allow  the  chair  to  explain,  in  that  the  advance  has  occurred  all  along 
in  other  sections  of  the  country  during  that  period,  where  no  oil  was  de- 
veloped. 

A.  As  simply  a  slight  illustration  of  the  point  which  I  made  of  the  absurd- 
ity of  Mr.  Lee's  statement,  I  present  for  your  information  a  statement  show- 
ing the  value  of  Pennsylvania  crude  oil  as  compared  with  that  of  other 
States,  the  total  production  in  value  from  the  year  1859.  which  was  the 
beginning  of  the  industry,  to  the  year  1898,  inclusive,  and  figured  on  a  very 
conservative  basis. t  It  shows,  gentlemen,  that  during  this  period,  and  this 
Is  an  interesting  statement.  I  am  sure,  that  there  has  been  taken  from  the 
oil  fields  in  Pennsylvania,  in  barrels  of  42  gallons,  662,048.642  barrels,  and 
that  the  average,  for  all  that  period,  of  the  prices  paid  at  the  wells  for  the 
oil,  is  $1,163  per  barrel,  or  a  total  value  of  $769,948,397.37. 

Q.  (By  Mr.  SMYTH.)  That  amount  has  been  paid  to  producers  for 
crude  oil?  A.  That  amount  has  been  paid  to  the  producers  for  crude  oil. 
Now,  as  has  probably  been  brought  out  in  the  course  of  this  testimony,  the 
oil  producing  business  is  done  largely  on  a  basis  of  what  is  called  royalty, 
that  is,  the  operator  takes  a  lease  of  the  land,  and  pays  to  the  land  owner, 
who  is  usually  a  farmer  in  the  section,  a  certain  free  royalty  interest  for  the 
right  to  occupy  and  drill  the  land. 

Q.  That  right  to  occupy  does  not  interfere  with  the  agricultural  pursuits 
of  the  farmer?  A.  No.  sir;  this  oil  is  kept  as  free  as  possible  from  interfer- 
ence with  the  farmer.  That  royalty  right,  or  payment,  has  varied  during 
the  history  of  the  business  from  one-half  of  the  oil  found  to  the  present 
ruling  basis  of  one-eighth,  which  basis  prevails  to-day  throughout  the  larger 
part  of  the  oil  producing  country.  Of  the  crude  produced,  one-eighth  goes 
free  to  the  land  owner  and  for  that  he  does  nothing,  as  I  say,  but  furnish 
the  surface  on  which  to  drill. 

Q.  (By  Representative  LIVINGSTON.)  Now,  will  you  go  further  and 
give  us  the  average  profit  that  you  have  made  on  all  those  wells?  A.  Now, 
what  I  want  to  say  is  that  figuring  for  the  whole  period  that  the  payment 
was  one-eighth,  and  not  the  higher  amount  that  has  prevailed  during  most 


•Black  faced  type  Indicates  matter  omitted,  in  the  course  of  editing-,  from  the 
official  report. 

tThis  tabulated  statement  appears  on  page  539  of  the  official  report. 


216  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

of  the  period,  the  amount  of  royalties  paid  to  people  in  that  section  on  the 
oil  produced  would  amount,  during  that  period,  to  the  sum  of  $96,243,549.67. 

Q.   (By  Mr.  SMYTH.)     In  royalties?    A.  Yes,  sir. 

Q.  Do  you  think  these  counties  are  worse  off  than  they  were  before  the 
oil  was  drilled  for?  A.  Well,  if  you  travel  through  them  you  would  not 
think  so. 

Q.  (By  Mr.  CLARKE.)  Have  you  any  statement  of  the  population  of 
these  cities  and  towns?  A.  It  would  be  a  mere  guess  on  my  part.  Mr.  Boyle, 
or  even  Mr.  Lee,  ought  to  be  able  to  answer  that  very  much  more  intelli- 
gently than  I.  I  have  not  lived  there  for  some  years  although  I  go  there 
every  year  and  still  keep  my  interests  there.  They  can  look  it  up  for  you. 
About  300,000  in  the  oil  towns  proper. 

*IVIr.   LEE.     Oh,  no. 

Mr.  CLARKE.     Well,  no  matter  since  you  don't  know. 

The  WITNESS.     I  can  easily  look  it  up  for  you,  if  you  desire. 

Mr.  Lee,  in  answer  to  a  question  by  Professor  Jenks,  refers  to  the  South 
Improvement  Company  as  though  it  were  actively  doing  business,  which  *he 
knew  was  not  true. 

Q.  (By  Vice-Chairman  PHILLIPS.)  The  South  Improvement  Company 
did  fix  rates,  did  they  not?    A.  Never  to  do  any  business. 

Q.  Not  to  do  business;  but  they  had  rates  fixed?  A.  There  was  a  con- 
tract entered  into  which  was  annulled  before  it  became  operative. 

Q.  There  was  another  contract  and  is  it  not  in  sworn  testimony  that  that 
contract  was  only  in  existence  two  weeks  afterwards,  and  did  or  did  not  the 
rates  fixed  by  the  South  Improvement  Company  prevail  after  the  Standard 
Oil  Company  came  into  existence?  A.  I  have  no  knowledge  of  any  relation 
on  the  part  of  the  Standard  Oil  Company  succeeding  to  the  South  Improve- 
ment Company,  whatever.  I  was  an  opponent  of  the  South  Improvement 
Company,  as  you  know.  I  disapproved  of  it  in  theory  and  practice,  and  I 
disapprove  of  it  to-day,  and  I  want  to  say  that  from  ray  own  close  personal 
knowledge  of  the  matter,  the  statements  that  that  which  was  the  South 
Improvement  Company  has  survived  in  the  Standard  Oil  Company  are  not 
true.    If  it  had  been  true  I  would  not  have  been  in  it  *and  you  know  it. 

Representative  LIVINGSTON.  I  want  to  suggest  now  to  the  witness, 
once  for  all,  and  to  all  other  witnesses,  that  there  are  some  expressions  sim- 
ilar to  one  he  has  just  made  that  a  statement  is  a  lusty  old  lie,  or  a  statement 
made  by  Mr.  Lee  is  not  true  and  he  knows  it.  Now,  how  can  we  keep  per- 
sonalities out  of  this?  If  the  witness  had  said  that  Mr.  Lee  was  mistaken, 
or  that  he  was  mistaken  entirely,  that  might  be  a  defensible  proposition,  but 
for  the  witness  to  say  that  right  to  the  face  of  this  commission,  by  the 
Eternal,  if  you  were  to  make  that  statement  about  some  men  that  I  know 
on  this  floor,  you  wouldn't  get  out  of  this  room  with  any  brains  in  your  head. 

Mr.  LEE.  I  guess  my  veracity  will  compare  favorably  with  the  gentle- 
man on  the  stand. 

The  WITNESS.  Well,  I  will  endeavor  to  be  very  careful  in  the  future, 
but  what  I   have  said  is  true. 

Mr.  FARQUHAR.  That  may  be,  but  the  "You  know  it"  would  not  be 
allowed  in  a  court  of  justice.     A.  That  may  be;   I  think  it  would. 

Mr.  FARQUHAR.  The  latter  part  of  it  would  not  be  allowed,  and  "He 
knows  it"  should  be  taken  out  of  the  record. 

(A  pause.) 

The  WITNESS.  Mr.  Lee  referred  to  the  so-called  shut-down  movement. 
It  was  entered  into  at  the  request  of  the  producers,  who  alleged  that  they 
were  suffering  from  low  prices  incident  to  a  large  accumulation  of  stocks 
*and  excessive  production.  Our  relation  to  it  was  entirely  the  result  of  the 
urgency  of  the  producers  represented  by  a  *prominent  committee  *of  pro- 
ducers. They  expressed  *at  the  conclusion  of  the  matter  the  greatest  satis- 
faction with  our  course  in  connection  with  it.  T  want  to  present  in  support 
of  my  statement  in  this  respect,  *which  answers  the  imputation  that  this 
movement  was  undertaken  at  our  instance  and  was  an  oppressive  movement 
on  our  part,  the  testimony  of  Mr.  Thomas  W.  Phillips  given  before  the  Con- 


•Black   faced   type  indicates  matter  ornitted,   in   tlic  course  of  editing,   from   the 
offlcial  report. 


JOHN  D.   ARCHBOLD.  217 

gressional  committee  inquiring  on  this  subject  in  1888,  pages  111  and  112. 
I  will  read  the  concluding  part  of  Mr.  Phillips'  statement. 

*Vice-Chairman  PHILLIPS.  I  would  be  pleased  to  have  you  read  it  if 
you  wish,  or  such  parts  of  it  as  you  desire.  Probably  it  is  too  voluminous  to 
read  it  all;  just  the  parts  that  refer  to  the  question. 

The  WITNESS.     To  the  question   I   want  to  answer? 

Vice-chairman   PHILLIPS.     Yes,  sir. 

The  WITNESS.  Well,  then,  I  will  read  the  concluding  part  of  Mr.  Phil- 
lips' statement. 

Vice-chairman  PHILLIPS.  I  will  state  that  I  never  had  an  opportunity 
to  look  that  testimony  over,  as  an  apology  that  there  is  some  verbiage  in  it 
that  I  do  not  think  I  used  before  that  commission.  We  see  that  very  often 
in  giving  testimony  the  records  are  not  just  as  accurate  as  they  should  be 
when  there  is  not  an  opportunity  for  revision. 

The  WITNESS  (Reading).  "By  Mr.  PHILLIPS.  We  are  certain  that 
there  would  have  been  much  bankruptcy  in  that  region  had  this  movement 
not  been  made.  I  will  state  further,  in  justice  to  them,  that  this  was  not  a 
movement  on  the  part  of  the  Standard  Oil  people.  It  Avas  a  movement  con- 
ceived by  the  producers  themselves.  They  approached  the  Standard  people 
in  regard  to  this  matter,  and  after  long  negotiations,  which  you  have  here  in 
testimony,  the  contract,  which  you  also  have,  was  formulated  and  signed." 

Vice-Chairman  PHILLIPS.     I  say  the   same  thing  to-day. 

The  WITNESS.  That  answers  Mr.  Lee's  statement.  Mr.  Lee  says:  "I 
believe  if  there  had  been  50  concerns  engaged  in  the  manufacture  of  petro- 
leum that  just  as  wide  markets  would  have  been  obtained  for  the  article, 
and  while  the  consumer  might  not  have  paid  any  more  for  his  oil,  the  petro- 
leum producers  would  have  realized  a  much  better  price  and  have  had  a 
handsome  profit,  whereas  I  think  they  have  not  realized." 

I  present  here  a  statement  showing  in  detail  a  list  of  the  oil  refineries  in 
the  United  States,  with  their  capacities,  averaging  a  life  to  the  end  of  De- 
cember. 1898,  of  14  years,  and  numbering  66  in  all.t 

Mr.  Lee  makes  a  very  elaborate  effort  to  show  that  trusts  and  combina- 
tious  affect  labor  injuriously.  The  best  refutation  possible  of  this  statement 
is  the  record  of  our  own  experience,  the  fact  being  that  for  all  the  years  in 
which  we  have  been  engaged  in  business  we  have  had  scarcely  any  serious 
difficulty  with  the  vast  body  of  men  employed.  On  the  other  hand,  we  assert 
most  positively  that  as  a  whole  there  never  was  a  more  zealous  body  of 
employes  than  have  been  connected  with  our  interests.  We  have  been  prac- 
tically without  strikes,  our  labor  is  well  paid  and  contented  in  every  depart- 
ment, and  I  submit  that  our  experience  in  this  regard  is  the  best  possible 
proof  of  the  advantages  of  labor  and  capital  working  together  on  intelligent 
lines  where  the  rights  of  each  are  fairly  considered. 

I  am  a  firm  believer  in  the  right,  and  indeed  the  duty  of  labor  to  organize, 
as  I  am  in  favor  of  the  combination  and  organization  of  capital.  Of  course, 
it  is  true  that  labor  organizations  often  do  very  unwise  and  arbitrary  things. 
They  fall  frequently  into  the  hands  of  leaders  who  are  demagogic  and  who 
lack  the  qualities  of  intelligent  leadership  and  are  badly  influenced  also  by 
political  demagogues,  whose  sole  stock  in  trade  is  often  their  ability  to  talk 
loudly  against  capital  and  the  employing  class;  and.  above  all,  they  are  too 
much  influenced  by  the  bad  advice  of  an  element  in  the  public  press  that  is 
utterly  depraved  and  demagogic,  and  which  teaches  them  altogether  false 
ideas  as  to  their  duties.  They  are  taught  that  it  is  no  sin  for  them  to  cheat 
capital.  They  will,  however,  learn  better  as  time  goes  on.  Capital  on  its 
side  has  made  and  is  making  grievous  mistakes  in  the  treatment  of  labor, 
but  the  two  are  moving  together  on  irresistible  lines  toward  organization 
and  a  better  mutual  understanding,  and  one  of  these  days  labor  will  realize, 
as  the  employing  class  already  knows,  that  the  howling  of  the  demagogue  is 
hurtful  to  ail  concerned,  and  a  better  era  of  understanding  between  the 
employer  and  the  employe  will  be  brought  about. 


•Black   faced   type  indicates  matter   omitted,  in  the  cour.se  of  editing,  from   the 
official  report. 

tThis   statement  is  printed   on   pages   541-542  of  the  official  report. 


218  REVIEW  OF   TESTIMONY— INDUSTRIAL  COMMISSION. 

Mr.  Lee's  suggested  remedies  seem  almost  too  frivolous  to  demand 
serious  consideration.  His  views  on  destructive  competition,  the  limitation 
of  capital,  etc.,  seem  altogether  too  absurd  to  call  for  special  attention. 

I  may  say,  in  conclusion,  regarding  Mr.  Lee,  that  he  has  taken  very  great 
care  to  organize  his  new  company,  or  embryonic  trust,  in  the  very  State 
(New  Jersey)  which  he  criticises  so  severely,  with  a  view,  undoubtedly,  to 
make  his  capital  quite  unlimited  if  he  finds  it  will  float. 

I  turn  next  to  the  testimony  of  Mr.  Monnett,  the  Attorney-General  of  the 
State  of  Ohio.  I  want  to  say  by  way  of  preface,  before  answering  directly 
the  points  presented  by  Mr.  Monnett,  that  we  are  interested  in  Ohio,  in 
whole  or  in  part,  in  a  number  of  corporations,  duly  chartered  by  the  State 
and  all  carefully  observing  the  obligations  imposed  upon  them  by  their 
charters.  The  annual  amount  paid  in  taxes  to  the  State  by  these  corpora- 
tions is  in  the  neighborhood  of  $250,000.  The  aggregate  amount  paid  in 
wages  to  about  4,700  employes  in  the  State  by  these  corporations  is  over 
$3,250,000  per  annum.  The  further  distribution  of  money  within  the  State 
for  fuel  and  supplies  of  all  kinds  would  amount  to  a  vast  sum. 

I  submit  for  your  consideration  whether  we  are  not  a  valuable  client  of 
the  State,  and  whether  we  are  not  entitled  to  protection  rather  than  perse- 
cution. That  Mr.  Monnett's  course  has  been  an  effort  at  the  most  malignant 
possible  persecution,  or  even  worse,  I  shall  endeavor  to  show  in  answering 
his  testimony. 

Mr.  Monnett  makes  the  statement  that  there  has  been  great  discrimina- 
tion in  favor  of  the  Union  Tank  Line  or  Standard  Oil  Company.  The  rates 
fixed  by  the  railroads  in  connection  with  tank  car  lots,  and  single  barrel  or 
part  car  lots,  have  been  the  same  to  all  and  carried  with  them  no  discrimina- 
tion whatever  in  favor  of  the  Standard  Oil  Company.  In  other  words,  I  deny 
the  allegation  broadly. 

Regarding  the  alleged  burning  of  books,  at  Cleveland,  Ohio,  I  want  to 
deny  the  fact  of  any  such  burning,  positively.  At  the  time  of  the  original 
inquiry  on  the  subject  we  offered  to  produce  every  employe  who  could  have 
had  any  knowledge  upon  the  subject,  and  each  would  have  denied  the  state- 
ment as  to  the  alleged  burning  of  the  books.  The  Attorney-General  refused 
to  have  them  sworn  and  at  the  time  Mr.  Monnett  gave  his  testimony  he  knew 
that  Mr.  F.  B.  Squire,  the  secretary  of  the  Standard  Oil  Company  of  Ohio, 
had  made  an  affidavit  in  the  litigation  pending  in  Ohio,  that  the  books  were 
in  his  possession,  and  any  denial  that  I  have  made  regarding  the  matter,  or 
any  statement  that  I  have  made  in  reference  to  the  testimony  in  connection 
with  it  is  true.  It  is  not  true  that  I  have  made  any  retraction,  as  Mr.  Mon- 
nett states,  with  reference  to  any  statement  that  I  have  made.  Mr.  Monnett's 
reiteration  of  this  matter,  after  all  that  has  been  said  regarding  it.  is  most 
reprehensible.  I  would  like  to  characterize  it  in  stronger  terms,  but  I  bow 
to  the  wish  of  the  commission. 

Mr.  Monnett  endeavors  to  carry  the  impression  that  more  Standard  Oil 
Triist  certificates  were  issued  than  our  statements  have  shown.  *This  is  an 
utterly  untruthful  intimation  on  his  part,  and  the  allegation  is  made  without 
a  Fcintilla  of  proof  to  sustain  it.  *He  must  have  known  in  making  it  that 
it  was  contrary  to  all  the  evidence  that  was  offered  in  the  case,  and  *that 
it  was  utterly  destitute  of  the  truth.  The  stock  and  transfer  books  of  the  trust 
were  placed  in  the  hands  of  Mr.  Monnett's  associate.  Mr.  Kincaid,  during  the 
Ohio  investigation,  to  examine  thoroughly  and  he  expressed  himself  as  per- 
fectly satisfied. 

He  speaks  with  feeling  in  reference  to  our  having  dismantled  some  works 
at  Marietta.  I  want  to  call  attention  to  the  fact  that  there  are  two  that 
survived  at  Marietta,  namely  Mr.  Rice's  and  Mr.  Davis'.  I  do  not  recall  that 
we  have  dismantled  any  there.  I  do  not  know  of  any  works  there  that  we 
have  dismantled. 

Q.  (By  Mr.  FARQUHAR.)  This  commission,  in  some  of  its  testimony, 
has  had  considerable  stress  laid  upon  the  dismantling  of  works  by  your  com- 
pany and  the  de-localizing  and  transferring  of  the  business  away  from  coun- 
try towns  and  other  places,  and  their  concentration  in  larger  places.    Would 


*niack  faced  t>pe  Indicates  matter  omitted,  in  the  course  of  editing,  from  tha 
official  report. 


JOHN  D.  ARCHBOLD.  219 

you  give  any  business  reasons  of  the  Standard  Oil  Company  with  reference 
to  any  of  those  changes?  A.  I  will  be  very  glad  to  and  I  have  it  in  another 
place.     I  thnk  you  will  find  it  amply  treated. 

*l  now  refer  to  Mr.  Monnett's  testimony  in  reference  to  the  Cudahy  line 
simply  as  showing  the  utter  lack  of  knowledge  and  the  lack  of  Information  of 
a  man  occupying  an  official  position  and  who  comes  here  expecting  to  influ- 
ence your  minds  and  the  public  mind  in  reference  to  this  important  question. 
He  said  the  Cudahy  line  ran  to  New  Jersey.  It  really  runs  from  the  Indiana 
oil  fields  to  Kankakee,  III.  I  state  this  simply  to  show  the  utter  lack  of 
knowledge  of  Mr.  Monnett  of  the  subject  on  which  he  is  talking. 

Mr.  Monnett  makes  a  statement  which,  even  to  a  person  familiar  with 
the  oil  business  is  quite  unintelligible,  to  the  effect  that  somehow  from  the 
business  of  selling  oil  in  Ohio  we  make  $120,000,000  a  year.  As  I  say,  it  is 
exceedingly  difficult  to  know  what  he  could  have  had  in  his  mind,  *unless  it 
was  that  some  time  in  his  experience  he  had  heard  this  figure,  and,  it  being 
the  largest  figure  he  had  ever  heard,  he  named  it,  but  it  certainly  had  no 
relation  to  our  business.  In  order  to  answer  that  with  as  much  intelligence 
as  possible  I  have  prepared  a  statement  which  shows  that  the  total  sales  in 
the  State  of  Ohio  of  all  the  refined  oil  and  products  of  oil  for  1898  aggregated 
$979,798.56. 

Q.  That  includes  by-products?  A.  Yes,  sir;  and  I  will  therefore  ask  you 
to  discount  Mr.  Monnett's  statement  at  least  $119,000,000. 

Q.  (By  Mr.  CLARKE.)  That  is  the  total  sales  by  your  company?  A.  The 
total  sales.  I  must  speak  guardedly  in  answer  to  what  Mr.  Monnett  saw  fit 
to  say  regarding  the  alleged  bribery  cases  in  Ohio.  With  reference  to  the 
so-called  "bribery"  case  in  Ohio,  I  desire  to  say  that  our  affidavits  have  been 
filed  with  the  Supreme  Court  of  the  State  of  Ohio,  denying  specifically  all 
of  Mr.  Monnett's  charges  of  attempted  bribery,  and  all  of  his  allegations  in 
relation  thereto,  and  asking  the  court  to  appoint  a  commission  to  investigate 
the  char°:es.  The  court  has  not  yet  acted  on  the  subject.  If  they  do  not, 
we  will  then  see  whether  there  is  not  some  other  method  by  which  Mr.  Mon- 
nett can  be  compelled  to  answer  on  this  matter. 

O.  (By  Mr.  FARQUHAR.)  What  was  the  supposed  amount  of  bribery? 
A.  There  has  been  some  newspaper  talk  of  $400,000. 

Q.   (By  Mr.  SMYTH.)   Paid  to  whom?     A.  To  Mr.  Monnett. 

*Q.  (By  Vice-chairman  PHILLIPS.)  Being  offered  to  Monnett,  not  paid. 
A.  Yes,  sir;  I  have  to  say  that  our  answer  is  before  the  Supreme  Court.  In 
reference  to  what  our  final  attitude  in  the  matter  will  be.  it  would  not  be 
proper  for  me  to  make  any  intimation.  *Mr.  Monnett  took  that  ground  and 
we  take  the  same  ground.     We  court  this  investigation. 

Q.  (By  Mr.  RATCHFORD.)  Are  you  prepared  to  say  that  such  a  proposi- 
tion may  have  been  made  without  your  knowledge,  or  do  you  deny  that  any 
such  proposition  was  made?  A.  We  have  denied  it  to  the  very  utmost.  Our 
answer  is  now  in  court  denying  it  to  the  very  utmost. 

Q.  The  answer  of  your  company?  A.  The  answer  of  our  company.  We 
are  waiting  the  recommendation  of  the  court. 

Mr.  Monnett  recommends  Mr.  W.  H.  Clark,  of  Newark,  Ohio,  as  a  com- 
petent witness.  In  recommending  this  witness  to  you  Mr.  Monnett  must  have 
known  that  he  was  an  untruthful,  dishonest,  discharged  employe,  and  in 
imposing  him  upon  you  as  a  witness  was  an  insult  alike  to  you,  to  our  inter- 
ests aiid  to  the  country  at  large. 

Mr.  Monnett  testified  in  answer  to  questions  by  Mr.  Harris  as  follows: 

"Q.  What  companies  are  competing  with  the  Standard  Oil  Company  in 
Ohio  now?  A.  There  is  only  a  limited  competition.  I  think  the  Scofleld. 
Shurmer  &  Teagle  people,  and  a  man  by  the  name  of  Shields  at  Mansfield 
has  an  independent  agency  and  only  a  limited  product.  The  Shurmer  & 
Teaele  people  originally  had  a  contract  whereby  they  were  allowed  to  live — 
to  sell  and  live." 

Mr.  Monnett  again  refers  to  the  absence  of  competition  in  Ohio,  and 
repeats  that  he  does  not  know  of  a  single  independent  chartered  corporation 
left  in  the  State  of  Ohio.    He,  however,  attempts  to  carry  the  impression  that 


•Black  faced  type  Indicates  matter  omitted,  in  the  course  of  editing,  from  the 
oflficial  report. 


220  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

we  are  attempting  to  deceive  the  public  by  operating  through  different 
names  in  the  State.  He  quoted  the  Penn  Oil  Company.  I  do  not  know  what 
he  means  by  that,  as  we  have  no  such  company  operating  in  the  State. 

I  now  submit  statements  showing  a  partial  list  of  our  competitors  in 
Ohio,  composed  of  pipe  lines,  refiners  and  producers,  covering  corporations, 
partnerships,  firms  and  individuals.  This  list  is  only  partial,  but  it  gives 
some  indication  of  the  utter  lack  of  knowledge,  or  worse,  that  actuated  Mr. 
Monnett  in  his  statement. 

This  is  a  list  of  the  incorporated  companies  engaged  in  the  Lima  district, 
in  the  State  of  Ohio;  not  in  that  part  of  Southeastern  Ohio,  where  the  oil  of 
the  higher  quality  is  found.  Counties  of  Washington  and  Monroe,  but  in  the 
Lima  district.    There  are  159  corporations. 

*Q.  (By  Mr.  A.  L.  HARRIS.)  That  is  in  production?  A.  In  production 
and  its  immediate  allied  business.  Some  little  in  gas,  perhaps,  but  I  think 
substantially  entirely  in  the  production  of  oil. 

Q.  (By  Mr.  SMYTH.)  Are  these  companies  controlled  by  the  Standard? 
A.  Not  to  the  interest  of  a  dollar.  They  are,  of  course,  all  creatures  of  the 
State  of  Ohio,  or  if  not  chartered  under  the  State  they  are  all  registered 
under  the  laws  of  Ohio  and  paying  taxes  to  that  State. 

Q.  Not  owned  nor  controlled  by  the  Standard  Oil  Company?  A.  Neither 
owned  nor  controlled  by  the  Standard  to  the  extent  of  a  dollar.  And  there 
are  individuals. 

Q.  They  are  agents  of  the  Standard?  A.  Not  agents  of  the  Standard 
Oil  Company  in  any  possible  way  or  sense. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Have  you  any  interest  in  these  com- 
panies by  purchasing  in  them.  A.  Not  a  dollar.  Substantially  none.  None 
that  I  know  of.  As  I  stated  here,  these  are  companies  outside  of  our  own  bus- 
iness. Our  own  business  for  the  State  of  Ohio  is  done  in  the  name  of  the 
Ohio  Oil  Company. 

Q.  The  point  that  I  wish  to  make  is  this:  Have  you  not  an  eighth,  a, 
quarter,  or  a  third  interest  in  a  good  many  of  these  companies  in  Ohio,  as 
you  have  in  Pennsylvania?    A.  No,  I  think  not;  no,  sir. 

Q.  In  Pennsylvania  you  have?    A.  Not  that  I  know  of. 

Q.  Are  you  not  largely  interested  in  the  output,  one-quarter  interest  in 
the  wells?     A.  We  may  be  to  a  small  extent. 

Q.  (By  Professor  JENKS.)  Not  at  all  in  any  of  these?  A.  I  think  not 
at  all  in  any  of  these.  If  it  is,  it  is  such  a  trifiing  exception  as  not  to  be  an 
exception  to  the  rule.  I  stated  the  number  of  partnerships  was  258,  of  indi- 
viduals 1.240,  and  159  corporations,  and  there  are  of  refining  concerns,  not 
in  the  remotest  degree  related  to  the  Standard  Oil  Company,  eight  active, 
large  concerns  chartered  b.v  and  doing  business  in  the  State  of  Ohio,  which 
makes  a  grand  total  of  1,665  concerns  doing  business  in  competition  with  us 
in  the  Lima  district,  against  Mr.  Monnett's  one  concern  that  he  could  not 
name,  and  one  outside  man  who  had  a  station  at  Mansfield. 

Q.  (By  Vice-chairman  PHILLIPS.)  What  per  cent  of  the  Lima  field 
do  you  control  the  production  of.    A.  I  have  that  all  here. 

Q.  (By  Mr.  A.  L.  HARRIS.)  When  I  asked  the  Attorney-General  the 
question.  I  had  in  my  mind  refining,  not  producing  companies.  A.  He 
answered  also  in  regard  to  producing  companies,  and  he  was  permitted  to 
do  that;  he  answered  regarding  them  all. 

Q.  I  asked  him  in  reference  to  the  refining  companies.     A.  Yes,  sir. 

Q.  I  thought  he  intended  to  make  the  answer  to  my  question.  A.  His 
answer  mentioned  producing  companies  and  he  spoke  of  the  Penn  Oil  Com- 
pany as  being  a  producing  company  which  he  claimed  was  really  ours. 

Q.  Is  that  a  refining  company?  A.  No,  a  producing  company  *which  we 
have  in  Pennsylvania. 

Q.  (By  Mr.  RATCHFORD.)  Mr.  Archbold  has  stated  that  the  Standard 
Oil  Company  has  virtually  no  interest  in  a  number  of  producing  companies 
he  has  mentioned.  Have  they  any  interest  in  refining  companies?  A.  None 
vv'hatever,  I  believe. 


•Black   faced   type  indicates  matter  omitted,   in  the  course  of  editing,  from  the 
nfliclal  report. 


JOHN  D.  ARCHBOLD.  221 

Q.  No  business  interest?  A.  With  the  refining  companies,  none  what- 
ever. 

Q.  (By  Mr.  A.  L.  HARRIS.)  How  many  refineries  outside  of  the  Stand- 
ard Oil  Company  are  in  operation  in  Ohio?  A.  I  have  just  given  them  here. 
I  do  not  thinli  this  covers  all,  but  it  covers  the  larger  ones.  This  was  made 
the  first  of  the  year.  They  are:  The  Manhattan  Oil  Company,  the  Paragon 
Oil  Company,  the  Craig  Oil  Company,  the  Indiana  Pipe  Line  and  Refining 
Company,  the  Sun  Oil  Company,  the  Findlay  Pipe  Line  Company,  and  the 
Peerless    Refining   Company. 

Q.  (By  Mr.  SMYTH.)  Ai'e  these  only  in  the  Lima  district  or  all  through 
Ohio?  A.  There  are  a  lot  of  Cleveland  refiners  that  are  not  included  here. 
This  was  made  up  with  reference  to  the  Ohio  field  about  which  Governor 
Harris  asked  me.  I  may  say  that  we  have  not  one  dollar  of  interest  in  the 
business  done  by  these  companies. 

Q.  Directly  or  indirectly?  A.  Directly  or  indirectly,  or  one  iota  of  con- 
trol in  any  way.  This  business  aggregated  for  the  five  years,  from  1894  to 
1898,  inclusive,  14,647,949  barrels.  Mr.  Rogers  reminds  me  that  there  are 
some  Cleveland  refiners  also  in  competition  with  us  that  are  not  included  in 
this  list.  I  think  that  is  all  met  in  another  place.  By  the  way,  these  Cleve- 
land refineries  are  included  in  the  general  list  of  refineries  which  I  gave  in 
answer  to  Mr.  Lee's  testimony.  I  have  further  a  supplementary  list  of  com- 
petitive producing  companies  made  up  of  corporations,  partnerships  and 
individuals  operating  in  Southeastern  Ohio,  apart  from  the  Lima  field,  aggre- 
gating 16  corporations,  eight  partnerships  and  69  individuals,  or  a  total  of 
93  in  that  section,  which  should  be  added  *to  Mr.  Monnett's  lack  of  knowl- 
edge. 

Mr.  Monnett  shows  his  vindictiveness  as  against  the  American  oil  indus- 
try by  applauding  a  scurrilous  pamphlet  put  out  by  one  of  the  yellow  jour- 
nals of  London  at  the  instance  of  the  Russian  oil  dealers  as  against  the 
Ameican  oil.  There  was  not  a  word  of  justification  for  the  statements  made, 
and  a  committee  of  Parliament,  which  has  gone  into  the  subject  most  thor- 
oughly with  reference  to  possible  legislation  on  the  oil  question  in  England, 
has  upheld  American  oil  as  against  all  the  outrageous  charges  made  by  the 
Russian  industry  and  given  publicity  through  this  scurrilous  pamphlet  *and 
disreputable  newspaper  in  London.  I  need  not  again  dwell  on  the  magnitude 
of  the  Russian  oil  industry  and  its  menace  to  our  American  industry.  No- 
where during  the  past  year  have  they  made  such  a  determined  effort  against 
the  American  oil  as  they  have  in  England  and  they  have  retained  a  journal 
of  the  lowest  order  to  make  these  scurrilous  attacks. 

*Q.  (By  Vice-chairman  PHILLIPS.)  .What  is  the  name  of  that  journal? 
A.  The  name  of  that  journal  is  the  Star.  And  this  pamphlet  is  published 
imdoubtedly  at  their  instance.  The  Russian  people  who  put  it  out  would  not 
put  their  names  to  it. 

*Q.  Is  that  the  pamphlet  to  which  you  refer?  (Exhibiting  a  pamphlet.) 
A.   Yes,  sir. 

Q.  The  name  of  the  publisher  is  given  here,  Simpkin,  Marshall,  Ham- 
ilton &  Kent.  A.  Yes,  sir.  1  submit  a  further  statement  of  the  Russian  oil 
industry,  giving  statistics  and  records  of  production  and  so  forth,  in  detail, 
which  I  am  sure  you  will  find  of  great  interest. 

Q.  (By  Professor  JENKS.)  Can  you  give  us  the  reference  to  the  official 
statement  of  the  committee  of  Parliament  to  which  you  have  referred?  A. 
We  can  get  that  for  you. 

Q.  (By  Mr.  PARQUHAR.)  Do  you  state,  Mr.  Archbold,  that  those  Star 
articles  are  in  the  interest  of  the  Russian  oil  industry?  A.  Yes,  sir;  they 
apply  to  Russian  oil.  and  they  decry  American  oil.  That  is  the  purpose  of 
the  publication. 

Q.  The  thing  is  to  cry  down  American  oil  over  there  in  the  trade?  A. 
Yes,  sir. 

Q.  And  you  claim  that  it  is  for  the  purpose  of  injuring  the  Standard  Oil 
Company?    A.  Oh,  yes,  sir.     They  are  large  distributors  over  there. 


•Black   faced   type  indicates  matter  omitted,  in  the  course  of  editing,  from  the 
ofliclal  report. 


222  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

Q.  What  is  the  test  that  has  been  established  by  the  Russian  govern- 
ment? A.  73°  Abell.  It  is  a  test  recommended  by  Sr.  Frederick  Abell,  a 
great  scientist,  who  analyzed  the  oil,  and  it  was  adopted  by  the  English  gov- 
ernment. 

Q.  What  is  the  American  equivalent  of  this  test?  A.  About  120°.  I 
might  add  a  further  list  of  the  Ohio  companies,  the  articles  of  incorporation 
of  which  have  been  filed  with  the  Secretary  of  the  State  of  Ohio,  since  No- 
vember 1st,  1898,  but  not  yet  published,  to  include  with  those  exhibits.  Mr. 
Monnett  made  a  statement  also  that  the  dismantling  of  the  Standard  Oil 
Company  would  reduce  prices  of  oil  to  consumers.  I  wish  to  answer  this  by 
giving  statistics  showing  the  record  of  cost  and  prices  for  a  period.*  To  put 
out  of  existence  the  world-wide  facilities  employed  by  the  Standard  Oil  Com- 
pany and  its  affiliated  interests  for  the  distribution  of  refined  oil,  which 
would  require  years  of  effort  and  a  similar  amount  of  capital  to  replace, 
would  immeasurably  increase  the  cost  of  oil  to  consumers. 

Q.  (By  Professor  JENKSp  The  price  that  is  given  in  this  table  is  the 
average  export  price?     A.  Tlie  average  export  price  for  the  year. 

Q.  (By  Mr.  SMYTH.)  The  export  price  fixes  the  price  of  the  refined, 
does  it  not?    A.  Substantially  so. 

Q.  (By  Professor  JENKS.)  Can  you  furnish  to  the  commission  a  list  of 
the  prices  and  amounts  of  water-white  oil  sold  in  this  country,  covering  sub- 
stantially this  period  in  two  or  three  of  the  leading  markets,  say  Chicago, 
New  York  and  Cincinnati?  A.  If  you  will  give  me  a  memorandum  of  that,  I 
will.t 

At  1  o'clock  the  commission  took  a  recess  until  2  o'clock. 

After  recess  Mr.  Archbold  was  recalled. 

Professor  JENKS.  Will  you  kindly  resume  your  statement,  Mr.  Arch- 
bold. 

The  WITNESS.  I  desire,  Mr.  Chairman,  to  say  a  word  of  explanation. 
Senator  Lee  has  called  my  attention  to  the  fact  that  in  his  opinion  my  testi- 
mony in  reference  to  his  approach  to  us  with  regard  to  their  business  was 
with  the  view  of  selling  their  properties.  I  did  not  mean  to  state  his  approach 
to  us  was  for  that  purpose.  What  I  meant  to  say  was  that  it  was  with  a 
view  to  combination.  I  supposed  1  had  so  clearly  stated  it  that  there  would 
be  no  misunderstanding,  but  1  fear  that  I  did  not.  And  that  is  the  statement 
that  I  desire  to  make. 

JMr.  KENNEDY.     That   is  what   I    understood. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Was  it  in  regard  to  combination  or 
were  you  to  not  interfere  with  them  in  getting  their  line  through  to  New 
York — the  right  to  live,  rather  than  the  combination?  Was  it  not  put  rather 
in  that  form?  A.  My  understanding  of  it  was  as  I  have  stated  that  it  was  for 
combination. 

tQ.  (By  Mr.  FARQUHAR.)  The  understanding  of  the  commission  was, 
Mr.  Chairman,  that  there  was  a  combination,  and  the  word  "sale"  was  never 
mentioned   by  the  witness. 

Mr.    KENNEDY.     That   is  the  way    I   understood   it. 

Mr.  SMYTH.      I   think  we  all    understood   it  that  way. 

A.  1  speak  next  of  the  testimony  of  Mr.  Theodore  F.  Davis,  of  Marietta, 
Ohio.  It  is  somewhat  of  a  difficulty  for  us  to  understand  why  this  gentleman 
should  have  appeared  before  you.  He  certainly  has  had  no  experience  in  the 
refining  of  oil,  or  as  an  owner  of  a  refinery  that  would  qualify  him  to  appear 
before  you  as  a  witness  on  this  important  subject.  He  has  an  interest  in  a 
little  alleged  refinery  at  Marietta  which  he  bought  when  he  was  somewhat 
in  politics,  and  immediately  approached  us  for  the  sale  of  the  property.  We 
declined  to  buy  it  on  the  ground  that  it  was  valueless  as  a  working  plant 
and  had  no  value  as  a  competitor,  and  I  had  forgotten  that  there  was  such 


•Mr.  Archbold  submitted  the  above  paper,  which  is  published  in  the  official  re- 
port (p.  547).  These  statistics  showed  that  since  1870  the  daily  production  of  Penn- 
sylvania oil  has  increased  4.')0  per  cent.,  the  price  of  crude  oil  has  declined  75  per 
cent,    and    the   price   of   refined    about   75V2  per  cent. 

tThis  information  was  furnished  by  the  witness  and  appears  in  the  official  re- 
port  (pp.  547  and  548). 

tBlack  faced  type  indicates  matter  omitted,  in  the  course  of  editing,  from  the 
official  report. 


JOHN  D.  ARCHBOLD.  223 

a  thing  until  his  appearance  here.  Immediately  after  his  appearance  here 
before  you  he  evidently  thought  that  he  had  again  made  himself  prominent 
enough  to  succeed  in  selling  it,  and  he  came  to  me  again  in  New  York  offer- 
ing to  sell  this  property  and  *claiming  by  way  of  apology  for  what  he  said 
here,  that  the  papers  had  misrepresented  him. 

*Q.  (By  Professor  JENKS.)  Came  to  you  personally?  A.  Came  to  me 
personally.  1  will  submit,  if  you  desire,  a  letter  from  him  on  this  subject  and 
my  reply  thereto,  which  perhaps  covers  all  that  need  be  said  of  this  case.  I 
think  the  only  possible  explanation  of  the  matter  in  reference  to  his  appear- 
ance is  that  he  came  at  Mr.  Monnett's  suggestion  as  one  of  his  combination. 

*Q.  (By  Mr.  CLARKE.)  Was  the  letter  written  after  his  interview  with 
you?    A.  His  letter  was  written  after  his  interview  with  me,  as  you  will  see. 

The  first  letter  is  dated  "Marietta,  Ohio,  July  13th,  1899,"  and  his  appear- 
ance before  you  was  on  June  9,  1899:    (Reading.) 

John  D.   Archbold,   Esq.,   26  Broadway,  New  York: 

Dear  Sir— I  called  on  you  about  two  weeks  ago  with  a  letter  of  introduction  from 
(I  will  leave  the  name  out)  and  I  presented  the  matter  of  negotiation  for  my  refinery 
property  at  this  place.  You  made  memorandum  of  it  and  stated  that  you  would 
present  the  matter  to  your  people  soon  after  the  Fourth  of  July,  and  as  I  have  not 
heard  from  you,  presume  you  have  overlooked  it.  I  have  permitted  one  option  to 
expire  and  have  declined  the  proposition  of  another  party  to  negotiate  for  them, 
not  intimating  why  I  do  so,  which  is  my  appointment  with  you  in  regard  to  the  mat- 
ter. Please  indicate  your  desire  in  regard  to  whether  you  are  inclined  or  desire  to 
further  consider  the  negotiation.  As  I  stated,  I  much  prefer  dealing  with  your  peo- 
ple than  with  the  others,  yet  I  do  not  want  to  let  the  favorable  condition  pass  by 
Hoping  to  hear  from  you  soon. 

Very  truly, 

•     THEO.   F.   DAVIS. 
To  which  I  replied,  under  date  of  July  18: 

I  am  duly  in  receipt  of  your  favor  of  July  13.  I  beg  to  return  you  herewith  the 
schedule  of  refinery  property  which  you  left  with  me.  The  property  is  of  such  a 
character  as  to  be  without  value  to  us,  and  we  do  not  care,  therefore,  to  buy  it. 

Apprepciating  your  expression  that  you  prefer  to  sell  the  property  to  us  rather 
than  to  other  buyers,  I  am 

Truly  yours, 

JOHN  D.  ARCHBOLD. 
I  do  not  suppose  it  is  at  all  necessary  to  take  up  your  time  with  any 
further  statement  in  regard  to  this  gentleman,  but  I  have  rather  an  inter- 
esting letter  here  regarding  him  from  his  partner  in  the  refinery  business, 
but  I  will  not  read  it  unless  you  ask  it  to  be  read. 

Q.  (By  Vice-Chairman  PHILLIPS.)  What  do  you  say  in  regard  to  read- 
ing this  letter?  A.  Some  features  of  it  are  personal  and  they  may  be  omit- 
ted. I  will  read  that  part  which  pertains  to  his  business  relations  if  you  so 
desire.  It  is  from  a  gentleman  not  in  any  way  connected  with  us,  who  vol- 
untarily gives  the  letter  regarding  Mr.  Davis  and  his  relation  to  the  refining 
trade,  and  authorizes  me  to  use  it,  if  I  care  to. 

Q.  What  would  be  your  purpose  in  presenting  it?  To  discredit  the  wit- 
ness? A.  Nothing,  except  to  show  the  character  of  the  gentleman  in  the 
refining  trade  and  his  appearance  here. 

Mr.  SMYTH.    I  move  that  it  be  read,  omitting  the  personal  matter. 
(The  motion  was  put  and  carried  and  the  witness  continued.) 
The  WITNESS.     Well,  I  will  read,  omitting  that  which  may  seem  per- 
sonal, *and  I  am  only  afraid  that  I  may  get  myself  into  trouble  by  reading  it. 
I  am  in  the  hands  of  the  profession  here.     The  letter  is  dated  Newark,  Ohio, 
July  17.  1899,  and  is  from  George  T.  MacDonald.     (Reading.) 

*"Theo.  F.  Davis  was  never  a  large  producer.  I  first  got  acquainted  with 
him  in  1884;  from  that  day  until  1894  the  only  producing  interest  he  had  was 
with  Laing  and  me  in  the  Macksburg  field,  on  the  Mary  Shilling  farm,  the 
production  of  which  never  exceeded  15  barrels,  and  Davis  had  one-third  of 
this.  In  the  latter  part  of  1894,  Davis,  Laing,  and  I  think  some  others,  oper- 
ated in  the  Corning  field  under  the  name  of  the  Davis  Oil  Company.  I  have 
no  means  of  knowing  what  the  production  of  this  concern  amounted  to,  but 
Laing  told  me  that  they  had  not  made  any  money.     Afterwards  I   heard  that 


♦Black   faced  type  indicates  matter  omitted.  In  the  course  of  editing,  from  the 
ofUcial  report. 


224  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

*Davis  had  an  interest  in  some  good  shallow  territory  over  in  West  Virginia, 
but  I  don't  know  how  it  turned  out,  as  the  reports  are  always  bigger  than 
the  wells.  Davis  was  not  interested  with  Laing  and  me  in  the  coal  lands 
lease.  In  1892  there  was  a  margin  in  refined  oil,  so  Laing,  Davis  and  I  bought 
the  old  Lovell  refinery,  located  at  the  mouth  of  the  Little  Muskegon  river. 
We  put  in  $2,000  apiece,  making  in  all  $6,000.  When  the  Lovell  refinery  was 
built  it  was  for  the  purpose  of  taking  care  of  the  Cow  Run  production,  and 
they  depended  on  the  Ohio  river  for  an  outlet  to  market  their  product.  We 
had  to  take  our  crude  to  the  refinery  in  barges,  which  was  too  much  of  a 
handicap,  so  we  moved  our  works  to  Mile  Run,  a  little  below  Marietta,  on 
the  Ohio  river,  and  the  B.  &  O.  S.  W.  put  in  a  side  track  for  us,  but  by 
this  time  our  capital  was  exhausted,  and  we  could  not  work  to  advantage. 

"It  also  began  to  dawn  on  Laing  and  myself  that  the  day  for  a  small 
refinery  to  make  money  had  passed  away,  so  we  sold  out  to  Davis.  The  terms 
of  the  sale  were  that  he  assumed  the  firm's  debts  and  assets;  the  debts  were 
the  larger,  and  we  lost  our  original  investment.  ******  Davis  never 
ran  the  refinery  to  amount  to  anything  after  I  left  it.  In  fact,  Davis  is  not  a 
business  man;  he  would  like  to  be  a  politician  but  don't  know  how;  he  had 
one  term  in  the  State  Senate  and  one  term  as  trustee  in  the  Athens  Lunatic 
Asylum,  but  one  term   at  anything    is   all    that   he   can   stand. 

"As  we  moved  so  much  old  stuff  from  the  Lovell  refinery  it  would  be 
rather  difficult  for  me  now  to  state  just  exactly  what  the  present  refinery 
cost,  especially  as  I  have  not  access  to  the  books,  but  I  should  think  that 
$5,500  would  cover  everything,  including  the  ground  on  which  the  refinery 
is  built,  but  this  amount  would  not  include  the  adjoining  lot  (known  as  the 
Rolling  Mill  lot)  which  Davis  afterwards  purchased  from  New  York  parties. 
The  location  is  all  right  for  any  manufacturing  purpose  whatever,  both  for 
shipment  by  river  and  rail.  Now  it  would  be  very  hard  for  you  to  under- 
stand a  man  like  Davis,  as  there  is  no  other  man  like  him.  *****  |n 
fact,  Davis  never  made  a  dollar  in  his  life,  and  probably  never  will.  He  is 
the  slowest  man,  both  mentally  and  physically,  I  ever  met.  While  he  has  no 
education,  he  can  look  very  wise,  but  the  more  you  know  him  the  less  you 
will   think  of  him." 

Q.  (By  Vice-Chairman  PHILLIPS.)  Were  you  not  to  omit  the  per- 
sonalities? A.  I  thought  I  had.  I  omitted  that  which  was  so  much  worse 
tiiat   I   did  not  see  this. 

Q.  (By  Mr.  A.  L.  HARRIS.)  I  want  to  ask  if  you  think  this  is  the  proper 
way  to  attack  the  credibility  of  a  witness?  A.  Well,  the  gentleman  will 
come  here  if  it  is  desired. 

Q.  (By  Vice-chairman  PHILLIPS.)  I  think  it  would  be  better  to  have 
the  man  on  oath  that  makes  this  statement.  That  question  was  raised  with 
regard  to  a  commissioner  this  morning,  and  I  think  that  will  be  better.  A. 
The  letter  will  be  left  here  and  the  gentleman  will  come  if  you  wish  him. 
(Reading.) 

"Davis  newer  did  any  of  the  business  connected  with  the  refinery  and 
knows  nothing  about  any  part  of  it.  He  knows  less  about  business  than  an 
average  lawyer.  If  Davis  ever  gave  any  material  testimony  someone  else 
must  have  been  pulling  the  string.  The  nearest  he  ever  came  to  doing  any 
business  was  when  I  was  trying  to  run  the  refinery  in  the  summer  of  1893. 
A  Marietta  grocery  man  stopped  him  on  the  street  and  gave  him  an  order 
for  a  barrel  of  oil,  but  Davis  forgot  to  turn  the  order  in,  and  the  refinery 
lost  the  sale.     Davis  has  no  standing  in   Marietta.     *******" 

There  are  some   other  personalities  which   I   will   not  read. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Such  letters  as  this,  reflecting  on 
the  character  of  a  witness,  are  entirely  inadmissible  and  should  be  stricken 
out.  A.  I  answer  next  regarding  Mr.  T.  B.  Westgate,  of  Titusvllle,  Penn- 
sylvania. Mr.  Westgate  begins  by  going  over  substantially  the  same  ground 
in  reference  to  the  advent  of  the  Pure  Oil  Company  in  Greater  New  York. 
This  has  already  been  covered  by  the  testimony  of  Mr.  Lee,  and  I  need  not 
go  further  into  that  point.  He  makes  a  statement  charging  that  the  Stand- 
ard Oil  Company  imitated  his  yellow  barrels,  and  used  his  brands  so  that 


♦r$lack   faced   type  indicates  matter   Omitted,  in  the  course  of  editing,  from  the 
ofllclal  report. 


JOHN   D.   ARCHBOLD.  225 

they  might  get  trade  which  he  had  built  up  by  the  use  of  those  barrels  and 
brands  as  a  special  trade  mark.  I  have  carefully  investigated  this  question, 
and  I  find  that  instead  of  our  ever  having  attempted  to  use  Mr.  Westgate's 
brands  the  real  fact  is  that  he  used  our  brands.  The  yellow  brand  as  dis- 
tinguishing a  certain  special  quality  of  oil  had  been  used  by  us  in  that  ter- 
ritory for  many  years  before  Mr.  Westgate  appeared  there  at  all.  And  when 
he  came  he  adopted  our  yellow  barrel  so  as  to  facilitate  his  chances  for 
getting  business.  I  deny  emphatically  that  we  ever  used  his  barrels  or 
brands,  and  I  will  state  unequivocally  that  the  real  fact  is  he  used  ours. 

Q.  (By  Professor  JENKS.)  That  he  used  your  brands.  A.  That  he 
used  our  barrel,  our  color.  *l  do  not  know  that  he  used  our  brands,  but  the 
color  on  the  barrels.  I  deny  his  statements  in  reference  to  both,  and  charge 
in  turn  that  he  used  our  barrels. 

Q.  (By  Mr.  SMYTH.)  How  about  the  charge  of  using  their  brands? 
A.  Absolutely  untrue.     It  is  absolutely  and  unqualifiedly  untrue. 

Q.  The  statement  is  made  here,  I  believe,  that  you  had  used  the  brand. 
Sunlight  double  refined  oil,  and  put  your  name  on  the  outside  of  the  circle, 
which  of  course  would  not  be  an  exact  imitation  of  his.  Did  you  use  the 
name  that  he  was  using  for  his  oil  at  all?  A.  No,  sir;  I  deny  the  whole 
matter  in  toto. 

Q.  You  had  yourself  been  using  barrels  of  that  same  color  before  he 
began  selling  in  that  territory?  A.  For  a  long  time.  I  happen  to  know  about 
It  especially  because  I  had  to  do  with  the  business  in  that  section  and  with 
the  company  that  made  the  yellow  barrels,  and  knew  all  about  it.  In  re- 
gard to  his  statement  with  reference  to  Fulton,  New  York,  the  facts  are 
that  he  first  enticed  away  from  us  the  man  Crandall,  to  whom  he  refers,  who 
began  a  campaign  against  our  trade  by  cutting  prices.  We,  in  self-defence, 
finally  put  on  another  seller  of  oil  to  compete  with  him  to  regain  lost  trade. 

He  goes  with  more  particularity  into  the  case  of  Charles  Frey,  of  Ho- 
boken.  New  Jersey,  whom  he  characterizes  as  a  German  with  Bismarckian 
blood  who  had  *withstood  wiles  and  blandishments  and  threats,  and  said 
what  he  was  going  to  do.  This  is  Westgate's  testimony  in  reference  to  the 
case  of  Charles  Frey. 

I  have  carefully  investigated  this  case,  having  talked  personally  with 
our  Jersey  City  agent,  who  was  our  agent  at  the  period  mentioned  by  Mr. 
Westgate.  He  denies  emphatically  ever  having  made  any  such  threat  to- 
ward Mr.  Frey  as  Mr.  Westgate  testifies  to,  or  even  having  had  any  under- 
standing with  him  as  to  prices  in  connection  with  the  marketing  of  Mr. 
Westgate's  oil  or  any  competitive  oil.  as  Mr.  Westgate  testifies.  As  a  matter 
of  fact,  the  man  Frey  was  a  customer  of  ours  to  a  considerable  extent  in  the 
year  1890,  having  bought  his  principal  supplies  from  us.  He  was  a  man  of 
violent  temper  and  an  avowed  anarchist.  He  has  not  been  in  the  business 
now  for  some  years,  although  Mr.  Westgate's  testimony  would  carry  the  im- 
pression that  he  has  continued  to  represent  him  in  the  sale  of  oil  at  Ho- 
boken.  The  last  known  of  him  was  that  he  was  running  a  saloon  in 
Brooklyn. 

Mr.  Westgate  alleges  at  great  length  and  with  some  particularity,  the 
under-billing  of  tank  cars,  citing  as  the  special  cases  of  which  he  had  per- 
sonal knowledge,  shipments  from  Olean,  New  York,  to  points  eastward.  On 
that  subject  I  beg  to  present  to  you  letters  from  the  officials  of  the  Western 
New  York  &  Pennsylvania  Railway  Company  and  the  Erie  Railway  Com- 
pany, the  only  two  lines  out  of  Olean. 

I  will  read  first,  if  you  please,  the  letter  of  Mr.  Edward  T.  Johnson,  gen- 
eral freight  agent  of  the  Western  New  York  &  Pennsylvania  Railway  Com- 
pany, dated   Buffalo,  New   York,  August   10,    1899.     (Reading) : 

My  attention  has  been  called  to  the  testimony  of  Mr.  Theo.  B.  Westgate  (who 
I  think  is  a  refiner  from  Titusvllle,  Pa.,)  before  the  Industrial  Commission  of  Wash- 
ington, in  which  he  testified  that  It  was  his  belief  that  shipments  of  the  Standard 
Oil  Company  from  Olean,  N.  Y.,  in  tank  cars  v/ere  billed  at  a  weight  less  than  the 
actual  contents  of  the  same. 


*Black   faced   type  indicates  matter  omitted,  in  the  course  of  editing,  from  the 
ofiiclal  report. 

15 


226  REVIEW  OP  TESTIMONY— INDUSTRIAL   COMMISSION. 

In  answer  to  Mr.  Westgate's  testimony  I  would  say  that  I  have  investigated  the 
matter,  and  of  my  own  Icnowledge  am  positive  that  there  is  no  arrangement  of  this 
kind  now,  nor  has  there  been  at  any  time  heretofore  between  this  company  and  the 
Standard  Oil  Company  or  any  of  its  representatives.  On  the  contrary,  I  do  Ivnow 
that  on  all  oil  shipments  from  Olean  where  the  weights  have  been  per  100  pounds 
we  have  charged  and  collected  on  the  full  capacity  of  the  tank  cars  based  on— first, 
six  and  three-tenths  pounds  to  the  gallon,  subsequently  on  six  and  four-tenths 
pounds  to  the  gallon,  the  change  at  Olean  being  made  at  the  same  time  that  it  was 
put  in  force  over  the  entire  Western  New  York  &  Pennsylvania  Railway.  Where 
the  weights  have  been  per  barrel  we  have  charged  and  collected  freight  on  basis  of 
maximum  number  of  barrels  that  the  tank  could  contain.  It  is  possible  that  in  view 
of  the  hundreds  of  cars  of  oil  that  are  shipj^ed  from  Olean  some  clerical  errors  have 
been  made  by  which  the  weight  of  a  car  on  a  freight  bill  may  have  been  misstated, 
but  if  so  it  has  been  by  clerical  error  only,  and  not  by  any  arrangement  with  the 
Standard  Oil  Company  or  any  of  its  representatives. 

The  above  is  the  situation  now,  and  has  been  the  case  for  at  least  15  years,  dur- 
ing which  time  we  have  had  full  knowledge  of  all  traffic  matters  pertaining  to  ship- 
ments from  Olean,  and  the  above  statement  applies  from  all  other  points  on  this 
road  as  well  as  from  Olean,  N.  Y. 

If  it  will  be  of  any  service  to  you  I  will  be  glad  to  put  the  above  in  the  form  of 
an  affidavit,  or  will  appear  before  any  United  States  commissioner  and  testify  in  re- 
gard  to   same. 

Ynurs  truly, 

EDWARD  T.  JOHNSON, 

General  Freight  Agent. 

I  have  the  Erie  road's  letter,  dated  New  York,  August  29,  1899,  addressed 
to  me  by  George  G.  Cochran,  fourth  vice-president: 

Mr.  J.  D.  Archbold,  26  Broadway,  New  York: 

Dear  Sir— Referring  to  Mr.  Harriott's  letter  to  ycu  of  the  2Sth  instant  in  regard 
to  weights  on  oil.  i 

I  was  traffic  manager  of  the  Erie  Line  from  January,  1892,  until  March,  1896,  and 
concur  fully  for  this  period  in  what  Mr.  Harriott  says.  The  weight  of  six  and  four- 
tenths  pounds  per  gallon  was  maintained  from  the  date  of  its  adoption;  previously 
the  average  weight  was  six  and  three-tenths  pounds  per  gallon. 

Yours   truly, 

GEORGE  G.    COCHRAN, 

Fourth  Vice-President. 

Perhaps  I  should  have  first  read  the  letter  of  Mr.  Frank  Harriott,  gen- 
eral freight  traffic  manager  of  the  Erie  road.      (Reading) : 

Dear  Sir— In  regard  to  the  testimony  given  before  the  Industrial  Commission  in 
Washington,  June  8,  1899,  by  Mr.  Theodore  B.  Westgate,  of  Tltusville,  in  which  he 
alleges  that  on  shipments  of  the  Standard  Oil  Company  from  Olean,  N.  Y.,  tank 
cars  were  billed  at  less  than  their  actual  weight  and  in  this  way  an  advantage  was 
given  the  Standard  Oil  Company  over  other  shippers.  I  beg  to  say  that  for  three 
years  I  have  been  in  charge  of  traffic  matters,  covering  shipments  from  Olean  and 
other  points  on  the  line  of  the  Erie  Railroad,  and  I  can  state  positively  that  there 
is  not  now,  nor  has  there  ever  been,  an  arrarigenient  between  this  company  and  the 
Standard  Oil  Company  or  any  of  its  agents,  of  a  nature  testified  to  by  Mr.  West- 
gate.  On  the  contrary,  I  know  that  on  all  shipments  from  Olean,  as  well  as  from 
all  other  points  on  the  Erie  Railroad,  where  our  tariff  rates  are  "per  hundred 
pounds,"  we  have  charged  and  collected  freight  on  the  full  weight  capacity  of  the 
tank  car,  based  on  six  and  four-tenth  pounds  per  gallon,  and  in  a  few  instances 
where  rates  have  been  "per  barrel,"  we  have  charged  and  collected  freight  on  the 
basis  of  the  maximum  number  of  barrels  that  the  tank  car  held;  and  this  has  been 
true  on  all  shipments  made  by  the  Standard  Oil  Company  as  well  as  by  all  other 
shippers. 

You  are  authorized  to  use  this  letter  'n  any  way  that  you  think  best,  and  if  I 
can    furnish    you    any    further    information,  I  will  be  glad  to  do  so. 

Yours  truly, 

FRANK  HARRIOTT, 
General  Freight  Traffic  Manager. 
I  desire  to  submit  also  a  pamphlet  known  as  the  tank  gauge  handbook, 
which  contains  a  record  of  the  number  of  every  tank  car  with  its  full  capacity 
that  is  in  use  in  our  business,  and  which  is  in  the  hands  of  every  railroad  or- 
ganization over  which  we  make  shipments,  and  I  want  to  say  positively  that 
we  haven't  any  understanding,  nor  have  we  ever  had  with  any  railroad, 
regarding  the  under-billing  of  any  car.  *l  deny  the  charge  to  the  very  ut- 
most. 


♦Black   faced   type  Indicates  matter  Omitted,  in  the  course  of  editing,  from  the 
official  report. 


JOHN  D.  ARCHBOLD.  227 

Q.  (By  Professor  JENKS.)  And  you  say  also  that  you  have  paid  full 
charges  in  accordance  with  the  rates  given  in  this  pamphlet?  A.  We  have 
paid  full  charges  in  accordance  with  the  rates  given  in  that  pamphlet, 
*which  is  at  all  times  in  the  hands  of  railroad  companies  making  the  ship- 
ment.    We  could  not  deceive  them. 

Q.  Are  these  two  railroads  from  which  you  have  letters  the  only  ones 
out  of  Olean?  A.  They  are  the  only  ones  out  of  Olean.  The  concluding  part 
of  Mr.  Westgate's  statement  in  reference  to  railroad  discriminations  is  cov- 
ered in  the  statement  already  made  in  reference  to  the  same  question  in  Mr. 
Lee's  testimony;  namely,  that  the  cases  pending  in  the  United  States  Court 
are  to  recover  freight  which  the  railroads  charged  all  shippers  on  barrels. 
The  Interstate  Commerce  Commission  decided  that  railroads  should  carry 
barrels  free,  and  the  railroads  refusing  to  accede  to  such  a  decision  are  test- 
ing the  question  in  the  United  States  Court.  I  repeat  that  the  final  decision 
will  interest  us  to  a  larger  extent  than  all  other  shippers. 

Q.  Mr.  Westgate  presented  a  letter  from  Portland,  Oregon,  which  he 
put  in  evidence,  in  reference  to  some  statements  that  were  made  by  a  ship- 
ping agent  of  the  Standard  Oil  Company.  Referring  to  Mr.  Westgate's 
brand  the  letter  reads  in  this  way:  "You  can  rest  assured  that  if  another 
carload  of  Sunlight  oil  arrives  at  your  place,  it  will  be  sold  very  cheap. 
We  do  not  propose  to  allow  another  carload  to  come  into  that  territory 
unless  it  comes  and  is  put  on  the  market  at  one-half  its  actual  cost.  You 
can  convey  this  idea  to  the  young  man  who  imported  the  carload  of  Sunlight 
oil,"  etc.  It  is  signed  George  C.  Flanders.  The  question  is,  whether  your 
agents  in  competitive  territory  are  authorized  and  instructed  to  make  state- 
ments of  that  kind  to  competitors.  A.  *They  are  not.  If  any  such  state- 
ment was  made  it  was  a  foolish  statement,  by  a  foolish  and  unwise  man,  and 
in  our  thousands  of  employes  we  do  have  some  such.  The  statement  missed 
my  attention  if  it  was  in  my  copy  or  I  would  have  investigated  it. 

Q.  I  will  give  you  a  specific  reference  to  it.  *Refer  to  your  letter  which 
was  on  the  paper  of  the  Standard  Oil  Company.  It  is  Portland,  Oregon, 
George  C.  Flanders,  shipping  agent.  A.  *l  will  investigate  it  for  you.  I  say 
again  that  our  agent  had  no  such  instructions;  *he  had  instructions  at  all 
times  to  compete  vigorously  for  the  trade  and  hold  his  trade  by  all  fair 
methods,   but   any  such  statement  was  unauthorized  and  unwarranted. 

Q.  (By  Mr.  SMYTH.)  A  case  of  zeal  going  beyond  discretion?  A.  Ex- 
actly so.  yes,  sir. 

(The  following  letter,  with  the  annexed  newspaper  clipping,  was  subse- 
quently submitted  by  the  witness) : 

26  Broadway,  New  York,  October  27,  1899. 

Dear  Sir — Referring  to  the  letter  submitted  to  the  Industrial  Commission  at 
"U'ashington,  witten  by  George  C.  Flanders  from  Portland,  Ore.,  to  a  merchant  at 
Southbend,  Wash.,  and  to  which  you  called  my  attention.  While  the  Standard  Oil 
Company  does  compete  with  other  merchants  for  business,  it  is  done,  though,  on  a 
basis  of  a  fair  margin  of  profit,  and  Mr.  Flanders  did  not  have  any  authority  to  write 
that  oil  would  be  sold  on  the  basis  mentioned  in  his  letter.  The  letter  referred  to 
was  written  some  years  ago  (in  March,  1894),  and  was  intended  to  be  written  in  a 
jocular  manner  to  deny  a  claim  that  he  was  selling  an  oil  inferior  in  quality  to  that 
sold  by  others.  The  Standard  Oil  Company  is  at  times  unjustly  accused  of  doing  this, 
as  is  evidenced  by  the  enclosed  article  taken  from  a  Los  Angeles  paper,  and  a 
wrong  construction  might  at  times  be  put  on  a  letter  written  to  refute  a  claim  of 
this  kind. 

Tours  truly, 

H.  M.  TILFORD. 
J.  D.  Archbold,  26  Broadway,  New  York. 

Pomona,  October  5. 
To  the  Editor  of  the  Times: 

To  my  positive  knowledge,  90  per  cent,  of  the  kerosene  sold  in  Pomona,  Pasa- 
dena, Riverside  and  Anaheim  is  a  dangerously  low-test  oil.  To  sell  kerosene  for 
domestic  use  under  a  test  of  120=  in  the  Eastern  States  is  punished  by  long  terms  of 
imprisonment  and  from  $250  to  $500  fine.  There  are  no  laws  regulating  this  matter 
in  Southern  California.    The  result  is  human  life  Is  sacrificed   and   many   homes  de- 


*Black   faced   type  indicates  matter  omitted,  In  the  course  of  editing,  from  the 
official  report. 


228  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

stroyed.  This  oil  is  shipped  into  these  towns  by  the  Standard  Oil  Company  and 
sold  to  the  grocers,  who  in  turn  sell  it  to  the  public  as  the  best  Eastern  kerosene. 
By  actual  tests  I  find  the  lowest  grade  used  about  the  buildings  of  the  Santa  Fe 
Railroad  Company  is  150°  fire,  and  that  sold  by  the  Standard  Oil  Company  to  the 
grocers  in  those  towns  as  follows:  Elain,  in  cans  and  cases,  118°  to  120°  fire;  Pratt's 
Astral,  in  cans  and  cases,  98°  to  101°  fire;  Pearl,  in  cans  and  cases,  98°  to  101°  fire; 
Eastern,  in  bulk,  '.)8°  to  104°  fire.  Tlie  meaning  of  the  fire  test  is  at  w^hat  temperature 
Falirenheit  wuli  the  oil  throw  off  an  explosive  gas.  An  ordinary  lamp  often  attains 
a  temperature  of  120°.  Therefore,  any  oil  that  will  throw  off  this  gas  under  that 
temperature  is  termed  by  oil  men  "assassination  oil."  Witli  these  facts  in  view,  is  it 
any  wonder  tiiat  lamps  explode  and  human  life  is  sacrificed?  In  the  name  of  human- 
itv,  can  not  the  public  be  protected  from  this  dangerous  imposition? 

H.   S.   WAI.KER. 

The  WITNESS.  Mr.  Lockwood,  of  Zelienople,  says:  "The  Standard 
Oil  Company  has  driven  into  financial  obscurity,  bankruptcy,  or  servitude 
the  men  who  have  developed  this  great  oil  producing  industry  of  America." 
*This  statement  is  pretty  nearly  as  absurd  as  Mr.  Lee's  statement  that  the 
counties  that  have  produced  oil  are  not  as  well  off  as  though  they  had  never 
produced  a  barrel  of  oil.  The  fact  is  oil  production  has  been  an  exceptionally 
prosperous  business  for  people  who  have  attended  to  their  business,  and 
not   given   too   much   of  their  time  to   politics   or  to   the   business  of   ethers. 

I  now  present  a  partial  list  of  what  may  be  termed  successful  oil  opera- 
tors, which  is  the  best  answer  to  Mr.  Lockwood's  absurd  statement.  They 
have  not,  as  Mr.  Lockwood  further  says,  been  either  driven  off  the  nigh- 
ways  of  the  country  or  chained  to  the  rock  helpless,  but  are  --ctive,  aggres- 
sive, successful  business  men  who  would  resent  to  the  utmost  any  such 
absurd  statement  as  Mr.  Lockwood  makes.  I  hand  you  a  statement,  made 
so  much  in  detail  that  I  will  not  worry  you  with  its  reading,  of  tlie  producers 
who  have  been  prominent  in  the  business,  and  successful  operators  in  what 
is  known  as  the  Pennsylvania  oil  producing  section — the  section  which  Mr. 
Lockv.ood  was  treating  of.t 

Q.  (By  Mr.  SMYTH.)  How  many  names  did  you  mention?  A.  I  have 
not  figured  them  up.  There  are  hundreds  of  them.  Of  course  this  is  but  a 
very  partial  list.     I  have  not  figured  it  up — about  800. 

Q.  (By  Mr.  KENNEDY.)  Is  Mr.  Lockwood's  name  in  that  list?  A.  I 
suppose  it  is. 

Q.  (By  Mr.  FARQUHAR.)  Is  it  alphabetical?  A.  It  is  alphabetical,  and 
I  see  they  have  omitted  Mr.  Lockwood,  *fearing  that  he  had  ruled  himself 
out.  I  deny  emphatically  Mr.  Lockwood's  statement  that  everything  contem- 
plated to  be  done  for  the  South  Improvement  Company  has  been  done  for 
the  Standard  Oil  Company.  As  a  matter  of  fact  the  South  Improvement 
Company  never  did  any  business,  as  Mr.  Lockwood  well  knew,  and  the 
special  features  of  exclusive  freight  contracts  which  were  contemplated  by 
the  South  Improvement  Company  were  not  attempted  to  be  perpetuated  by 
the  people  of  the  Standard  Oil  Company.  It  was  at  once  recognized  that 
that  special  feature  was  not  defensible,  and  it  was  abandoned  absolutely. 
Mr.  Lockwood  refers  to  the  small  pipe  lines  which  sprang  into  existence 
in  the  early  history  of  the  oil  business.  It  is  true  that  in  the  early  history 
of  the  oil  business  there  were  a  number  of  small  pipe  lines  that  in  many 
cases  were  inadequately  capitalized  for  the  doing  of  their  business.  They 
w^ere  inefficient,  and  gave  the  producers  such  poor  service  that  the  remedy 
which  wa^  proposed  for  consolidation  and  the  improvement  of  the  service 
w-as  very  gladly  welcomed  by  the  producing  class  as  a  whole,  and  the  result 
was  that  pipage  was  reduced  first  from  40  cents,  which  was  the  prevailing 
price  during  the  life  of  that  number  of  small  lines,  to  30  cents,  and  after 
consolidation  with  the  United  Pipe  I>ines  it  was  reduced  to  20  cents.  *l  may 
say  that,  as  a  feature  of  that  consolidation,  a  continuing  cash  price  was  at 
all  times  paid  or  arranged  to  be  paid  to  the  producers  for  the  oil  and  such 
a  readiness  of  market  was  secured  as  had  scarcely  attached  to  any  other 
product  that  this  country,  or,  indeed,  the  world  at  large,  has  ever  known. 

Q.  (By  Professor  .lENKS.)  What  date  was  it  that  the  cost  of  pipage 
was  reduced  20  cents?  A.  Shortly  after  the  consolidation  of  the  United 
Pipe  Line  system. 


*Black   faced   type  indicates  matter  omitted,  in  the  course  of  editing,  from  the 
official  report. 

tThis  list  was  not  published  in  the  ofTicial  report  of  (lie  testimony. 


JOHN   D.  ARCHBOLD.  229 

Q.  Has  the  price  been  lowered  since  that  time?  A.  The  price  has  re- 
mained about  the  same. 

Q.  So  there  has  been  no  reduction  in  the  price  of  piping  for  a  good 
many  years?     A.  No,  sir. 

Q.  Twenty  years  or  so?  A.  No,  sir;  it  was  considered  a  permanent 
price,  and  has  been  considered  a  fair  price  throughout. 

Q.  (By  Mr.  SMYTH.)  A  universal  price,  you  say?  A.  A  universal  price 
to  all  comers. 

Q.  The  cost  of  building,  controlling  and  managing  pipe  lines,  I  presume, 
has  lessened?  A.  It  has  lessened  and  increased.  If  you  figure  from  to-day's 
standpoint  it  would  be  higher,  of  course,  with  the  high  prices  that  are  pre- 
vailing. The  long  distances  involved  in  the  laying  of  lines  to  some  of  the 
new  fields,  notably  the  West  Virginia  field  that  Mr.  Rogers  spoke  of.  require 
very  expensive  operations. 

Mr.  Lockwood  makes  the  statement  broadly  that  discriminations  were 
continued  in  favor  of  the  Standard  Oil  Company  after  the  interstate  com- 
merce law  was  passed.  I  desire  to  meet  this  statement  with  absolute  denial, 
and  I  challenge  him  to  produce  any  such  record.  After  making  it,  he  jumps 
away  from  the  question  as  to  what,  or  where  or  when,  and  goes  back  to  a 
case  which  was  begun  by  Mr.  Lockwood  and  some  of  his  associates,  against 
some  of  our  people  in  Clarion  county,  Pennsylvania,  nine  years  before  the 
interstate  commerce  law  was  passed.  In  connection  with  this  case  he  goes 
to  the  length  of  accusing  the  Supreme  Court  of  the  State  of  Pennsylvania 
of  violating  the  constitution  in  order  to  prevent  a  conviction  of  the  Standard 
Oil  people.  The  statement  is  so  outrageous  for  a  gentleman  of  his  calling 
that  it  carries  its  own  answer,  and  perhaps  should  have  no  further  comment. 
Mr.  Lockwood  goes  to  great  length  into  the  so-called  Matthews-Buffalo  case. 
This  case,  as  first  instituted,  attracted  a  great  deal  of  attention.  It  has  been 
made  much  of  in  the  sensational  press  and  by  careless  writers,  and  I  am 
very  glad  indeed  of  an  opportunity  to  go  on  record  in  answer  to  this  pre- 
seuiation  which  Mr.  Lockwood  has  made  in  this  case,  and  the  sensational 
statements  regarding  it  which  he  gave  to  the  public  through  your  hands, 
exposing  the  sensational  charges  that  have  been  made  in  connection  with  it. 
1  will  therefore  with  your  permission  read  this  statement  of  the  case: 

Vice-chairman  PHILLIPS.     Certainly. 

The  \A'ITNESS.  "Mr.  Lockwood  attempts  to  make  much  of  the  so-called 
Matthews-Buffalo  case.  And,  indeed,  gentlemen,  this  case  has  been  more 
often  and  more  thoroughly  exploited  in  the  way  of  misrepresentation,  not 
only  by  men  of  Mr.  Lockwood's  type,  but  by  careless  writers  of  magazine 
articles,  pamphlets  and  books,  than  any  other  case,  unless  it  be  that  of  Rice. 
It  is  high  time  that  a  simple,  succinct  statement  of  the  case  should  be  made, 
and  I  am  glad  to  make  it. 

"The  facts  are  that  in  ISSl,  Matthews,  with  two  others,  were  in  the 
employ,  in  confidential  capacities,  of  the  Vacuum  Oil  Company,  of  Rochester, 
N.  Y.  The  executive  officers  of  this  company  were  Messrs.  H.  B.  and  C.  M. 
Everest,  of  Rochester,  who,  with  their  friends,  represented  a  large  ownership 
in  the  stock  of  the  company,  and  were  by  contract  fully  in  control  of  the 
mana-^ement  of  the  business  of  the  company.  Messrs.  Everest  were  not  at 
that  time,  nor  have  they  ever  been  interested  in  the  stock  of  the  Standard 
Oil  Company.  The  Standard  Oil  Company  were  owners  in  the  stock  of  the 
Vacuum  Oil  Company,  but  had  no  direct  relation  whatever  with  the  manage- 
ment of  its  affairs.  While  still  in  the  employ  of  the  company,  Matthews 
and  his  two  associates  conspired  together  to  leave  the  employ  of  the  Vacuum 
Oil  Company  and  establish  a  like  business  at  Buffalo.  To  this  end  they  had 
entered  into  a  partnership  arrangement,  had  prepared  themselves  by  using 
the  Vacuum  Company's  patents  for  castings  of  the  material  to  be  used  in 
construction,  had  thoroughly  familiarized  themselves  with  all  methods  of 
manufacture,  and  with  the  patrons  of  the  Vacuum  Company,  and  in  every 
way  prepared  themselves  to  take  advantage  of  the  various  business  pro- 
cesses— many  of  them  covered  by  patents  owned  by  the  Vacuum  Company. 
There  is  plenty  of  indisputable  evidence  that  they  did  not  expect  their  ven- 
ture at  Buffalo  to  really  succeed  on  its  merits,  but  they  believed  that  by  so 
imitating  the  brands   and    processes   of  the  Vacuum   Company  they   would 


230  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

induce  the  latter  to  buy  them  out  at  a  high  price.  As  I  say,  there  is  plenty 
of  evidence,  even  including  that  of  one  of  the  parties  who  was  to  join  with 
Matthews — a  man  named  Miller — that  they  expected  to  be  bought  up  by  the 
"Vacuum  Oil  Company,  or  the  Standard  Oil  Company.  Efforts  were  also  made 
by  the  Matthews  party  to  entice  away  other  important  employes  of  the 
Vacuum  Company.  After  the  business  was  gotten  under  headway  at  Buffalo 
and  the  infringements  became  evident,  various  suits  were  brought  by  the 
Vacuum  Company  against  Matthews  and  his  associates.  During  this  period 
Miller,  one  of  the  Matthews  party,  solicited  re-employment  with  the  Vacuum 
Company  and  finally,  after  considerable  discussion,  was  re-employed.  Later, 
having  some  disagreement  with  the  Vacuum  Company  with  reference  to  the 
question  of  his  employment,  he  again  coquetted  with  Matthews  and  the  Buf- 
falo party,  and  as  a  result  of  his  statement  before  the  grand  jury  as  to  what 
his  intercourse  had  been  with  Messrs.  Everest,  and  of  other  statements  made 
before  the  grand  jury,  the  nature  of  which  was  never  disclosed,  an  indictment 
was  found  by  the  grand  jury  charging  Messrs.  Everest  and  all  the  directors  of 
the  Vacuum  Company,  namely  Messrs.  H.  H.  Rogers,  A.  M.  McGregor  and  my- 
self with  conspiring  against  the  business  of  the  Buffalo  Company.  The  evidence 
produced  in  the  case  clearly  indicated  a  carefully  concocted  effort  on  the 
part  of  Matthews  and  his  associates  as  against  the  Vacuum  Company,  and 
the  balance  of  the  testimony  was  tremendously  in  favor  of  the  Vacuum 
Company.  At  the  conclusion  of  the  evidence  for  the  prosecution,  the  judge 
held,  and  he  could  not  have  held  otherwise,  that  not  a  scintilla  of  evidence 
had  been  produced  against  the  so-called  Standard  people — namely,  Messrs. 
Rogers,  McGregor  and  Archbold,  and  directed  the  jury  to  acquit  them,  which 
they  did. 

"As  I  have  stated,  the  balance  of  the  evidence  in  the  case  was  so  much 
against  Matthews  that  it  seems  an  act  of  gross  injustice  that  the  judge  should 
have  allowed  the  case  against  Messrs.  Everest  to  go  to  the  jury.  The  result 
of  the  trial  was  that  the  jury,  plainly  influenced  by  the  cunning  plea  of  the 
District  Attorney  in  behalf  of  the  individual,  Matthews,  as  against  the  so- 
called  rich  corporation,  rendered  a  verdict  against  Messrs.  Everest.  Six  of 
the  jurors  made  affidavit,  copies  of  which  I  attach  hereto,  that  they  only 
agreed  to  a  verdict  on  the  basis  of  the  minor  charge  presented  in  the  indict- 
ment, that  of  the  enticing  away  from  the  Buffalo  works  of  the  man  Miller 
by  the  Messrs.  Everest.  The  judge  imposed  a  fine,  the  largest  permitted  by 
the  statute.  As  a  matter  of  simple  justice  the  verdict  should  have  been  set 
aside  entirely.  All  talk  about  the  blowing  up  of  the  Buffalo  works,  which 
has  been  so  much  exploited  by  the  yellow  journals  and  by  careless  writers, 
is  the  purest  fiction.    There  never  was  anything  of  the  kind. 

"With  reference  to  Mr.  Lockwood's  statement  that  Matthews  had  ver- 
dicts against  the  Standard  Oil  Company  people  for  civil  damages  for  $270,000, 
I  may  say  that  the  statement  is  as  false  as  every  other  feature  which  he 
presents.  An  action  was  brought  by  Matthews  for  $20,000  and  a  sympathy 
verdict  for  that  amount  was  rendered  by  the  jury.  Judge  Barker  promptly 
set  the  verdict  aside  as  being  excessive,  and  on  the  ground  that  the  jury 
were  guided  in  their  action  by  'prejudice,  passion  or  sympathy.' 

"Matthews  brought  further  action  for  $2,50,000.  which  he  never  brought 
to  trial.  Any  careful  student  of  the  case,  who  will  go  thoroughly  into  the 
literature  of  the  matter  which  can  be  easily  presented,  will,  after  the  lapse 
of  all  these  years,  reach  no  other  conclusion  than  that  Matthews  and  his 
associates,  lay  and  professional,  were  engasred  in  an  effort  of  extortion." 
I  give  here  a  record  of  the  action  of  six  of  the  jurors,  in  reference  to  the 
case  of  Messrs.  Everest.  They  are  statements  to  the  court.  Some  of  them 
are  affidavits.  We  have  all  that  testimony  if  you  want  it;  the  whole  record 
of  the  case  in  extenso.     It  is  very  voluminous. 

The  statement  referred  to  above  follows: 
State  of  New  York,  County  of  Erie— ss. 

Nicholas  Demcrly,  of  the  town  of  Boston:  .Tohn  J.  Kinney,  Bernard  Schlebus,  R. 
B.  Musan,  George  W.  Havens,  John  Uehblucher,  being-  severally  duiy  sworn,  each 
for  himself  r3eposes  and  says:  That  he  was  one  of  the  jury  that  served  on  the  trial 
of  H.  B.  Everest  and  C.  M.  Everest  for  conspiracy  in  the  Erie  County  Oyer  and 
Terminer  Court,  In  May,  1887:  that  the  said  jury  rendered  a  general  verdict  of  guilty 
against  both  of  said  defendants.     And  deponent  further  says  that  as  he  verily  belives. 


JOHN  D.  ARCHBOLD.  231 

it  was  not  the  intention  of  said  jury,  in  rendering  said  general  verdict,  to  pronounce 
the  defendants  guilty  of  an  attempt  or  conspiracy  to  blow  up  or  burn  the  worics  of 
the  Buffalo  Lubricating  Oil  Company  Limited,  but  the  conviction  was,  in  the  mind 
of  deponent,  based  upon  the  enticement  of  the  witness,  Miller,  from  the  employ  of 
said  oil  company,  and  he  believes  that  the  other  members  of  the  jury  convicted  the 
prisoners  on  the  same  ground.  And  deponent  further  says  that  he  believes  the  ends 
of  justice  will  be  met  in  this  case  by  the  imposition  of  a  fine  upon  the  defendants, 
and  he  therefore  begs  to  recommend  to  the  court  that  the  sentence  of  said  defend- 
ants be  that  they  pay  a  fine  only,  and  that  they  be  not  sentenced  to  imprisonment. 

(John  J.  Kinney  was  sworn  as  to  recommendations  only.  John  Uehblu- 
cher  only  signed  the  paper  in  presence  of  John  F.  Knapp.) 

Q.  Have  you  the  fullest  official  records  of  the  court  which  are  at  the 
service  of  the  commission,  if  they  desire  them?  A.  Yes,  sir;  they  are  at  the 
service  of  the  commission  if  they  desire  it. 

Q.  (By  Mr.  FARQUHAR.)  After  the  finding  in  the  court  in  respect  to 
their  conspiracy  to  destroy  the  works,  there  being  several  actions  after  that 
for  damage,  I  understood  you  to  state  that  Matthews  did  not  recover  at  all? 
A.  After  Judge  Barker  set  it  aside  there  never  was  any  further  case  brought 
to  trial.  There  was  an  action  pending  for  $250,000,  which  was  never  brought 
to  trial. 

Q.  Did  Matthews  make  any  settlement  of  any  kind  with  those  against 
■whom  the  judgment  was  awarded?  He  received  no  settlement  at  all?  A.  I 
do  not  know  what  his  relations  were  with  his  lawyers.  It  seems  as  far  as  I 
have  any  recollection  of  the  matter,  that  after  this  decision,  settlement  was 
made  with  his  lawyer,  partner,  and  himself  of  what  there  was  left.  I  do  not 
know  that  this  is  a  very  exceptional  thing,  but  it  was  true  in  that  case. 

Mr.  Lockwood  makes  the  ridiculous  statement  that  the  "combines"  had 
threatened  the  Interstate  Commerce  Commission,  etc.  He  evidently,  in  mak- 
ing this  statement,  desired  to  be  understood  that  they  had  threatened  it 
bodily,  but  this  I  believe  he  afterwards  disavowed. 

I  come  now  to  Mr.  Lockwood's  long  statement  regarding  the  case  of 
George  Rice,  of  Marietta.  Mr.  Lockwood  goes  at  length  into  the  Rice  case, 
*almost  as  a  special  counsel,  and  attempts  to  enlist  the  sympathy  of  the 
commission  regarding  Rice.  I  now  desire,  first,  to  present  to  the  commission 
a  full  statement  of  the  original  Rice  case,  made  by  Mr.  D.  O'Day  before  the 
committee  of  the  House  of  Representatives  in  1888,  pages  273  to  276.  inclu- 
sive of  their  report  of  testimony.  This  statement  covers  the  exact  facts 
regarding  the  much  talked  of  Rice  case.  I  would  like  to  read  Mr.  O'Day's 
testimony,  if  I  may,  and  make  it  a  part  of  the  record.  The  examination  of 
Mr.  O'Day  before  that  committee  was  at  great  length,  but  I  will  try  and 
limit  myself  to  those  parts  which  obtain  as  directly  as  possible  to  the  Rice 
case.     (Reading.) 

"Q.  Do  you  remember  the  Cleveland  &  Maiietta  Railroad  Companv?  A. 
I  do. 

"Q.  You  remember  Mr.  Pease  was  receiver?  A.  I  met  him  once; 
yes,  sir. 

"Q.  Did  you  not  have  a  conference  with  him  upon  the  subject  of  making 
a  rate  over  his  railroad  for  crude  oil?    A.  Yes,  sir;  btit  not  for  refined  oil. 

"Q.  When  was  that?     A.  I  think  it  was  in  1882  or  1883. 

"Q.  Where  did  you  desire  that  oil  to  be  transported;  from  what  point 
to  what  point?  A.  The  arrangement  that  you  speak  of  was  not  made  with 
Mr.  Pease.  An  arrangement  was  made  with  the  managers  of  the  Wheeling 
&  Lake  Erie  Railroad,  I  think,  who  at  that  time  controlled  the  Marietta 
Railroad,  which  was  continued  after  Mr.  Pease,  the  receiver,  was  appointed. 
The  arrangement  consisted  in  making  a  through  traffic  with  the  railroad 
company  of  which  the  Macksburg  line  was  a  part.  We  made  a  connection 
from  Marietta  to  a  point  south,  the  total  arrangement  of  charge  being  divided 
between  the  railroad  and  the  pipe  line. 

"Q.  What  rate  did  you  get  over  that  railroad  for  the  transportation  of 
oil?    A.  To  where? 


♦Black   faced   type  indicates  matter  omitted,  in  the  course  of  editing,  from  the 
official  report. 


232  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

"Q.  For  the  distance  it  passed  over  the  railroad.  A.  A  good  deal  of  oil 
was  transported  from  Marietta  to  Cleveland.  The  bulk  of  it  was  transferred 
south  to  Marietta  and  Parkersburg. 

"Q.  At  what  rate?  A.  I  think  the  through  pipage  rate  and  rail  rate  was 
35  cents,  as  I  recollect  it. 

"Q.  What  part  of  that  did  the  railroad  company  get?  A.  I  have  forgot- 
ten what  the  divisions  were.     My  recollection  is  it  was  20  and  15  cents. 

"Q.     Was  it  not  10  cents?    A.  I  cannot  say,  sir;  I  cannot  be  positive. 

"Q.  I  will  read  the  following  to  you  to  aid  your  recollection.  It  is  an 
extract  of  a  letter  to  Mr.  Rapello,  general  counsel  of  the  receiver,  and  signed 
by  P.  Pease.  He  states  that  'Mr.  O'Day,  manager  of  the  Standard  Oil  Com- 
pany, met  the  general  freight  agent  of  the  Wheeling  &  Lake  Erie  Railroad 
and  our  Mr.  Terry  at  Toledo  about  February  12,  and  made  an  agreement 
(verbal)  to  carry  their  oil  at  10  cents  per  barrel.  But  Mr.  O'Day  compelled 
Mr.  Terry  to  make  a  35-cent  rate  on  all  other  oil  going  to  Marietta,  and  that 
we  should  make  the  rebate  of  25  cents  per  barrel  on  all  oil  shipped  by  other 
parties,  and  that  the  rebate  should  be  paid  over  to  them  (the  Standard  Oil 
Company),  thus  giving  us  10  cents  per  barrel  for  all  oil  shipped  to  Marietta, 
and  the  rebate  of  25  cents  a  barrel  going  to  the  Standard  Oil  Company,  mak- 
ing that  company,  say  $25  per  day  clear  money  on  Mr.  George  Rice's  oil 
a'one.' 

"Q.  State  whether  that  is  a  true  statement?  A.  It  is  not  a  true  state- 
ment. 

"Q.  In  what  respect?  A.  In  the  respect,  first,  of  the  divisions.  It  may 
be  tiue  regarding  that.  But  I  am  not  sure  of  that;  I  do  not  recall  it  well 
enough  to  know.  It  is  not  a  true  statement  that  we  compelled  the  road  in 
any  sense  to  do  anything  of  the  kind. 

"Q.  Were  you  not  under  your  agreement  to  have  your  oil  transported 
from  Marietta  over  the  railroad  at  10  cents  a  barrel?  A.  We  had  an  arrange- 
ment by  which  the  through  rate  from  the  wells,  which  included  the  pipage 
charge,  was  to  be  a  certain  figure,  and  was  to  be  divided  between  the  rail- 
roads and  ourselves. 

"Q.  What  share  did  the  railroad  get?  A.  My  recollection,  which  is 
rather  hearsay,  was  20  cents  pipage  rate  and  the  railroad  15  cents. 

"Q.  And  not  10  cents?    A.  I  do  not  want  to  be  positive  of  that. 

"Q.  (By  the  CHAIR.)  Does  that  rate  which  you  give  include  your  local 
pipage,  too?     A.  Yes.  sir. 

"O.  (By  Mr.  GOWEN.)  Where  did  this  oil  strike  the  railroad?  A.  At  a 
place  known  as  Macksburg. 

"Q.  Went  from  there  to  Marietta,  Ohio?     A.  Yes,  sir. 

"Q.  Now,  I  ask  you  if  the  rate  which  the  railroad  received  out  of  the 
joint  rate  was  not  only  10  cents  a  barrel?  A.  My  recollection  is,  as  I  said 
before.  15  cents,  I  won't  be  positive  of  that. 

"Q.  Would  you  assert  your  recollection  against  a  judicial  determination 
of  this  question  by  the  court?    A.  I  certainly  should  not. 

■■Q.  Now,  did  you  not  make  it  as  a  part  of  that  arrangement  that  this 
railroad  company,  or  its  receiver  or  manager,  should  charge  a  certain  Mr. 
Georere  Rice,  who  was  a  competitor  with  you,  a  higher  rate  on  his  oil?  A. 
No.  sir. 

"Q.  You  did  not?    A.  We  did  not. 

"Q.  Were  you  not  to  receive,  and  did  you  not  receive,  from  this  railroad, 
or  its  business,  a  payment  to  your  company  on  account  of  the  oil  they  trans- 
ported for  Mr.  George  Rice?  A.  Yes,  sir;  the  railroad  company  agreeed 
that  the  rates  should  cover  all  oil  transported. 

"Q.  What  rate?  A.  The  fixed  rate  as  between  the  railroad  and  the  pipe 
line. 

"Q.  That  is  to  say  that  when  the  through  rate  of  35  cents  was  charged 
on  the  oil  which  passed  throueh  your  pipe  line  and  their  railroad  together, 
and  out  of  which  you  received  20  or  25  cents,  as  your  recollection  may  be, 
they  were  to  charg-e  the  same  rate  to  Mr.  George  Rice,  whose  oil  passed 
only  over  their  railroad,  and  not  through  your  pine  line?  A.  There  was 
nothing  special  about  George  Rice,  it  covered  the  oil. 


JOHN   D.   ARCHBOLD.  233 

"Q.  But  did  that  other  oil  which  was  in  competition  with  you  pass 
through  your  pipe  line?    A.  No,  sir. 

"Q.  bid  not  they,  therefore,  on  that  oil  which  only  passed  over  their 
railroad  and  not  through  your  pipe  line,  pay  to  you  the  same  allowance  or 
rebate  that  they  did  on  your  oil  which  did  pass?  A.  They  did,  liiit  we 
returned  it  through  the  advice  of  our  counsel,  Mr.  Dodd. 

"Q.  How  long  did  you  keep  it?    A.  A  very  short  time. 

"Q.  It  was  a  hot  time  for  Mr.  Rice?  A.  I  don't  think  it  was;  he  was  a 
hot  man. 

"Q.  The  result  of  that  arrangement,  if  it  had  been  carried  out — assum- 
ing your  recollection  to  be  correct — you  would  have  paid  15  cents  to  the 
railroad  for  your  oil.  and  Mr.  Rice  would  have  paid  35  cents,  would  he  not? 
A.  No.  sir;  he  had  the  privilege  of  doing  what  we  did,  which  he  afterwards 
did  do. 

"Q.  He  was  not  using  your  pipe  line?  A.  No,  sir;  we  tried  to  get  him 
to  make  an  arrangement  with  us  to  use  our  pipe  line,  but  he  would  not  do  it; 
he  wanted  a  better  rebate  than  anybody  else. 

"Q.  He  had  his  own  means  of  bringing  this  oil  to  the  railroad;  he  did 
not  require  your  pipe  for  that  service?  A.  He  required  the  pipe  to  get  his 
oil  to  Marietta,  and  subsequently  laid  a  pipe  to  Marietta. 

"Q.  Was  not  this  the  fact,  as  Judge  Baxter  has  found,  in  this  case,  that 
Mr.  Rice,  who  at  that  time  only  used  the  railroad,  paid  35  cents  for  the  trans- 
portation of  a  barrel  of  oil?    Was  not  that  true?    A.  I  took  it  to  be  true. 

"Q.  Now,  out  of  that  sum,  how  much  did  you  get  from  the  railroad  out 
of  what  they  had  received  from  Mr.  Rice?  A.  We  did  not  get  any;  that  is, 
we  did  not  retain  any.  The  railroad  company  agreed  to  account  to  us  for 
the  oil  that  went  over  its  lines,  and  they  did  make  an  accounting,  to  my 
recollection,  of  about  $200  or  $250,  or  something  like  that,  on  oil  other  than 
that  which  passed  through  our  line.  Our  counsel.  Mr.  Dodd,  advised  me  that 
we  could  not  do  that  business,  and  we  refunded  the  money. 

"Q.  Was  that  refunded  before  the  investigation  of  the  case  took  place  in 
court?    A.  I  do  not  know;   I  do  not  remember. 

"Mr.  BUCHANNAN.  Before  this  examination  proceeds  any  further,  I 
wish  to  say  that  the  use  of  the  terms  'in  court'  and  'Judge  Baxter'  indicates 
to  me  that  there  has  been  litigation  upon  this  subject  between  Mr.  Rice  and 
some  company.  I  would  like  to  know  before  the  examination  goes  any  fur- 
ther, whether  there  has  beeen  such  litigation  between  Mr.  Rice  and  any  com- 
pany represented  by  or  that  would  be  bound  by  the  statements  of  the  wit- 
ness now  upon  the  stand;  and,  second,  whether,  if  such  litigation  has  been 
had,  it  is  concluded  and  the  matter  disposed  of  in  the  courts  or  is  in  any 
Vv-ay  still  pending.  I  ask  this  question  solely  for  information,  because  I  do 
not  know  anything  about  the  matter. 

"Mr.  GO  WEN.  No.  sir;  the  proceedings  are  entirely  completed.  It  was 
not  a  suit  between  Mr.  Rice  and  anybody.  It  was  a  proceeding  against  the 
receiver  of  this  road  to  dismiss  him  from  his  receivership.  That  has  been 
terminated.  It  has  been  dismissed,  the  case  is  ended  and  reported  in  the 
Federal  Reporter. 

"Mr.  SMITH.     Who  rendered  that  decision? 

"Mr.  GO  WEN.    Judge  Baxter;  he  removed  him. 

"Mr.  SMITH.    Was  he  judge  of  the  United  States  Court? 

"Mr.  GOWEN.  He  was  judge  of  the  Circuit  Court  for  the  Southern  dis- 
trict of  Ohio. 

"Mr.  SMITH.     A  United  States  Court? 

"Mr.  GOWEN.     Yes.  sir. 

"The  CHAIRMAN.  I  understand,  in  answer  to  Mr.  Buchanan,  the  infor- 
mation is  furnished  that  there  were  a  proceeding  pending  to  remove  a 
receiver.  That  proceeding  resulted  in  the  finding  by  the  court  removing  him 
and  that  litigation  is  closed. 

"IVTr.  GOWEN.     That  branch  of  the  litigation  is  closed. 

"Mr.  BUCHANAN.  That  answers  my  inquiry.  But  there  has  been  an- 
other remat-k  made  that  leads  me  to  ask  if  there  is  any  other  branch  of  the 
case  remaining  unclosed? 


234  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

"Mr.  GOWEN.  Only  this:  The  jurisdiction  that  the  United  States 
Court  was  enabled  to  take  over  this  case  arose  from  the  fact  that  a  receiver 
had  been  appointed  in  a  proceeding  in  that  court  to  foreclose  the  mortgage, 
and  therefore  as  the  receiver  was  an  officer  of  that  court,  the  court  took 
jurisdiction  on  this  question.  Whether  the  proceeding  to  foreclose  the  mort- 
gage is  ended  or  not,  I  do  not  know. 

"Mr.  BUCHANAN.     That  answers  my  question. 

"Mr.  GOWEN.     There  is  no  other  suit  pending  about  it  that  I  know  of. 

"Q.  (By  Mr.  GOWEN.)  Where  did  this  oil  that  was  transported  over 
this  railroad  to  Marietta  originate?  A.  In  the  country  in  and  about  Macks- 
"burg. 

"Q.  Ohio?    A.  Yes,  sir. 

"Q.  There  is  a  small  oil  field  near  the  Macksburg  field  in  Southeastern 
Ohio?     A.  Yes,  sir. 

"Q.  How  far  is  that  field  from  the  Ohio  river?  A.  Perhaps  15  or  20 
miles;  somewhere  along  there. 

"Q.  The  largest  town  near  to  it  on  the  Ohio  is  Marietta?  A.  Yes,  sir; 
south. 

"Q.  (By  Mr.  SMITH.)  You  stated  that  the  charges  on  oil  were  lost  in 
trying  to  get  the  business,  if  my  memory  serves  me  right?     A.  Very  largely. 

"Q.  How  were  they  lost?  A.  In  competition  in  buying  the  oil — bidding 
for  the  oil. 

"Q.  Bidding  for  the  oil?    A.  Yes,  sir. 

"Q.  Did  you  have  to  purchase  of  somebody?    A.  We  had  to  purchase  oil." 

That  covers  the  record  of  the  case  as  given  under  the  sworn  testimony 
of  Mr.  O'Day,  who  had  to  do  with  it  on  behalf  of  our  interest  at  the  time, 
and  I  desire  to  state  further  that  I  have  made  a  careful  personal  inquiry  of 
Mr.  O'Day  regarding  the  case,  and  he  informs  me  that  the  amount  involved 
in  the  Rice  contract,  some  $2-50,  was  immediately,  under  Mr.  Dodd's  instruc- 
tions, refunded,  and  that  such  refunding  was  made  before  any  proceedings 
were  instituted  as  against  the  receiver. 

We  were  in  no  sense  a  party  to  the  proceeding  against  the  receiver, 
wore  not  present  in  court  when  the  matter  was  heard  and  had  nothing  what- 
ever to  do  with  it. 

I  desire  to  state  further,  from  my  own  personal  knowledge,  that  Rice's 
efforts  for  many  years  have  been  directed,  not  toward  making  a  success  of 
his  refining  business,  but  to  the  pursuit  of  such  a  vexatious  course  toward 
us  as  would  lead  us  to  buy  him  out  of  the  business  at  an  exorbitant  price. 
In  other  words,  his  course  for  many  years  has  been  a  direct  effort  toward 
extortion.  In  a  personal  interview  which  I  had  with  him,  on  his  request, 
as  far  back  as  1S86,  he  demanded  of  me  that  we  pay  him  $2.50.000  in  cash 
and  $50,000  per  year  for  five  years,  or  a  total  of  $500,000  for  his  Marietta 
refinery  which  was  worth  at  that  time  possibly  $25,000  or  $30,000.  He  based 
his  demand  on  a  statement  that  he  had  already  inaugurated  a  number  of 
suits  before  the  Interstate  Commerce  Commission,  that  he  could  influence 
the  action  of  the  commission,  and  had  other  suits  in  contemplation  which 
he  would  at  once  press,  unless  we  submitted  to  his  demands.  He  claimed 
that  if  we  did  make  the  deal  with  him,  he  could  influence  the  discontinuance 
of  fbe  suits  already  pending,  and  that  he  would  refrain  from  bringing  others 
to  annoy  us.  He  further  stated  that  he  had  the  ability  to  cost  us  a  very  large 
amount  of  money  by  making  what  are  termed  "cut  quotations"  in  the  mar- 
kets for  refined  oil,  thereby  unsettling  the  trade  and  compelling  us  to  make 
concessions  to  our  customers  in  the  localities  affected.  I  drew  him  out  as 
much  as  possible  on  this  subject  in  the  hope  of  getting  him  to  expose  his 
plans  as  thoroughly  as  possible,  and  then  asked  for  time  in  order  to  make 
investigations  of  his  statements.  He  evidently  realized  after  some  delay  in 
the  matter  that  we  had  not  been  specially  influenced  by  his  statements,  and 
the  matter  was  allowed  to  drop.  Later,  however,  he  made  further  efforts  in 
the  same  line. 

Rice  has  had  no  active  relation  with  the  business,  nor  made  any  effort 
to  have  any  for  many  years.  I  cannot  say  positively,  but  I  believe  he  has 
been  supported  as  an  agitator  by  our  enemies  and  those  seeking  in  this  indi- 
rect and  underhanded  way  to  annoy  us. 


JOHN   D.   ARCHBOLD.  235 

I  desire  to  say  a  word  regarding  the  effort  at  pathetic  reference  to  Mr. 
Lockwood  in  the  Rice  case,  in  Lloyd's  book.  I  desire  to  characterize  this 
statement  in  Mr.  Lloyd's  book,  as  well  indeed  as  all  the  other  statements 
with  reference  to  our  business,  as  cunning  fiction,  made  up  entirely  on  one- 
sided testimony,  and  dressed  for  sale.  Whether  Mr.  Lloyd  expected  to 
share,  as  a  result  of  his  advocacy  of  Rice,  in  what  Mr.  Rice  might  be  able 
to  get  from  us,  I  am  unable  to  say,  but  he  certainly  lays  himself  open  to  that 
suspicion. 

I  desire  to  say  further  with  reference  to  this  book  of  Mr.  Lloyd's,  that 
if  you  are  disposed  to  waste  your  time  reading  it,  you  will  find  it  with  refer- 
ence to  its  statements  regarding  the  business  of  the  Standard  Oil  Company, 
one  of  the  most  untruthful,  distorted  compilations  that  was  ever  inflicted  on 
a  suffering  public. 

Q.  (By  Mr.  FARQUHAR.)  What  is  the  title  of  the  book?  A.  Wealth 
vs.  Commonwealth. 

Mr.  Lockwood  makes  an  absurd  statement  intended  to  convey  the  impres- 
sion that  at  the  same  time  refined  oil  is  sold  in  Germany  at  two  cents  a 
gallon,  the  people  of  Texas  and  Arkansas  are  forced  to  pay  25  cents.  There 
is,  of  course,  not  a  word  of  truth  in  any  such  statement,  nor  does  he  pretend 
to  furnish,  nor  can  he  offer,  any  evidence  in  support  of  it.  It  is  the  sort  of 
statement  that  a  silly  demagogue  would  make,  in  an  effort  to  create  senti- 
ment on  this  question. 

Mr.  Lockwood  makes  the  startling  admission  that  he  himself  at  one 
time  aspired  to  be  a  monopolist  and  a  plutocrat.  We  cannot  escape  a 
shudder  at  the  thought  of  such  a  thing.  *If  he  had  succeeded,  who,  indeed, 
would  have  saved  the  country?  And  would  he  now  have  been  engaged  in 
an  effort  to  marry  his  daughters  to  the  effete  noblemen  of  the  old  world. 

He  makes  an  absurd  statement  regarding  the  railroad  companies  rais- 
ing the  price  of  crude  oil  from  40  cents  to  80  cents  and  paying  the  addi- 
tional 40  cents  to  the  South  Improvement  Company.  *He  must  have  known 
that  this  was  an  utterly  false  statement,  there  being  not  a  shadow  of  basis 
to  support  it.  He  convicts  himself  with  reference  to  this  matter  by  testifying 
that  the  South  Improvement  Company  was  not  carried  out.  As  a  matter 
of  fact,  I  repeat  that  they  never  did  any  business. 
Mr.  Lockwood  testifies  as  follows: 

"Q.  (By  Mr.  KENNEDY.)  Mr.  Lockwood,  can  you  state  approximately 
what  per  cent  of  the  refined  oil  of  this  country  is  turned  out  by  the  inde- 
pendent companies.  A.  We  calculate  that  they  are  handling  about  4  per 
cent. 

"Q.  Only  4  per  cent.?  A.  Only  4  per  cent.  You  know  this  is  an  immense 
husiness. 

"Q.  (By  Vice-chairman  PHILLIPS.)  This  is  taking  the  Ohio  oil?  A. 
Taking  the  Ohio  oil  and  Pennsylvania  oil,  and  all  these  different  grades  of 
oil." 

I  will  now  present  a  statement  showing  the  aggregate  business  done  by 
the  Standard  Oil  Company  and  by  others  in  the  United  States  for  the  five 
years  from  1894  to  1898  inclusive,  in  which  it  appears  that  the  aggregate 
percentage  of  all  business  in  petroleum  and  its  products  done  by  the  Stand- 
ard Oil  Company  was  82  3-10  per  cent,  for  this  period  of  five  years,  as  against 
their  competitors'  17  7-10. t  *Mr.  Lockwood's  testimony  being  that  it  was  4. 
Q.  (By  Mr.  SMYTH.)  That  includes  all  by-products?  A.  It  includes 
petroleum  and  all  its  products.  Mr.  Lockwood  testified  that  by  manipulation 
of  the  price  of  Ohio  crude  oil,  in  conjunction  with  the  railways,  we  succeed- 
ed in  getting  the  price  down  to  an  abnormally  low  figure  and  then  bought 
substantially  the  whole  Ohio  producing  field. 

I  now  present  a  statement  covering  the  years  1890  to  1898,  inclusive, 
showing  our  relation  to  the  business  of  producing  oil.  not  only  in  Ohio,  but 
in  Pennsylvania,  thinking  that  it  would  set  at  rest  the  question  which  has 


•Black  faced  type  indicates  matter  Omitted,  in  the  course  of  editing,  from  the 
official  report. 

tA  tabulated  statement  showing  the  percentage  of  the  petroleum  business  done 
yearly  by  the  Standard  Oil  Company  from  1894  to  189S,  inclusive,  is  published  In  the 
official  report  of  the  commission,  page  560. 


236  REVIEW  OF   TESTIMONY— INDUSTRIAL  COMMISSION. 

been  raised  in  reference  to  that  relationship,  and  which  has  been  raised 
again  to-day  by  some  gentlemen.  I  will,  if  desired,  read  the  statement  year 
by  year,  or  will  give  you  the  aggregate,  as  you  prefer. 

*Q.  (By  Professor  JENKS.)  Perhaps  it  would  be  better  if  you  just 
read  the  percentages.  A.  Well,  in  1890,  that  produced  by  us  in  the  fields  of 
Ohio  and  Pennsylvania  was  24.44  per  cent.;  1891,  26.79;  1892,  24.36;  1893, 
28.46;  1894,  28.21;  1895,  30.28;  1896,  29.45;  1897,  29.82,  and  in  1898,  35.58.  Or 
for  this  total  period  of  1890  to  1898,  inclusive,  the  Standard  Oil  Company's 
percentage  on  the  whole  thing,  by  districts,  was  28.70.t 

Q.  What  are  the  figures  for  the  two  separate  fields  for  the  last  two 
years?  A.  For  the  year  1897,  of  Pennsylvania  oil,  there  was  produced  a 
total  of  35,170,367,  of  which  we  produced  27.83  per  cent.,  and  there  was  pro- 
duced of  Lima  oil  in  1897,  22,793,033,  of  which  we  produced  32.89  per  cent. 
In  1898,  the  Pennsylvania  production  was  31,645,151,  of  which  we  produced 
35.55  per  cent.,  and  the  Lima  production  was  20,266,328,  of  which  we  pro- 
duced 35.63  per  cent.  This  is  in  answer  to  Mr.  Lockwood's  statement  that 
we  had  substantially  the  whole  of  the  Ohio  producing  field. 

Mr.  Lockwood's  statement  that  when  the  Standard  Oil  Company  buys  a 
pipe  line  producers  have  to  pay  for  it  two  to  forty  times  over,  is  so  absurd 
and  ridiculous  as  not  to  call  for  any  answer. 

In  conclusion,  gentlemen,  it  is  really  difficult  to  answer  seriously  a  man 
who  indulges  in  such  extravagance  of  statement  as  has  characterized  Mr. 
Lockwood's  testimony.  Indeed,  it  is  difficult  to  believe  that  he  takes  himself 
seriously.  We  can  forgive  much  from  a  man  in  whose  veins  runs  the  boiled 
down  pugnacity  of  147  revolutionary  sires,  but  when  he  ruthlessly  attacks 
judges  and  courts  and  claims  that  the  entire  railroad  and  corporate  interests 
of  the  country  find  their  chief  avocation  in  the  "corrupting  of  public  affairs, 
and  the  debauching  of  public  men."  I  think  you  will  agree  with  me  that  we 
must  conclude  that  the  "fool-killer"  has  been  very  remiss  in  his  duty  in  the 
vicinity  of  Zelienople,  Pa. 

In  the  possibility  that  the  statement  which  I  have  made  regarding  my 
intercourse  with  Mr.  Rice  and  his  overtures  to  me  in  connection  with  his 
business,  may  not  be  complete,  I  desire  also  to  file  for  the  information  of 
the  commission  a  transcript  of  the  testimony  of  Mr.  Rice  given  on  cross- 
examination  in  the  suit  of  the  State  of  Ohio  vs.  the  Buckeye  Pipe  Line  Com- 
pany, taken  on  the  20th  of  February,  1899.  This  is  in  relation  to  Rice's  con- 
nection with  the  contempt  proceeding  against  the  Standard  Oil  Company  of 
Ohio. 

"Q.  Mr.  Rice,  you  know  that  a  proceeding  for  contempt  was  instituted 
by  Ihe  Attorney-General  of  Ohio  against  the  Standard  Oil  Company  of  Ohio? 
A.  Yes,  sir. 

"Q.  Did  you  employ  counsel  in  that  case?    A.  I  did. 

"Q.  Who?     A.  W.  L.  Flagg. 

"Q.  What  other  counsel  did  you  employ?     A.  Mr.  Kincaid. 

"Q.  He  is  now  acting  as  special  counsel  for  the  Attorney-General?  A. 
Yes,  sir. 

"Q.  How  long  prior  to  the  commencement  of  these  proceedings  in  con- 
tempt as-ainst  the  Standard  Oil  Company  did  you  employ  Mr.  Flagg?  A. 
Two  or  three  weeks — less  than  a  month. 

"Q.  Did  you  employ  him  to  assist  the  Attorney-General  in  instituting 
and  conducting  the  proceedings  in  contempt?  A.  I  should  say  that  would  be 
most  natural. 

"Q.  Did  he  come  here  to  Columbus  for  a  consultation  with  the  Attorney- 
General?     A.  Yes,  sir. 

"Q.  Did  you  come  with  him?    A.  I  guess  I  came  on  before. 

"Q.  You  had  your  consultation  with  the  Attorney-General  before  he 
came?    A.  Yes,  sir. 

"Q.  You  three  had  consulted  together?     A.  Yes,  sir. 


*P.lack  faced  type  indicatos  matter  cimittpd,  in  the  course  of  editing,  from  the 
ofTioial  report. 

tThe  above  statement  in  tabulated  ff'  m  appears  on  page  561  of  the  official  report 
of  the  commission. 


JOHN   D.  ARCHBOLD.  237 

"Q.  When  did  you  employ  Mr.  Kincaid?  A.  That  was  about  the  same 
time,  not  just  exactly. 

*'Q.  Was  he  brought  into  this  conference  by  you?     A.  Yes.  sir. 

"Q.  At  that  time  he  was  not  employed  by  the  State?  A.  I  do  not  think 
he  was. 

"Q.  He  was  your  private  counsel?     A.  Yes,  sir. 

"On  cross-examination  in  relation  to  Mr.  Rice's  offering  to  sell  his 
property  to  Mr.   Archbold: 

"A.  He  (Archbold)  wanted  to  know  what  I  would  take  to  go  out  of 
business  and  I  told  him  $250,000  and  $50,000  per  year  for  five  years;  but 
several  years  before  that  he  wanted  to  buy  my  plant  and  I  offered  to  sell  it 
for  $25,000  and  $5,000  for  five  years,  and  before  that  time  I  offered  to  sell 
it  for  $20,000.     I  have  a  perfect  right  to  ask  what  I  please  for  my  plant. 

********* 

"Q.  Did  you  authorize  or  request  Mr.  Orvis  to  have  an  interview  with 
him   (Archbold)?     A.  No,   sir;    not  at  first. 

"Q.  Did  you  at  any  time?    A.  I  may  have  done  so. 

"Q.  Now  coming  to  the  second  interview,  did  you  have  another  inter- 
view in  June,  1890,  with  Mr.  Archbold  at  his  office  in  the  Standard  Oil  build- 
ing, at  26  Broadway,  in  New  York?    A.  I  do  not  recollect. 

"Q.  Did  you  then  make  a  similar  offer  to  him?  A.  I  did  not  have  a 
second   interview  with   Mr.  Archbold. 

"Q.  Did  you  at  that  time  authorize  Mr.  Orvis  to  make  an  offer  to  sell 
your  property  for  $500,000?    A.  Yes,  I  guess  I  did. 

"Q.  You  were  to  get  $250,000  cash  and  $50,000  for  five  years?  A.  I 
guess  so. 

"Q.  What  were  you  to  give  to  Mr.  Archbold  for  that  consideration?  A.  I 
was  to  sell  out  my  plant  and  get  out  of  the  business. 

"Q.  Were  you  to  refrain  from  bringing  any  further  litigation?  A.  That 
was  to  settle  up  the  whole  trouble;  I  was  to  do  nothing  further,  have  no 
litigation  or  anything  of  that  kind." 

*That  finishes  my  answer  to  the  testimony,   iVIr.  Chairman. 

Q.  (By  Professor  JENKS.)  Have  you  any  general  statements  to  make 
in  reference  to  the  organization  of  the  company  and  its  methods?  A.  I  have 
a  general  statement  which  I  would  like  to  make. 

Vice-Chairman  PHILLIPS.  Well,  just  proceed,  Mr.  Archbold,  and  make 
your  statement. 

A.  I  am  glad  to  say  this  is  a  much  pleasanter  task  to  me  than  attempting 
to  answer  the  allegations  of  these  various  witnesses.  I  did  not  come  here, 
although  I  am  naturally  under  some  feeling  in  respect  to  these  charges  that 
have  been  made  so  often  and  as  we  think  so  unfairly  reiterated  against  us, 
to  assail  anybody  harshly  and  if  I  have  been  led  into  any  expression  that 
seemed  harsh  at  any  time  during  the  course  of  my  answers,  I  am  sorry 
for  it.  I  have  answered  as  I  have  only  out  of  the  fullness  of  what  I  believe 
to  be  a  correct  statement  and  the  desire  to  make  my  answer  as  positive  as 
possible;  certainly  not  with  any  disrespect  to  this  commission.  It  is  a  much 
pleasanter  task  for  me  to  undertake  to  say  a  word  more  particularly  in  de- 
fense of  the  organization  with  which  I  have,  for  almost  my  entire  business 
life,  been  intimately  related,  and  in  which  relation  I  have  the  greatest  pos- 
sible pride.     Shall  I  proceed? 

Vice-chairman   PHILLIPS.     Certainly. 

The  WITNESS.  .Trusts,  or  speaking  correctly,  large  corporations,  are 
the  necessary,  indeed  the  irresistible  result  of  our  rapidly  growing  com- 
merce. In  adopting  them  we  are  but  following  the  example  of  that  greatest 
of  all  commercial  nations,  England,  under  whose  commercial  charters,  capi- 
talization and  scope  are  practically  unlimited.  Any  legislative  restrictions 
imposed  here  would  operate  alone  to  the  benefit  of  foreign  commercial  com- 
petitors. The  claim  that  such  restrictions  would  help  the  weak  and  incom- 
petent of  our  own  country  as  against  the  strong  and  aggressive  is  too  puerile 
to  call  for  serious  answer.  I  speak  to-day  especially  in  defense  of  the  aggre- 
gation of  capital  and  experience  in  the  petroleum  business  on  the  ground  of 


*Black   faced   type  in(3icate.s  matter  omitted,  in  the  course  of  editins,  from   the 
official  report. 


238  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

its  absolute  necessity  for  the  successful  development  and  promotion  of  that 
business.  I  am  here  to  defend  the  Standard  Oil  Company  organizations 
also  on  economic  and  ethical  grounds.  Not  to  indulge  in  undue  length,  I  will 
lay  down  a  number  of  leading  propositions  in  support  of  my  position,  which 
may  serve  as  texts  for  more  extended  discussion  if  you  should  so  desire. 

The  early  years  of  the  petroleum  industry  were  marked  by  a  chaotic 
and  crude  condition  in  all  branches  of  the  trade,  namely,  the  production, 
manufacture,  transportation  and  marketing,  and  the  average  quality  of  the 
refined  products  was  inferior  and  unsatisfactory.  The  advent  of  the  Stand- 
ard Oil  Company  aggregation  changed  this  entirely.  It  brought  to  the  busi- 
ness ample  capital,  and  combined  into  effective  working  shape  the  best  pos- 
sible talent  in  all  branches  of  the  business.  It  improved  quality  and  greatly 
reduced  costs.  It  supplanted  old  and  inferior  methods  and  refineries  with 
the  newest  and  most  progressive  methods  and  most  perfectly  equipped  and 
favorably  located  refineries.  It  has  ever  been  on  the  alert  to  engage  the 
best  obtainable  practical  and  technical  talent  for  the  development  and  im- 
provement of  the  business  in  all  its  branches.  It  inaugurated  new  systems 
of  transportation  which  not  only  gave  to  the  producer  the  most  efficient  pos- 
sible service  at  greatly  reduced  cost,  but  a  daily  continuing  cash  market  for 
his  product,  on  a  basis  of  the  best  price  obtainable  in  the  world's  markets. 
Further,  it  reached  out  and  occupied  the  markets  of  the  world  for  American 
petroleum.  Individual  effort  could  not  have  accomplished  any  such  her- 
culean task  in  many  times  the  same  period,  and,  indeed,  the  efforts  of  the 
Standard  Oil  Company  were  none  too  quickly  made.  If  there  had  been  as 
prompt  and  energetic  action  on  the  part  of  the  Russian  oil  industry  as  was 
taken  by  the  Standard  Oil  Company  the  Russians  would  have  dominated 
many  of  the  world's  markets  which  have  been  made  to  inure  so  largely  to 
the  benefit  of  the  American  oil  industry.  Later  in  the  history  of  the  trade, 
Russia  and  other  oil  producing  countries  have  followed  in  the  footsteps  of 
the  Standard  Oil  Company  in  the  general  markets  of  the  world,  and  I  hand 
you  now  a  statement,  partial  in  character,  of  the  oil  companies  of  Russia, 
the  Dutch  East  Indies,  Galicia,  Japan  and  other  countries,  which  will  give 
you  some  faint  idea  of  the  menace  which  even  now  threatens  the  American 
oil  industry.*  When  you  reflect,  gentlemen,  that  there  has  been  brought 
into  this  country  during  the  past  30  years  from  the  exportation  of  petroleum 
and  its  products  nearly  $1,500,000,000  you  will  appreciate  the  importance  of 
this  subject. 

It  is  true  beyond  a  question  that  the  result  to  the  public  of  the  opera- 
tions of  the  Standard  Oil  Company  has  been  highly  beneficial,  and  not  hurt- 
ful, as  its  enemies  claim.  As  has  been  already  stated,  it  has  given  the 
public  goods  of  vastly  improved  quality  at  gTeatly  reduced  prices.  It  has. 
by  its  effective  system  of  distribution,  supplied  this  most  necessary  article 
for  domestic  consumption  promptly  and  cheaply  to  the  most  remote  sections 
of  our  country,  and.  indeed,  to  the  world.  Beyond  all  this,  however,  it  has 
given  to  the  community  at  large  an  opportunity  for  investment  in  the  busi- 
ness itself,  which  it  could  never  have  had  under  the  old  system.  Thus, 
there  are  to-day  partners  in  the  Standard  Oil  Company  as  shareholders  to 
the  number  of  fully  3,500,  where  less  than  one-twentieth  of  that  number 
would  have  been  interested  as  partners  under  the  old  system. 

It  has  been  most  beneficial  in  its  effect  on  labor.  There  could  be  no 
stronger  evidence  that  the  labor  involved  in  its  vast  operations  has  been 
well  paid  and  contented  than  lies  in  the  statement  that  for  more  than  a 
quarter  of  a  century,  since  the  Standard  Oil  Company  began  its  operations. 
it  has  scarcely  had  a  serious  strike  of  any  kind  among  any  branch  of  its 
employes,  one  or  two  temporary  strikes  among  some  special  classes  of  work- 
men in  sympathy  with  other  labor  organizations  who  were  striking,  con- 
stituting the  sole  disturbances. 

Indeed,  it  is  not  too  much  to  say  that  to  the  loyalty,  zeal  and  intelli- 
gence of  its  vast  army  of  about  35,000  employes,  the  company  is  largely  in- 
debted for  its  strength  and  efficiency. 


♦This  list,  covering  one  and  a  half  printed  pages,  is  given  on  pages  56.3  and  564  of 
the  ofTicial  report  of  the  commission. 


JOHN  D.   ARCHBOLD.  239' 

I  unhesitatingly  express  the  opinion  that  when  the  history  of  our  time  is 
written  it  will  appear  that  the  marvelous  commercial  and  industrial  evolu- 
tion which  we  are  experiencing  in  this  great  country  during  the  year  1899 
marks  one  of  the  most  important  steps  of  progress  in  our  country's  history. 
It  will  prove  to  be  of  immense  value  to  all  classes  of  our  population.  The 
investor,  the  consumer  and  the  laborer  will  all  be  benefited  by  it — the  in- 
vestor, by  the  better  security  which  arises  through  amplitude  of  capital  for 
the  business  contemplated  and  the  combination  of  talent  in  the  various  de- 
partments of  administration  in  business;  the  consumer,  through  improved, 
processes,  resulting  in  better  products  at  lower  prices  and  more  efficient 
distribution;  the  laborer  by  steadier  employment  at  better  wages,  and  a 
better  opportunity  for  improvement  in  condition,  if  special  talent  is  shown. 

The  outcry,  gentlemen,  against  corporations  does  not  come  from  the 
great,  busy,  industrial  classes,  but  from  impractical  sentimentalists,  yellow 
journals  and  political  demagogues,  from  the  latter,  perhaps,  more  than  any 
other.  It  is  a  veritable  attack  upon  thrift  and  prosperity.  To  listen  to  their 
voice  to  the  extent  of  imposing  restrictive  legislation  would  mean  a  frightful 
step  backward  in  the  commercial  development  of  our  country. 

If  you  should  ask  me  what  legislation  can  be  proposed  to  improve  the 
present  condition,  I  answer  that  the  next  great  and,  to  my  mind,  inevitable 
step  of  progress  in  the  direction  of  our  commercial  development  lies  in  the 
direction  of  National  or  Federal  corporations.  If  such  corporations  should 
be  made  possible  under  such  fair  restrictions  and  provisions  as  should  right- 
fully attach  to  them,  any  branch  of  business  could  be  freely  entered  upon 
by  all  comers  and  the  talk  of  monopoly  would  be  forever  done  away  with. 

Our  present  system  of  State  corporations,  almost  as  varied  in  their 
provisions  as  the  number  of  States,  is  vexatious  alike  to  the  business  com- 
munity and  to  the  authorities  of  the  various  States.  Such  Federal  action 
need  not  take  away  from  the  States  their  right  to  taxation  or  police  regula- 
tion, but  would  make  it  possible  for  business  organizations  to  know  the  gen- 
eral terms  on  which  they  could  conduct  their  business  in  the  country  at 
large. 

Lack  of  uniformity  in  the  laws  of  the  various  States,  as  affecting  busi- 
ness corporations,  is  one  of  the  most  vexatious  features  attending  the  busi- 
ness life  of  any  great  corporation  to-day,  and  I  suggest  for  your  most  care- 
ful consideration  the  thought  of  a  Federal  corporation  law. 

Q.  Have  you  any  further  statement  to  make  in  reference  to  the  organiza- 
tion of  the  Standard  Oil  Company  itself?  A.  That,  I  suppose,  would  all  be 
covered  in  the  statement  that  Mr.  Dodd  is  to  make.  All  the  data  regarding 
the  organization  I  think  will  be  in  that.  I  want  to  hand  you,  in  connection 
with  this  paper,  this  most  interesting  statement,  which  I  think  is  the  first 
general  compilation  of  the  information  that  has  ever  been  made  in  this 
country  and  is  almost  a  surprise  to  us  who  are  familiar  with  the  oil  busi- 
ness, as  showing  the  tremendous  growth  of  the  foreign  petroleum  business. 
I  will  only  refer  by  name  to  the  countries  in  which  petroleum  is  now  suc- 
cessfully mined  and  prepared  for  the  market,  the  capitalization,  so  far  as 
we  are  able  to  obtain  it,  and  the  names  of  the  companies  which,  as  I  think, 
substantially  and  fully  bear  out  these  statements.* 

Q.  (By  Mr.  SMYTH.)  Can  you  give  us  anything  like  the  proportion? 
A.  I  have  a  statement  which  I  think  shows  the  proportion  of  the  business 
done.  It  will  be  a  little  surprise  to  you,  gentlemen,  to  see  the  enormous 
capitalization  of  the  business  attaching  to  the  Russian  oil  development.  I 
may  say,  in  a  word  of  explanation,  that  the  business  there  is  in  tremendously 
or  going  to  be  in  tremendously  strong  hands,  as  you  will  see,  when  I  men- 
tion the  name  of  the  Rothschilds,  which  will  be  a  sufficient  guarantee  as  to 
the  strength  of  the  company,  and  they  are  growing  now  enormously  in  the 
extension  of  their  business  in  the  various  markets  of  the  world.  The  Nobel 
Brothers  are  there  competing  for  the  business,  and  recently,  perhaps  within 
the  past  year  more  than  in  the  aggregate  time  before,  English  capital  and 
English  corporate  organizations  have  engaged  in  the  petroleum  trade  in 
Russia  to  an  enormous  extent,  the  largest  concern,  perhaps,  being  the  Shell 
Company.     I  hand  you  this  list  showing  firms  in  Russia  and  this  showing: 


♦This  list  appears  on  page  563  of  the  official  report  of  the  commission. 


240  REVIEW   OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

list  of  corporations  in  Galicia;  a  further  statement  from  Roumania,  one 
from  Borneo  and  sundry  places  in  the  Dutch  East  Indies,  in  British  India, 
in  Alsace,  Germany,  and  in  Japan.  *Both  corporations  and  individual  firms 
are  producing  and  refining  petroleum.  It  will  probably  be  an  item  of  in- 
formation to  many  of  you  that  the  production  of  petroleum  is  assuming 
great  proportions  in  Japan.  They  are  now  very  rapidly  progressing,  or  com- 
ing to  the  front  in  improved  methods  of  production,  and  will  ultimately  be- 
come formidable  competitors  to  our  American  industry.  The  system  of 
petroleum  refining  in  Japan  is  by  corporations  and  individual  firms  going 
out  into  the  fields  and  producing  and  refining.  In  Sumatra  the  business  has 
already  attained  large  proportions,  and  in  Java  and  the  Island  of  Madeira. 

Q.  (By  Mr.  SMYTH.)  Is  there  any  American  capital  represented  in  any 
of  these  firms?  A.  There  is  no  American  capital  that  I  know  of.  They 
have  sent  out  and  taken  from  our  oil  producing  country  here  many  artisans, 
but  I  do  not  know  of  any  American  capital  being  invested. 

Q.  (By  Mr.  A.  L.  HARRIS.)  Then  the  Standard  Oil  Company  is  not 
represented  in  any  of  these  corporations?    A.  Not  in  any  way. 

Q.  Not  even  with  the  Nobel  Brothers?  A.  No,  sir;  not  a  dollar  of  in- 
terest or  relationship  or  understanding  in  any  way. 

Q.  (By  Mr.  SMYTH.)  I  suppose  one  of  the  causes  of  attack  on  Ameri- 
can oil  in  London  is  that  English  capital  is  interested  in  the  Russian  re- 
fineries? A.  Undoubtedly.  As  I  said  before,  I  think  that  attack  was  un- 
doubtedly made  by  the  people  interested  in  the  Russian  distribution  in  Eng- 
land. It  may  be  of  interest  to  read  a  short  letter  from  our  foreign  ex- 
porters giving  an  epitome  of  the  various  productions  in  these  various  coun- 
tries.    It  is  as  follows: 

New  York,  September  1,  1899. 
J.  D.  Archbold,  Esq.: 

Dear  Sir— I  beg  to  hand  you  herewith  the  statements  you  desired,  in  duplicate, 
and  wish  to  say  that  the  Russian  production  is  on  the  Peninsula  of  Apsheron,  on 
the  west  coast  of  the  Caspian  sea,  and  the  Grosni  district,  northwest  from,  the 
same. 

We  estimate  the  Russian  production  at  present  to  be  about  160,000  barrels  per  day 
and  Grosni  about  10,000  barrels  daily.  The  Galician  production  is  about  2,000,000  bar- 
rels crude  and  Roumania  500,000  to  600,000  barrels  per  annum,  and  the  Alsace  pro- 
duction about  175,000  barrels  crude  annually.  The  Dutch  East  Indies,  about 
3,400,000  barrels;  Burmah  about  2,000,000  cases  refined  per  annum,  and  Japan  will 
probably  amount  to  about  2,000  barrels  crude  oil  per  day. 

Of  course  we  give  you  these  figures  as  near  as  we  can  get  to  them,  and  where 
we  give  yo;i  the  output  of  refined,  we  have  no  reliable  figures  as  to  what  it  may 
represent  in  crude. 

Yours  truly, 

C.   F.  ACKERMANN. 

I  have  here  a  further  statement  which  covers  the  information  which 
you  asked  as  to  the  percentages  of  these  various  countries.  It  is  for  the 
year  1897.  Unfortunately  we  have  not  the  full  data  at  hand  with  which  to 
give  you  the  1898  figures.  This  statement  shows  the  business  of  all  the 
countries  of  the  world  producing  refined  oil.f  Some  little  percentage  of  it, 
as  you  will  observe,  is  not  of  native  production  in  the  country,  but  it  is 
shown  in  this  way  because  the  country  named  compels,  by  its  tariff  laws, 
the  bringing  into  the  country  of  the  crude  petroleum  for  refining  there;  but 
the  larger  items  are  the  production  of  the  various  countries,  as  you  will 
observe.  The  total  production  of  the  world  of  refined  petroleum,  illumi- 
nating oil,  for  the  year  1897,  was  39,338,991  barrels  of  50  gallons  each,  and 
was  divided  as  follows.     I  will  give  you  the  percentages,  if  you  please. 

Q.  (By  Professor  JENKS.)  Yes.  A.  United  States,  64.23;  Russia,  23.28; 
France,  3.25;  Austria-Hungary,  2.66;  Sumatra,  2.32,  and  the  remainder,  Scot- 
land, Canada,  Java,  Roumania,  India,  Spain,  Mexico,  Cuba.  Brazil,  Germany, 
Peru,  Italy,  Japan  and  Porto  Rico  arc  all  fractions  of  less  than  one  per 
cent.,  making  the  grand  aggregate  of  100  per  cent.;  the  great  factors,  as  you 
will  see,  for  the  year,  being  the  United  States  and  Russia,  and  a  rapidly  in- 
creasing factor,  of  course,  in  Austria-Hungary   and   Sumatra. 

The  population  of  the  world  is  1,349,140,091.  The  production  of  illumi- 
nating oil  is  therefore  equal  to  one  and  five-tenths  gallons  per  capita. 


*Black   faced   type   indicates  matter  omitted,  in  the  course  of  editing,  from  the 
official  report. 

tThis   statement   appears    on    page   5G7  of  the   official   report   of  the   commission. 


JOHN  D.   ARCHBOLD.  241 

Q.  (By  Mr.  CLARKE.)  Do  you  suppose  there  has  been  a  considerable 
advance  since  these  statistics  were  given?  A.  The  business  of  Russia  is 
Increasing  very  rapidly,  *and  with  our  present  basis  of  price  here  it  will 
increase.  Here  is  a  further  statement  of  the  world's  production  of  crude 
oil  which  may  be  of  interest.!  Perhaps  I  had  better  not  take  the  time  to 
read   it. 

Total  production  in  the  United  States,  1859  to  1897,  inclusive  (38  years), 
837,494,059  barrels,  on  the  basis  of  5.6  cubic  feet  to  one  barrel  of  oil.  This 
amount  of  crude  oil  would  fill  a  pipe  line  6.9  feet  in  diameter  extending 
•entirely  around  the  earth.  It  would  cover  a  surface  of  10,000  square  miles  to 
a  depth  of  0.2  inches,  or  fill  a  reservoir  having  an  area  of  one  square  mile 
and  a  depth  of  167  feet. 

Q.  Is  there  anything  further  that  you  have  to  add  to  your  general 
statement?     A.  I  have  nothing  further. 

Q.  (By  Professor  JENKS.)  Perhaps  we  had  better  ask  you  some  ques- 
tions somewhat  more  in  detail  in  reference  to  some  of  the  points  you  ^ave 
l)rought  out.     A.  Very  good,  sir. 

Q.  (By  Mr.  FARQUHAR.)  Have  you  furnished  the  commission  to-day 
with  the  total  exports  from  the  first,  all  over  the  world,  from  the  United 
States?  A.  I  don't  think  I  have  submitted  such  a  statement.  It  may  be 
that  among  these  statistical  reports  there  is  such  a  statement,  but  1  hardly 
think  so.     I  have  for  periods  given  the  exports. 

Q.  And  you   can  furnish  the  exports  year  by  year?    A.  From   the   day 
we  began. 
Total  value  of  petroleum  products  exported  from  United  States 

for  the  years  1861  to  1871,  inclusive,  amounted  to $    199,030,333 

Value  of  exports  from  1872  to  1898,   inclusive,    (i.e.,   since  the 

organization  of  the   Standard   Oil  Company) 1,246,846,381 

Value  of  exports  by  Standard   Oil  Company 1,126,401,021 

Standard  Oil  Company,  90.34  per  cent,  of  total. $ 

Q.  (By  Professor  JENKS.)  With  reference  to  the  effect  of  the  Stand- 
ard Oil  Company  upon  prices  you  have  made  the  general  assertion  that, 
through  the  infiuence  of  the  Standard  Oil  Company,  in  your  judgment,  prices 
of  refined  oil  have  been  greatly  lessened  to  consumers  here.  Is  it  generally 
true  that  the  prices  at  the  present  time  are  considerably  lower  at  com- 
petitive points  than  at  those  where  you  have  no  competition?  A.  Well.  I 
cannot  speak  with  any  precision  regarding  that  matter,  but  I  have  no  doubt 

♦Black  faced  type  Indicates  matter  omitted,  in  tlie  course  of  editing,  from  the 
ofRcial  report. 

vTlils  statement  showed  the  percentages  of  the  production  of  crude  oil  by  various 
countries  for  1S97  (the  total  production  being  126.136.528  barrels  of  42  gallons  each)  as 
follows:  United  States,  47.96;  Russia,  45.26;  Austria-Hungary,  1.66:  Sumatra.  1.41; 
Scotland  (1896),  1.04:  Canada,  .64;  Java,  .58;  Roumania.  .45;  India  (1896),  .34;  Japan, 
.23;  Germany,  .13;  France,  .06;  Peru,  .05;  Argentine,  .02;  Italy,  .01;  other  countries 
<estimated),  .16. 

The  witness  also  submitted  a  tabulated  statement  showing  the  crude  oil  produc- 
tion in  the  United  States,  by  States,  for  the  years  1896  and  1897.  This  statement 
•showed  that  the  total  production  for  the  United  States  in  1896  was  60,864,401  barrels  of 
42  gallons  each,  and  for  1897,  60.496.499  barrels,  being  a  decrease  for  1S97,  comparpd 
with  1896,  of  367,902  barrels.  The  total  value  of  the  production  in  1896  was  158,518,709, 
and  for  1897,  $40,929,611,  being  a  decrease  in  value  of  $17,589,098.  The  production  for 
1897  bv  States  follows:  Pennsylvania,  18,439.180;  New  York,  771,606;  West  Virginia, 
13,078,011:  Ohio  (Pennsylvania  oil),  2,877,193;  Ohio  (Lima  oil),  18,682,677:  Indiana.  4,110.- 
■356;  Kentucky,  322;  Tennessee,  4,377;  Missouri,  19;  Colorado,  477,499;  California,  1,903,- 
411;  Kansas,  81.098;  Wyoming,  3,650;  Illinois,  500;  Texas,  65,975;  Indian  Territory,  625. 
The  increase  or  decrease  in  the  production  of  States  for  1897,  compared  with  1896, 
follows:  Pennsylvania,  decrease.  1,356,599;  New  York,  increase,  35.000;  West  Vir- 
ginia, increase,  3,072,045;  Ohio  (Pennsylvania  oil),  decrease,  488,172;  Ohio  (IJma  oil), 
■decrease,  1,892,462;  Indiana,  decrease,  536,596;  Kentucky,  decrease,  1,358;  Tennessee,, 
increase,  ,52;  Missouri,  decrease,  24;  Colorado,  increase,  116,049;  California,  increase, 
«.tO,634;  Kansas,  decrease.  32,473;  Wyoming,  increase,  772;  Illinois,  Increase,  250;  Texas, 
increase,  64,525:  Indian  Territory,  increase,  455. 

Both  of  the  above  statements  appear  on  pages  567  and  .568  of  the  ofRcial  report 
of  the  commission 

JSubmitted   to   the  commis.sion   in   comp'iance  with  the  commissioner's  request. 

16 


242  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

that  when  we  are  closely  pressed  with  competition  at  any  time  we  endeavor 
to  hold  our  trade.  That  is  a  natural  law  of  trade,  of  which  we  are,  of  course, 
a  part. 

Q.  And  your  general  principle,  of  course,  is,  if  a  competitor  comes  into 
a  market  that  you  have  held  alone,  you  expect  to  put  the  price  down  to  hold 
the  market  if  possible?  A.  I  think,  as  a  rule,  the  contrary  of  that  proposition 
would  be  true.     The  competitor  forces  the  fight,  as  a  rule. 

Q.  About  what  proportion  of  the  refined  oil  of  the  country  do  you  sup- 
ply? A.  Well,  I  should  say  of  this  country  it  would  be  approximately,  con- 
sidering the  whole  field,  about  82  per  cent. 

Q.  In  reference  to  the  policy  of  an  organization  of  the  size  and  power 
of  the  Standard  Oil  Company  to  fix  prices  in  the  general  market  as  against 
competitors,  do  you  think  that  an  organization  that  controls  80  per  cent,  of 
all  the  goods  that  go  into  the  market  will,  generally  speaking,  have  it 
within  its  power — within  moderate  limits,  of  course — to  fix  the  price  and 
force  its  competitors  *practically  out  of  the  field?  A.  It  may  temporarily 
have  such  power,  but  if  it  exercised  it  universally  or  arbitrarily  it  would 
surely  bring  its  own  downfall. 

Q.  If  it  attempted  to  push  the  price  too  high  it  would,  of  course,  call 
in  competition?     A.  It  would  invite  competition. 

Q.  Whenever  there  is  fierce  competition  between  large  institutions  and 
prices  are  cut  in  any  locality  do  you  let  down  the  oils  to  the  lowest  rates 
practicable?  A.  Well,  personally,  I  would  never  advise  selling  goods  at  a 
loss.  I  expect  it  is  done  in  some  cases,  but  I  would  not  personally  advise 
selling  goods  at  a  loss.     If  you  can  get  to  cost  I  think  you  are  low  enough. 

Q.  You  would  not  say  then,  as  regards  your  own  methods  of  compe- 
tition, that  where  the  fighting  is  forced  by  competitors  you  do  not  cut  prices 
down  below  cost?  A.  I  should  hope  not.  I  would  quickly  get  to  that  point, 
as  I  would  rather  keep  my  works  going  and  my  labor  employed  than  to 
shut  it  down  even  at  the  cost  point. 

Q.  You  would  not  temporarily,  in  any  special  locality,  go  below  the 
cost  point  for  the  sake  of  freezing  out  a  smaller  rival,  with  the  expectation  of 
getting  control  of  the  market?  A.  I  do  not  think  I  would.  There  might  be  a 
very  special  case  where  such  a  thing  would  be  advisable,  but  it  would  be  an 
exceptional  case. 

Q.  You  would  not  say  that  your  company  has  not  done  that  at  all?  A.  I 
would  not  say  that  it  was  never  done. 

Q.  So  far  as  an  organization  of  the  size  of  the  Standard  Oil  Company 
is  concerned,  if  you  put  prices  down  to  cost,  you  can  afford  to  hold  them 
there,  of  course,  very  much  longer  than  a  smaller  rival  can?    A.  Oh,  yes,  sir. 

Q.  And  you,  I  presume,  are  in  the  habit  of  doing  that  to  get  rid  of  com- 
petitors at  times?  A.  We  are  in  the  habit  of  fighting  vigorously  to  hold  our 
trade  and  business. 

Q.  To  the  extent  of  holding  prices  down  to  cost  until  rivals  go  away? 
A.  Yes,  sir. 

Q.  The  general  result  then  is  this:  By  virtue  of  your  greater  power 
you  are  enabled  to  secure  prices  that  on  the  whole  can  be  considered  steadily 
somewhat  above  competitive  rates?  A.  Well,  I  should  hope  so.  I  think  we 
have  better  merchandising  facilities,  better  marketing  facilities,  better  dis- 
tributing facilities  and  better  talent  than  the  competitor  could  have. 

Q.  I  am  not  asking  as  to  your  power  to  make  profits,  but  in  reference 
to  the  price  that  you  get  from  your  consumer?  A.  Perhaps  you  would  say, 
if  we  get  a  better  average  price,  we  get  better  prices. 

Q.  Then  you  think,  generally  speaking,  that  you  get  prices  for  oil  that 
are  slightly  above  competitive  prices?  A.  Well,  I  should  think  so.  I  can- 
not answer.  This  is  a  very  general  question,  and  very  difficult  to  answer. 
I  cannot  answer  it  specifically,  but  I  should  hope  we  do. 

Q.  Of  course  in  this  investigation  we  are  seeing  if  we  can  get  some  gen- 
eral principles  on  which  legislation  may  be  based  and  these  questions  are 
to  bring  out,  if  we  can,  the  power  that  so  great  an  organization  has  in  fixing 
prices.     Would  you  say  then,  that  in  the  case  of  an  organization  that  con- 


*Black   faced   type  iriflicates  matter  omitted,   in  the  course  of  editing,  from  the 
official  report. 


JOHN  D.   ARCHBOLD.  243 

trols  perhaps  80  per  cent,  of  the  markets  of  the  country,  there  is  a  mo- 
nopolistic element  that  enters  and  enables  them  to  hold  the  prices  above 
the  regular  rates.  Is  there  a  monopolistic  power  that  comes  merely  from 
the  power  of  capital  itself?  A.  Undoubtedly  there  is  an  ability,  and  when, 
as  I  have  already  said,  the  ability  is  unwisely  used  it  is  sure  to  bring  its 
own  defeat. 

Q.  If  that  ability  is  used  to  get  exorbitant  prices  it  will  invite  com- 
petition?   A.  Yes,  sir. 

Q.  But  if  that  ability  is  kept  within  modest  limits,  would  you  still  say 
that  it  was  in  the  power  of  such  an  organization  to  get  the  benefit  of  a  mo- 
nopolistic power  that  comes  merely  from  the  power  of  capital  itself?  A.  I 
should  say  that  it  would  be  a  very  restricted  power  and  a  very  restricted 
limit.  The  competitors  in  this  country  are  very  active.  They  are  on  the 
alert  at  all  points,  and  they  are  simply  waiting  in  the  hope  of  finding  just 
such  a  condition  as  you  describe.  I  should  say  that  as  business  is,  and 
as  it  has  been  for  many  years,  we  would  not  have  that  ability  to  any  con- 
siderable extent. 

Q.  If  the  ability  were  used  only  to  a  comparatively  slight  extent,  would 
it  still  be  enough  to  make  a  difference  between  what  you  might  call  mod- 
erate dividends,  say  6  and  7  per  cent.,  and  pretty  high  dividends  of  12,  15 
or  20  per  cent?  A.  Well,  that  involves  so  nice  a  question  that  I  can  hardly 
undertake  to  answer  it.  Generally  as  to  the  effect  on  the  community,  if  it 
is  on  that  point  that  you  wish  enlightenment 

Q.  I  first  want  it  on  the  prices  of  the  whole  United  States,  I  will  speak 
of  the  community  afterwards.  A.  I  should  say  that  the  lessened  cost  incident 
to  doing  business  by  the  large  volume  would  more  than  compensate  the  cor- 
poration for  its  inability  to  get  the  higher  prices. 

Q.  We  will  leave  that  point  with  this  then:  Large  capital  in  your  judg- 
ment, gives  an  organization  the  power  to  get  a  somewhat  higher  price  than 
can  be  obtained  in  the  market,  provided  the  competitors  are  substantially 
equal  in  power?   A.  Oh,  it  may  be  so;  that  is  a  difficult  question  to  answer. 

Q.  In  your  business,  has  there  been  any  decided  increase  within  the 
last  10  or  15  years  in  the  by-products  that  come  from  the  refining  of  oil? 
A.  Oh,  yes,  sir.  There  the  utilization  has  been  greatly  improved,  and  the 
uses  of  the  by-products  throughout  the  world  have  been  enormously  in- 
creased. 

Q.  Will  you  give  us  a  few  specific  illustrations  from  your  own  busi- 
ness? A.  Our  leading  by-products  are  the  light  gasoline  and  naphtha  prod- 
ucts, the  paraffine  product  that  is  used  in  the  candle-making  business,  the 
lubricating  oils  for  all  classes  of  machinery,  which  have  taken  the  place 
of  the  animal  and  vegetable  oils,  the  utilization  of  the  vaseline  products 
and  numberless  small  products.  I  do  not  call  them  all  to  my  mind,  but  I 
have  named  the  leading  ones. 

Q.  Can  you  say  whether  it  would  be  possible  for  these  various  by- 
products to  be  secured  to  as  great  an  advantage  by  an  organization  that 
had  at  its  control  in  the  refining  business  say  only  half  a  million  dollars? 
A.  I  do  not  think  it  would  be  possible  for  them  to  do  so.  I  do  not  think 
they  could  undertake  the  different  branches  of  the  business  involved  in  the 
producing  of  these  various  articles  to  which  I  have  referred  with  anything 
like  the  advantage  that  we  do  with  a  large  specialization. 

Q.  You  would  put  down,  as  one  prominent  advantage  that  is  secured 
by  this  large  aggregation  of  capital,  the  use  of  the  by-products?  A.  I  do.  I 
will  put  that  down  as  one  prominent  advantage  that  is  secured  by  the  large 
aggregation  of  capital.  It  may  be  rather  surprising  to  you,  with  all  your  re- 
search on  this  subject,  to  know  that  the  by-products  of  petroleum  are  sub- 
stantially about  equal  in  value  to  illuminating  oil  itself. 

Q.  If  so  large  an  income  is  secured  at  the  present  time  from  the  by- 
products, it  would  be  possible  after  awhile.  I  suppose,  to  make  profits  even 
though  the  main  product  of  the  refined  petroleum  were  sold  substantially 
at  cost?  A.  Well,  possibly — somewhat  profitable.  However,  we  count  the 
profit  from  the  by-products  as  part  of  the  whole  profits  in  the  management 
of  our  business.     We  take  it  as  a  whole. 


244  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

Q.  (By  Mr.  SMYTH.)  Is  the  larger  profit  derived  from  the  by-products 
or  the  oil?  A.  I  should  say — I  do  not  know  which  is  the  larger — from  the 
by-products.  In  estimating  the  outcome  from  a  barrel  of  crude  we  consider 
the  whole  proposition — what  we  get  for  the  by-products  and  from  the  market 
price  for  illuminating  oil.  We  take  those  prices  and  base  our  prices,  as  a 
whole,  on  them.  Of  course,  it  is  to  our  interest  somewhat,  and  in  special 
cases  often  to  our  interest.  These  gentlemen  who  are  our  competitors  in 
the  nearby  eastern  markets  do  not  have  to  face  the  problems  that  we  do 
in  great  part  from  competition  with  Russia  in  the  markets  that  we  reach  in 
the  far  East.  We  have  frequently  to  base  our  calculations  on  both  and  give 
a  price  for  refined  oil  in  competition  with  them  there  that  might  not  have 
realized  the  profit  to  itself  here.  We  have  to  do  that,  so  as  to  hold  those 
markets  for  the  general  American  trade  as  against  the  Russian  aggression. 

Q.  You  say  that  in  the  eastern  markets  you  have  sold  your  refined  oil 
on  a  very  low  basis?  A.  I  should  say  below  cost  at  times,  figuring  trans- 
portation and  the  ordinary  charges. 

Q.  And  secured  your  profits  from  the  by-products  entirely?  A.  Yes,  sir, 
been   satisfied  with  them. 

Q.  As  regards  the  home  market,  the  statement  was  made  by  you  that 
the  prices  had  been  steadily  lowered.  If  we  take  the  margin  between  crude 
petroleum  and  refined  petroleum  we  find  that  for  a  number  of  years  past 
this  margin  does  not  seem  to  have  lessened  very  materially  in  spite  of  the 
increased  profit  that  has  come  from  the  by-products?  A.  There  is  a  basis  be- 
low which  it  is  not  possible  to  go  very  much.  I  think  the  experience  of  our 
competitors  is  the  best  proof  of  the  fact  that  in  reference  to  the  business 
as  a  whole,  it  is  very  close.     It  has  been  handled  on  a  very  close  basis. 

Q.  Would  you  say  that  the  margin  of  profit  now  in  the  refining  industry 
is  any  greater  for  a  period  of  three  years  than  it  was  eight  or  ten  years  ago? 
A.  I  could  not  speak  from  memory  as  to  eight  or  ten  years  ago. 

Q.  Well,  five  or  six  years  ago?     A.  1  should  not  think  it  was. 

Q.  What  is  your  general  impression?  A.  In  giving  my  general  impres- 
sion I  speak  in  all  these  matters  with  a  little  reservation,  from  memory,  and 
I  am  just  as  accurate  as  I  can  possibly  be  from  memory.  I  should  not  like 
to  give  an  answer  with  nicety  on  the  question.  I  will  answer  you  to  the 
very  best  I  can  from  my  knowledge  of  the  matter. 

Q.  In  the  course  of  our  endeavors  to  get  information  on  these  points, 
the  question  has  been  raised  at  different  times  in  reference  to  the  effect 
of  the  Standard  Oil  Company  upon  the  producers  through  the  price  that  has 
been  paid  for  crude  oil.  Do  you  know  what  proportion  of  the  Pennsylvania 
product  you  purchase?  A.  I  think  the  percentage  of  the  business  done  by 
us  as  a  whole  would  be  perhaps  the  best  illustration  of  that. 

Q.  Can  you  recall  off-hand  the  figures?  A.  The  percentage  of  the 
Pennsylvania  would  be  less  than  82  per  cent.,  because  the  larger  portion  of 
the  competitors'  business  is  done  in  Pennsylvania  rather  than  in  Ohio,  and 
I  would  say  in  the  neighborhood  of  80  per  cent. 

Q.  Your  purchases  in  the  Pennsylvania  field  are  not  made  through 
your  pipe  line?  Have  you  a  general  purchasing  agent?  A.  We  have  a  pur- 
chasing agent  through  whom  we  buy. 

Q.  Who  is  the  purchasing  agent  through  whom  you  buy?  A.  Mr. 
Joseph    Seep,  of  Oil  City. 

Q.  And  the  prices  that  Mr.  Seep  makes  in  his  offers  are  fixed  by  you 
regularly?    A.  Well,  they  are  suggested  by  us  as  a  rule. 

Q.  He  is  your  general  purchasing  agent  and  there  are  various  sub- 
agents  under  him  throughout  the  field?  A.  Under  him  throughout  the  field, 
yes,  sir. 

Q.  Can  you  recollect  about  how  many?  A.  I  should  say  40  or  .'30,  or  per- 
haps more. 

*Q.  A  statement  has  been  made  as  to  that?  A.  I  don't  know  whether 
there  are  quite  as  many  as  that.  I  think  perhaps  Mr.  Boyle  can  tell  that. 
I  should  say  40. 


*Blark   faced   type  Indicates  matter  Omitted,   in   the  course  of  editing,  from  the 
offlcial  report. 


JOHN   D.  ARCHBOLD.  245 

Q.  The  prices  are  fixed  for  him  generally,  as  you  say,  at  your  office? 
A.  Yes,  sir. 

Q.  As  regards  the  profit  upon  which  these  prices  are  fixed,  the  circular 
that  Mr.  Seep  issued  some  time  ago,  which  has  been  produced  here,  stated 
that  the  prices  that  he  would  pay  would  be  fixed  in  general  by  the  world's 
markets.  The  implication  would  be  that  the  prices  would  probably  not  vary 
very  frequently  or  very  violently.  Has  it  been  true  generally  that  the 
prices  have  kept  pretty  stable  for  the  crude  oil  in  Pennsylvania?  A.  The 
prices  have  varied  somewhat  during  the  past  several  years,  according  as 
the  outlook  was  for  the  production  and  as  the  demand  was.  It  could  not 
be  stated  better  by  me  or  by  anybody  than  that  circular  states  it.  We  have 
before  us  daily  the  best  information  obtainable  from  all  the  world's  markets 
as  to  what  the  offerings  are  and  as  to  what  it  is  best  to  sell  for,  and  we  make 
every  day  the  very  best  possible  concessions  on  prices  and  that  is  our  basis 
for  arriving  at  the  current  price. 

Q.  Generally  speaking,  are  the  relative  prices  between  crude  and  re- 
fined oil  kept  substantially  uniform?  A.  Oh,  substantially  so.  Of  course, 
it  is  not  always  the  same.  Sometimes  it  seems  possible  to  get  a  higher 
price  and  we  can  but  avail  ourselves  of  that,  and  sometimes  we  have  to  take 
the  closer  margin  and  still  buy  the  crude,  and  there  we  suffer  loss,  of 
course. 

Q.  Statements  have  been  made  here  by  some  of  the  witnesses  to  the 
effect  that  there  have  been  times  when  refined  oil  at  the  seaboard  was  sell- 
ing for  perhaps  as  low  or  lower  than  the  crude?  A.  I  should  say  that  that 
was  a  very  exceptional  case. 

Q.  Can  you  suggest  any  circumstances  where  that  would  be  a  normal 
condition  of  affairs?  A.  I  do  not  recall  any  such  case.  The  answer  was 
given  by  me  that  in  competing  with  the  Russians  at  certain  times  for  certain 
of  the  markets  we  have  made  prices  for  refined  oil  that  were  as  low  as  the 
crude  oil  price  and  have  taken  our  chances  for  the  best  market  for  by- 
products. That  is.  true,  but  they  have  been  very  exceptional  cases  and  it  is 
not  the  case  to-day. 

Q.  The  question  was  suggested  some  little  time  ago  with  reference  to 
the  purchase  and  dismantling  of  plants  of  your  competitors.  Instances  of 
that  kind  have  occurred?    A.  Oh,  yes,  sir. 

Q.  Will  you  state  the  conditions  which  in  your  judgment  justified  that? 
A.  I  have  endeavored  to  do  so  as  directly  and  as  tersely  as  possible  in  my 
general  argument. 

Q.  Perhaps  you  will  sum  it  up  again?  A.  Well,  it  was  that  we  have  at 
times  bought  refineries  with  the  expectation  of  succeeding  to  the  volume  of 
business  done  by  them.  We  have  universally  replaced  the  capacities  of 
these  refineries  by  better  ones  and  better  equipped  construction  at  more 
favorable  points.  We  would  not  buy  refineries  and  dismantle  them  for  the 
pleasure  of  doing  it.  We  have  done  it  because  of  a  carefully  considered 
business  purpose  and  that  being  in  the  direction  of  economy  and  business. 

Q.  I  will  call  your  attention  to  the  case  of  some  refineries  that  were 
bought  at  Titusville.  Perhaps  you  can  explain  somewhat  in  detail  these 
cases?  A.  They  were  no  exceptions  to  the  rule.  We  utilized  some  of  that 
property.  We  had  opportunities  to  utilize  some  of  them  quite  advantage- 
ously as  small  refineries.  I  think  one  of  them  was  taken  to  Porto  Rico. 
One  was  taken  to  Kansas,  where  it  was  needed  for  a  new  production,  and 
the  other  one  went  to  Porto  Rico,  where  we  were  compelled  by  the  tariff 
laws  to  refine. 

Q.  You  have  always  maintained  a  production  equal  to  the  demands  of 
the  trade?    A.  Always  in  excess  of  it. 

Q.  (By  Professor  JENKS.)  Would  you  make  a  general  statement  of  the 
dismantling  of  the  plants  at  different  times?  Was  that  done  to  lessen  your 
output?  A.  Oh,  no;  there  has  been  at  all  times,  of  course,  an  excess  of 
capacity,  compared  with  the  demand.  The  refineries  have  never  been  run 
at  their  full  capacities.  I  would  say  in  reference  to  that,  that  the  sole 
purpose  in  the  abandoning  of  any  plant  would  be  to  conduct  the  business 
at  a  point  where  it  could  be  more  economically  done. 


246  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

Q.  Incidentally,  in  connection  with  the  attempt  to  keep  your  trade  by 
holding  your  market,  and  in  a  special  locality,  where  competition  was  vig- 
orous?   A.  Purely  so. 

Q.  So  that  entered  as  one  factor?  A.  That  entered  as  one  factor,  of 
course. 

Q.  The  assertion  is  frequently  made — I  do  not  recollect  whether  it  has 
been  made  on  the  stand — that  in  certain  localities  where  you  are  compelled, 
in  order  to  keep  control  of  your  trade,  to  put  your  prices  down  for  a  time, 
until  your  rival  withdraws  from  business,  prices  are  afterwards  put  above 
what  they  were  before,  in  order  to  recoup  the  loss  that  occurred.  Is  that 
correct?  A.  We  have  no  such  policy  in  the  business.  It  may  be  possible 
that  in  the  history  of  the  business  from  anxiety  to  serve  by  some  over  zeal- 
ous servant,  that  such  a  case  may  occur,  but  if  it  were  known  it  would  not 
oe  approved. 

Q.  That  is  your  policy?  A.  No,  sir.  The  distinct  policy  that  we  have 
followed,  imder  which  we  have  survived  with  our  great  business,  has  been 
that  we  must  treat  the  public  pretty  fairly. 

Q.  Statements  have  been  made  in  the  papers  several  times  in  reference 
to  special  discriminations  in  freight  rates  that  have  been  secured  by  the 
Standard  Oil  Company  in  Canada,  which  are  said  to  have  affected  very 
unfavorably  other  American  refineries.  Can  you  explain  that?  A.  I  am 
not  acquainted  with  it  at  all.  There  has  been  some  such  agitation  in  the 
newspapers,  but  I  have  considered  it  as  one  of  the  usual  classes  of  such 
agitation.  I  would  be  glad  to  inquire  about  it,  if  you  wish,  and  see  what 
information  I  can  get  about  it.  I  do  not  know  of  any  such  discrimination  as 
to  rates  in  our  favor,  and  to  the  exclusion  of  other  shippers  of  a  like  char- 
acter. Mr.  Rogers  says  that  Mr.  Harris  asked  the  question  as  to  our  com- 
pany's interest  in  the  refining  business  in  Canada.     I  did  not  hear  him. 

Q.  Yes,  I  should  like  to  ask  you  that.    A.  We  are  interested  in  it. 

Q.  Will  you  please  tell  us  about  your  interest  in  the  Canadian  refining 
business?  A.  We  are  interested  in  the  Canadian  refining  business  and  are 
doing  our  best  to  form  a  business  there — doing  our  best  to  get  it  on  a  profit- 
able basis.  It  has  been  very  much  disorganized  for  a  long  time,  and  we 
have  come  into  relationship  there  within  the  past  year  or  so. 

Q.  How  large  a  proportion  of  the  Canadian  oil  refining  industries  do 
you  control?    A.  I  think  about  75  per  cent. 

Q.  Have  there  been,  with  your  knowledge,  any  contracts  made  with  the 
Canadian  Pacific  and  the  Grand  Trunk  Railway  in  reference  to  advancing 
rates  to  Buffalo  and  Toledo?  A.  As  I  say,  I  have  not  any  specific  knowledge 
about  the  matter.    I  will  be  glad  to  inquire  about  it. 

Q.  You  will  give  us  full  information  on  that  subject?  A.  I  will.  The 
advance  in  rates  on  American  oil  from  Buffalo  and  Detroit  was  made  by  the 
Canadian  roads  in  their  own  interests  and  is  in  no  way  discriminatory  in 
favor  of  the  Standard  Oil  Company,  but  rather  to  the  contrary,  for  that  com- 
pany pays  these  advanced  rates  in  full  and  ships  over  75  per  cent,  of  the 
American  oil  consumed  in  Canada.* 

Q.  On  the  question  of  special  rebate  or  special  favors  by  the  railroads, 
the  statement  has  been  made  that  at  times  you  have  been  enabled  to  influ- 
ence the  railroads  to  put.  rates  over  special  lines  so  high  that  it  would  work 
to  the  disadvantage  of  competitors  who  had  to  use  those  lines  more  than 
you  did.  For  example,  Mr.  Westgate  testified  that  in  shipping  oil  into  Can- 
ada he  had  found  himself  at  a  disadvantage  on  account  of  this  increase  in 
rate  of  which  I  have  spoken,  and  of  which  you  say  you  have  no  knowledge, 
and  that  in  attempting  to  ship  to  Canada  or  through  the  State  of  New  York, 
he  found  that  rates  from  his  refinery  to  the  northern  part  of  New  York  State 
were  very  much  above  the  rates  that  might  be  considered  normal  there, 
judging  by  the  rates  on  other  goods.  For  example,  he  found  that  to  ship 
other  goods  to  Northern  New  York  there  were  Boston  rates,  but  on  oil  there 
were  other  special  rates.  He  felt  that  he  was  put  to  a  disadvantage  on 
account  of  the  location  of  his  refinery  and  that  the  Standard  Oil  Company 
had  succeeded  in  influencing  the  railroads  there  in  making  those  special 
rates  to  the  disadvantage   of  their  competitors.     What  would   you   say  on 


•This  statement  was  furnished  to  the     commission  later  by  Mr.  Archbold. 


JOHN  D.   ARCHBOLD.  247 

that  general  question?  The  matter  would  be  entirely  within  the  law,  of 
course?  A.  I  do  not  know  of  any  such  condition  at  all.  I  have  no  knowl- 
edge of  the  tariff  rates  on  petroleum  having  been  changed  in  New  York 
State  or  anywhere  else  for  a  long  period.  I  do  not  know  that  to  be  so.  It 
is  within  the  bounds  of  possibility,  but  I  should  be  disposed  to  doubt  it 
exceedingly. 

Q.  You  would  be  likely  to  know  in  detail  with  reference  to  the  freight 
rates?    A.  I  can  find  out  for  you. 

Q.  Over  any  road,  I  mean?  A.  Oh,  yes,  sir;  of  course  I  can  inquire 
about  it.  I  only  know  in  reference  to  the  question  of  coming  into  relation- 
ship with  the  Canadian  refining  interests  that  the  question  of  rates  and 
their  relation  to  the  American  business  was  considered,  but,  as  I  say,  I  do 
not  know  of  any  rates  *relating  to  our  business  that  are  not  open  to  all 
comers. 

Q.  It  is  not  a  question  of  rates  that  are  open  to  all  comers.  Competitors 
say  that  the  Standard  has  secured  rates  over  one  line  that  have  worked  to 
the  disadvantage  of  others.  A.  I  do  not  know  about  that.  I  should  say  that 
it  would  be  to  the  interest  of  the  Canadian  roads  to  encourage  business  in 
their  own  territories.  I  do  not  know  about  that — as  to  any  preferential  bus- 
iness, I  mean. 

Q.  You  have  spoken  in  reference  to  the  testimony  of  Senator  Davis.  In 
his  testimony,  a  statement  was  made  that  a  man  in  his  employ  had  been 
approached  by  the  Standard  Oil  Company  and  offered  pay  regularly  if  he 
would  inform  the  Standard  Oil  Company  in  reference  to  their  shipments, 
and  so  on.  Does  the  company,  under  any  circumstances,  get  information 
from  the  employes  of  their  various  competitors?  A.  The  company  does 
nothing  of  the  kind.  If  any  such  case  has  occurred — and  it  might  as  an 
exceptionally  rare  case  on  the  part  of  a  zealous  employe  who,  in  his  anxiety 
to  know  about  his  competitor,  might  do  a  foolish  thing — it  has  never  been 
approved  by  the  company,  and  if  Mr.  Davis  or  Mr.  Westgate  or  anybody 
else  says  that  we  in  New  York  get  down  to  our  offices  early  in  the  morning 
to  get  our  reports  about  their  business  through  spies  that  we  have  out.  they 
are  entirely  wrong.  We  do  nothing  of  the  kind.  We  are  not  figuring  at  all 
on  Mr.  Westgate's  or  Mr.  Davis'  business.     We  are  figuring  all  around. 

Q.  Do  you  make  the  general  statement  that  no  reports  are  made  from 
your  agents  with  reference  to  the  business  of  competitors?  A.  I  do  not  say 
that.  I  should  say  that  there  were  no  such  reports.  Such  reports  as  we  get 
are  rightfully  secured,  but  to  secure  them  by  bribery  or  imfair  methods  of 
any  kind  would  not  be  approved  by  any  man  in  any  position  of  authority  in 
the  Standard  Oil  Company,  and  I  would  be  only  too  thankful,  at  any  time, 
to  have  any  such  case  brought  to  our  attention. 

Q.  You  have  said  that  the  general  information  in  reference  to  the  organ- 
ization of  the  company  would  be  furnished  in  the  answer  to  the  schedule 
of  inquiries  that  we  have  given  you,  but  there  are  some  one  or  two  matters 
that  perhaps  would  not  be  covered  by  that  particularly.  From  Attorney- 
General  Monnett's  testimony  the  different  forms  of  organization  of  the 
Standard  Oil  Company  were  brought  out  somewhat.  You  had  an  earlier 
trust  organization;  afterward  the  trust  was  dissolved,  I  believe,  and  you  had 
a  different  form  of  organization.  Will  you  sketch  briefly  the  changes  in 
organization  that  the  Standard  Oil  Company  has  gone  through  since  the 
dissolution  of  the  trust?  A.  Would  it  not  be  vastly  preferable  for  you  to 
have  that  in  such  succinct  shape  as  it  will  be  furnished?  I  think  it  could  be 
stated  very  much  better  from  the  records  than  I  could  give  it  to  you  from 
memory,  and  I  would  very  much  like  if  you  will  wait  for  that. 

Q.  I  thought  it  possible  that  some  of  the  commissioners  might  like  to 
base  a  question  or  two  on  your  answer,  if  you  can  state  it  briefly,  and  then 
we  will  have  it  for  the  record  from  Mr.  Dodd  in  a  more  definite 
form?  A.  Well,  the  Standard  Oil  Trust,  as  such  existed  from  the 
year  1882  to  1892.  It  was  formed  in  1882  and  dissolved  in  1892.  After  the 
time  of  its  dissolution,  the  majority  of  the  stocks  of  the  various  companies 
involved  in  the  Standard  Oil  Trust  was  distributed  to  the  equitable  owners 


♦Black  faced  type  Indicates  matter  omitted.  In  the  course  of  editing,  from  the 
official  report. 


248  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

and  this  distribution  has  gone  on  steadily  up  to  this  time  in  the  hands  of  the 
liquidating  trustee. 

Q.  Nevertheless,  since  that  time  the  different  Standard  Oil  Companies 
have  worked  in  harmony,  I  suppose,  have  they  not?  A.  I  suppose  the  own- 
ership is  all  in  harmony. 

Q.  The  general  way  in  which  the  control  has  been  kept  uniform  has 
been  that  the  men  who  were  formerly  the  trustees  now  hold  the  majority  of 
the  stock  in  each  one  of  these  different  companies?     A.  Exactly  so. 

Q.  So  that  the  Standard  Oil  combination,  as  we  might  say,  has  worked 
altogether  harmoniously?  A.  Well,  it  is  hardly  fair  to  call  it  a  combination; 
you  might  call  it  an  aggregation. 

Q.  Well,  an  aggregation,  if  you  please.  A.  But  the  fact  of  the  harmoni- 
ous working  has  been  as  you  say. 

Q.  Will  you  also  explain  briefly,  because  that  was  dwelt  on  at  length  by 
Attorney-General  Monnett,  the  method  of  distributing  the  profits  to  the 
stockholders  under  the  trust  and  since?  A.  Under  the  trust  the  profits 
were,  of  course,  centralized  in  the  hands  of  the  trustees  and  distributed. 

Q.  Distributed  to  the  certificate  holders?  A.  Yes,  sir.  Since  then,  divi- 
dends have  gone  directly  to  the  owners  of  the  stock  of  the  various  compan- 
ies.    They  have  aggregated  the  same  in  one  case  as  in  the  other,  of  course. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Have  they  been  paid  on  the  orig- 
inal Standard  Trust  certificates?   A.  To  the  extent  that  they  remain  out,  yes, 

Q.  Is  there  a  very  large  per  cent  of  them  remaining  out?  A.  Not  a 
very  large  per  cent,  Mr.  Phillips. 

Q.  (By  Professor  JENKS.)  Do  you  recollect  about  what  per  cent.?  A. 
I  cannot  tell  you,  but  it  is  becoming  very  small. 

Q.  (By  Vice-Chairman  PHILLIPS.)  But  the  market  quotations  are 
based  on  the  original  trust  certificates?  A.  All  of  them  in  New  York  on  the 
original  trust  certificates. 

Q.  Will  you  repeat  your  answer?  A.  Well,  it  covers  the  same  equitable 
ownership. 

Q.  But  it  is  largely  distributed?     A.  Largely  distributed  now. 

Q.  On  the  original  trust  certificates?  A.  No,  not  largely;  to  a  very 
small  extent  now  on  the  original  trust  certificates. 

Q.  It  was  for  quite  a  time  after  the  dissolution?  A.  Yes,  sir;  but  it  is 
very  rapidly  disappearing  now. 

Q.  So  that  we  understand  when  the  Standard  Oil  Company  is  quoted, 
say  in  the  neighborhood  of  $500,000,000,  in  the  aggregate  $490,000,000.  do 
we  understand  that  is  the  quotation  on  the  original  Standard?  A.  On  what 
was  represented  by  the  original  Standard;  yes,  sir. 

Q.  On  what  was  represented  by  the  original  Standard  Oil  Company? 
A.  Yes,  sir;   by  the  original  Standard  Trust. 

Q.  When  a  purchaser  buys  on  the  market  100  shares  or  50  shares  of 
what  is  known  as  Standard  Trust  certificates  and  it  is  taken  to  the  company 
for  transfer,  what  do  you  give  him  in  place  of  that — if  I  should  buy  100 
shares  of  Standard  Trust  as  quoted?  A.  You  would  be  entitled  to  receive 
an  equitable  interest  in  every  one  of  the  companies  composing  the  trust. 

Q.  What  form  is  that  certificate  now  in?  A.  When  it  is  transferred  it 
may,  if  it  is  so  desired,  be  in  the  form  of  certificates  of  the  stock  of  the 
various  companies. 

Q.  Do  they  take  it  in  that  way  when  they  purchase,  transfer  or  sell  it? 
Do  they  take  it  in  this  divided  form  or  do  you  give  them  a  certificate  repre- 
senting all  these  aggregations?  A.  What  he  would  be  entitled  to  would  be 
his  interest  in  the  stocks  of  the  various  constituent  companies. 

Q.  Yes.  but  what  form  of  paper  do  you  give  for  them  in  way  of  a  cer- 
tificates? If  I  buy  100  shares  on  the  market  at  say  $490  or  $480  or 
any  such  sum,  or  $500,  and  take  them  to  be  transferred,  or  if  a  man  dies 
and  his  stock  is  sold  or  transferred  to  some  other  person,  what  kind  of  a 
certificate  do  you  give  that  person  to  represent  all  these  aggregations?  A. 
We  would  give  him,  if  he  so  desired,  (we  would  not  issue  any  new  certifi- 
cate or  reissue  any  certificate  of  the  Standard  Oil  Trust,  that  being  in  final 
liquidation),  his  stock  in  the  various  companies,  or  as  some  of  us  are  doing" 
now,   holding  our  shares  through  the  New  Jersey  corporation.     We  would 


JOHN  D.   ARCHBOLD.  249" 

give  him  a  certificate  in  that  which  would  represent  substantially  the  same 
interests. 

Q.  Have  such  transfers  been  made.     A.  Such  transfers  are  now  made. 

Q.  (By  Mr.  SMYTH.)  Are  there  daily  transactions  of  the  stock  of  the 
Standard  Oil  Company?    A.  To  a  small  extent, 

Q.  (By  Mr.  FARQUHAR.)  Is  there  a  share  of  Standard  Oil  stock,, 
a  certificate  of  stock,  on  the  Stock  Exchange  in  New  York?  A.  There  is 
none  on  the  Stock  Exchange. 

*Vice-Chairman   PHILLIPS.     And  never  has  been. 

Q.   (By  Mr.  FARQUHAR.)     Then  you  took  up  the  eight  companies 

A.   (Interrupting.)     The  various  companies;  more  than  that. 

Q.  They  formed  the  New  Jersey  Company,  and  the  stock  that  we  see 
quoted  in  the  New  York  market  is  the  stock  of  these  companies?  A.  It  is 
the  remaining  fraction  of  the  Standard  Trust,  I  should  say,  although,  I  think, 
to  a  very  limited  extent.  The  stock  of  the  New  Jersey  corporation,  which 
substantially  represents  all,  would  also  be  quoted. 

Q.  The  stock  that  is  issued  is  not  quoted  in  the  New  York  market,  other 
than  what  we  might  call  driblets  of  stock?    A.  Y'es,  sir. 

Q.  Ends  of  estates  and  stock  probably  put  in  the  hands  of  brokers  by 
persons  who  have  gotten  it  through  the  division  of  property;  it  has  come 
into  their  hands  in  that  way?     A.  Yes,  sir. 

Q.  In  other  words,  the  Standard  Oil  Company  stock  is  not  in  the  mar- 
ket?   A.  Not  now. 

Q.  Not  in  the  general  form  as  a  dealing  stock?     A.  No,  sir. 

Q.  That  is  avoided,  I  believe?  A.  We  have  carefully  avoided  listing  it 
on  the  Stock  Exchange  and  we  never  favored  making  it  a  speculative  affair 
at  all. 

Q.  Have  you  ever  known  when  your  stockholders,  your  directors,  offi- 
cers or  others  have  dealt  in  these  stocks?  A.  Oh,  I  think,  to  a  very  limited 
extent.  There  have  been  some  transactions  on  the  part  of  the  officers  in 
the  stocks,  usually  in  the  way  of  adding  to  their  interests.  I  think  I  have 
myself.  I  myself  must  plead  guilty  to  the  charge  of  having  bought  lOO 
shares  and  then  resold  them  again  within  the  past  10  years.  I  think  that 
represents  my  entire  transaction  in  the  stock  in  10  years. 

Q.  Are  not  usually  the  stock  transactions  confined  a  good  deal  among 
yourselves — transfers  among  the  main  holders  of  the  Standard  Oil  Com- 
pany's stock,  perhaps?  A.  There  is  a  large  number  of  shareholders — I 
think  I  stated  over  3,500. 

Q.  *So  that  there  is  not  any  secret  arrangement.  Of  course,  these  are 
simply  figures  and  we  want  facts.  The  idea  conveyed  to  the  commission  is 
that  the  stock  of  the  Standard  Oil  Company,  its  great  properties  and  every- 
thing else,  is  not  a  stock  that  is  usually  put  into  the  New  Y^ork  or  any  other 
market,  but  these  properties  and  everything  are  confined  to  a  narrow  scope 
of  40  or  50  people,  who  are  the  main  owners  and  managers?  A.  Undoubt- 
edly the  majority  is  held  within  as  limited  a  number  as  that. 

Q.  Have  you  at  any  time  in  the  history  of  the  company  ever  sought  to 
make  a  profit  through  your  stock?    A.  Oh,  no;   sir. 

Q.  At  any  time?  A.  Except  in  the  improvement  of  the  stock,  as  a 
holder;  but  not  as  a  speculator.  As  I  say,  I  think  that  within  the  past  10 
years  I  may  have  bought  and  sold  100  shares  of  stock.  That  shows  the 
extent  of  my  operation.     I  think  it  will  cover  fully  10  years. 

Q.  (By  Professor  JENKS.)  Will  a  list  of  the  dividends  that  have  been 
declared  on  the  stock  be  furnished  in  the  answer  to  the  schedule?  A.  Un- 
doubtedly. 

Q.  That  is,  as  far  as  you  would  judge?  A.  As  far  as  I  know — Mr.  Dodd 
has  the  matter  in  charge. 

Q.  Now,  will  you  take  a  moment  to  explain  the  formation  of  this  New 
Jersey  corporation  out  of  the  others?  A.  It  is  merely  that  a  New  Jersey 
corporation,  with  a  capital  of  $100,000,000  of  common  stock  and  $10,000,000 


*Black   faced   type  indicates  matter  omitted,  in  the  course  of  editing,  from  the 
official  report. 


250  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

of  preferred  stock,  is  formed,  that  shall  be  competent,  under  its  charter,  to 
own  the  stocks  of  these  various  corporations  and  to  buy  from  all  parties 
such  of  these  stocks  as  they  desire  to  sell.    Many  or  few  may  sell. 

Q.  It  is  expected  that  these  other  corporations  will  put  their  stock  in? 
A.  Not  the  corporations — the  individuals  owning  the  stock. 

Q.  (By  Vice-chairman  PHILLIPS.)  Would  it  not  be  a  case  of  a  $100,- 
000.000  company  absorbing  $500,000,000  of  stock?  What  would  they  give 
them  in  value  for  it?  A.  It  is  substantially  the  same  value  as  was  repre- 
sented in  the  Standard  Trust  ownership,  whether  it  is  one  or  two,  or  three 
or  four  hundred. 

Q.  Then  this  new  stock  would  be  put  out  at  300  or  400  per  cent,  pre- 
mium?   A.  No,  sir;  no  new  stock  is  being  put  out. 

Q.  (By  Mr.  SMYTH.)  The  capital  of  this  stock  company  only  aggre- 
gates $100,000,000?     A.     Yes,  sir. 

Q.  And  it  is  simply  a  reissue  under  the  New  Jersey  charter?  A.  Yes,  sir. 

Q.  The  original  capital  is  still  $100,000,000?  A.  Yes,  sir.  There  is  no 
new  capital  sold,  it  is  all  in  the  organization. 

Q.  It  is  simply  a  reissue  of  the  present  stock  to  the  present  stockholders 
under  another  name  and  another  charter?     A.  Yes,  sir. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Necessarily  carrying  the  same  value? 
A.  Yes,  sir;  necessarily  carrying  the  same  value.  In  other  words,  the  Standard 
Oil  Trust  is  dissolved  and  the  parties  interested  in  it,  receiving  their  equita- 
ble shares  in  the  various  companies,  sell  them  to  the  Standard  Oil  Company 
of  New  Jersey. 

Q.  (By  Professor  JENKS.)  Now,  will  you  explain  to  us  briefly  the  sys- 
tem of  paying  premiums  on  crude  oil?     A.  In  the  producing  districts? 

Q.  Yes,  sir:  in  the  producing  districts.  A.  The  premiums  are  usually 
the  result  of  the  question  of  the  value  in  the  different  parts  of  the  district. 
I  will  not  say  that  in  some  cases  they  have  not  been  also  somewhat  influ- 
enced by  competition.  Where  we  have  had  private  facilities  in  a  certain 
district  to  take  care  of  the  oil,  and  other  people  have  come  in  and  tried  to 
take  it  away  from  us,  I  cannot  say  we  have  not  in  some  cases  paid  more 
than  we  liked  to  pay.  Perhaps  that  is  so;  but  as  a  rule,  in  the  special  case 
of  the  Franklin  oil  and  the  Lima  oil  and  the  Scio  oil,  the  quality  influenced 
the  question  of  value  entirely. 

Q.  I  infer  from  what  you  say  that  at  times,  in  order  to  dispose  of  com- 
petitors, the  premiums  have  been  kept  on  until  the  competitors  have  been 
bought  out.  and  afterwards  dropped?  A.  As  I  said,  where  our  business  has 
been  attacked  we  have  endeavored  to  save  it. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Permit  me  one  word  on  that  ques- 
tion, because  I  am  somewhat  familiar  with  the  pipe  line  business  in  the  oil 
fields.  Has  not  the  Standard,  when  an  independent  line  went  a  short  dis- 
tance from  Oil  City,  put  a  premium  on  that  oil.  when  no  person  claimed  that 
that  oil  was  more  valuable  than  oil  on  other  lines?  It  was  not  put  on  there 
on  account  of  the  value  of  the  oil?  A.  As  I  have  already  said,  Mr.  Phillips, 
that  may  be  a  case  in  point  where  we  have  found,  after  providing  these 
special  facilities,  which  has  no  value  for  any  purpose  other  than  our  busi- 
ness, it  was  attacked  by  an  incomer  and  we  have  vigorously  attempted  to 
protect  it. 

Q.  You  put  on  a  premium  on  the  Mellon  line.  You  remember  they  built 
a  line  through  to  Philadelphia  and  established  refineries  there  and  the  oil 
became  quite  valuable.  You  put  a  premium  on  oil  in  Butler  county  and  in 
Washington  county.  You  put  on  a  premium  in  both  of  those  fields  at  that 
time,  did  you  not?    A.  We  undoubtedly  did. 

Q.  It  was  taken  off  when  you  purchased  the  line?  A.  Undoubtedly,  and 
we  would  do  the  same  thing  again.  We  could  not  do  less  and  be  in  the 
business. 

Q.  You  do  not  think  that  that  is  a  matter  of  discrimination?  A.  No,  sir. 
We  do  it  as  a  matter  of  self-protection. 

Q.  But  when  you  think  you  do  it  in  a  legal  way,  you  do  it;  whereas,  you 
could  not  give  a  rebate?     A.  Precisely. 

Q.  There  is  a  pipe  line  in  the  Scio  field,  if  I  understand  correctly,  and 
there  is  an  independent  line  there?    A.  There  is.  but  it  is  a  question  of  qual- 


JOHN   D.  ARCHBOLD.  SSI 

ity.  The  Scio  oil  is  of  a  very  superior  quality.  Very  naturally  we  could 
not  pay  a  premium  for  it  with  the  light  business  that  is  being  done,  were 
it  not  for  the  quality  itself. 

Q.  But  in  the  cases  to  which  I  have  referred,  in  Butler  county,  Alle- 
gheny county,  and  Washington  county,  it  was  not  a  question  of  value,  but 
a  question  of  competition?  A.  A  question  of  competition,  unquestionably. 
They  were  very  strong  competitors,  and  we  were  there  fighting  them  vigor- 
ously. 

Q.  (By  Professor  JENKS.)  Several  times  in  the  course  of  the  investi- 
gation statements  have  been  made  with  reference  to  the  very  decided  inter- 
est that  the  Standard  Oil  Company  has  taken  in  the  Producers'  Oil  Com- 
pany, Limited.  Statements  have  been  made  in  reference  to  their  buying 
stock  in  that  company  and  attempting  to  get  control  of  it.  Will  you  give 
your  version  of  that?  A.  They  bought  some  stock  of  the  Producers'  Oil 
Company,  Limited,  and  also  of  the  United  States  Pipe  Line. 

Q.  About  what  proportion  of  stock  did  you  buy?  A.  I  could  not  state 
from  memory  the  fractional  interest  in  the  United  States  Pipe  Line;  a 
larger  part  in  the  Producers'  Oil  Company. 

Q.  A  majority  of  the  stock  in  the  Producers'?  A.  No,  sir;  I  would  say 
considerably  less  than  a  majority. 

Q.  (By  Vice-chairman  PHILLIPS.)  That  is  in  the  Producers'  Oil  Com- 
pany, Limited?  A.  Yes,  sir;  in  the  Producers'  Oil  Company,  Limited.  *We 
found  much  difficulty  in  the  way  of  admission. 

Q.  I  always  understood  that  it  was  a  little  over  a  half  and  I  want  to  be 
corrected  by  Senator  Lee,  if  that  is  wrong.  A.  I  think  Senator  Lee  is  mis- 
taken as  well  as  yourself.  We  never  owned  more  than  a  half.  The  gentle- 
man who  bought  the  shares,  pending  the  ownership  decision,  did  own  more 
than  half.     We  never  did. 

Q.  But  it  was  under  your  control  and  you  worked  in  harmony?  A.  It 
was  until  we  sold  it. 

Q.  You  worked  in  harmony  with  that  other  person?  A.  We  generally 
worked  in  harmony  with  him. 

Q.  You  would  have  shared  the  management  with  him  if  there  had  been 
a  change  of  ownership?  A.  If  there  had  been  change,  we  should  have  hoped 
for  better  relationship,  but  it  did  not  come.  We  bought  that  interest  and 
were  so  opposed  in  the  exercise  of  ownership  that  we  sold  out.  We  sold  it 
in  good  faith  and  the  courts  have  fully  upheld  the  ownership  of  Colonel 
Carter,  the  gentleman  purchasing  it.  That  had  been  finally  adjudicated  in 
a  most  remarkable  decision,  in  which  the  court  held  that  he  was  the  bona 
fide  owner  but  that,  because  of  some  by-law  on  the  books  of  the  organiza- 
tion, he  could  not  have  any  voice  in  the  management.  We  have  had  no 
other  interest  in  it  whatever,  not  even  a  dollar's  worth  of  interest  in  it.  The 
sale  was  made  in  good  faith  and  it  was  sustained.  Our  interest  in  the  own- 
ership of  the  stock  of  the  United  States  Pipe  Line  Company  was  bought  at 
a  time  when  we  thought  the  business  ought  to  become  profitable.  It  was 
bought  as  an  investment  and  with  a  view  of  having  such  knowledge  as  we 
could  have  rightfully  through  such  ownership  as  we  should  acquire  in  it. 
There  is  nothing  extraordinary  about  it.  Our  ownership  was  contested  by 
the  gentleman  in  charge  of  the  pipe  line  and  the  courts  have  passed  on  it, 
upholding  our  rights  to  own  it,  and  giving  us  our  place  and  recognition  on 
the  board.  We  have  never  done  a  thing  to  hurt  the  business  of  the  com- 
pany, but  have  been  greatly  pained  that  the  results  from  it  have  not  been 
very  profitable  and  we  do  not  understand  why  they  have  not  been.  We  do 
think  that  one  of  these  days,  if  that  iniquitous  voting  trust  is  ever  dissolved, 
there  may  come  a  time  when  the  shareholders  will  wake  up  to  a  feeling 
that  others  than  those  who  have  managed  it  may  do  better  for  them.  That 
is  all  there  is  about  it. 

Q.  Did  not  all  of  the  shareholders  agree  to  the  voting  trust?  A.  You 
got  them  to  agree  to  it,  and  they  could  not  get  out  of  it.  There  have  been 
some  that  wanted  to  get  out  mighty  bad.    There  is  no  doubt  about  that. 


•Black    faced    type   indicate   matter    omitted,  in  the  course  of  editing-,  from  the 
official  report. 


252  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

Q.  You  controlled  a  little  over  half  of  the  stock  of  the  Producers'  Oil 
Company,  Limited,  through  Colonel  Carter,  and  you  endeavored  to  control 
the  company  and  that  was  carried  to  the  Supreme  Court.  It  was  organized 
as  a  partnership,  limited,  and  the  law  itself  requires  persons  to  have  a 
majority  of  interest  of  stock  in  order  to  vote,  and  the  by-laws  recognized 
the  same  thing.  The  Supreme  Court  decided  that  a  purchase  would  not 
make  your  party  a  partner  in  that  concern  any  more  than  I  would  be 
allowed  to  force  myself  in  with  another  partner  if  I  should  buy  one  partner 
out  in  a  dry  goods  business.  Was  not  the  law  framed  for  that  special  pur- 
pose, as  it  was  understood  in  Pennsylvania,  as  was  the  English  law?  A.  I 
must  correct  you  very  positively  once  and  for  all,  Mr.  Phillips,  when  you 
say  we  are  controlling  through  Colonel  Carter.  We  have  nothing  to  do  with 
Colonel  Carter,  and  the  stock  we  owned  was  sold  in  good  faith  and  he  owns 
it  entirely.  He  can  do  away  with  it.  He  can  give  it  away  or  tear  it  up  if 
he  pleases,  without  raising  any  question  with  us  or  anybody  else  that  I 
know  of.  I  am  not  here  to  criticise  the  law.  I  am  not  here  criticising  either 
judges  or  courts.  The  law  is  a  very  queer  one,  as  it  was  considered  in  that 
case.  A  man  was  adjudged  by  a  court  the  equitable  owner  of  a  majority  of 
the  stock  of  the  company  and  at  the  same  time  there  was  some  by-law,  of 
which  he  had  not  been  advised  by  the  company,  providing  he  should  be  kept 
out  of  the  management.  It  is  a  very  queer  law  to  me,  but  it  is  the  law  and 
I  am  not  here  to  criticise  it. 

Q.  Colonel  Carter  did  not  buy  that  stock  at  his  own  instance,  did  he? 
A.  He  did  buy  it  at  his  own  instance. 

Q.  And  without  any  consultation,  understanding  or  agreement  with  the 
Standard  Oil  Company?  A.  He  was  in  a  contention  regarding  the  matter  of 
his  individual  ownership.  He  became  enlisted  in  it  and  bought  our  stock,  as 
I  say,  the  same  as  you  or  anybody  else  could  have  bought  it.  We  were  glad 
enough  to  get  out  of  it. 

Q.  You  had  purchased  a  large  amount  of  that  stock?  A.  Yes,  sir;  and 
we  sold  it. 

Q.  (By  Professor  JENKS.)  Practically  you  have  said  several  times 
that  you  had  received  no  discriminating  favors  from  railroads  at  all  since 
the  passage  of  the  interstate  commerce  law.  The  statement  has  frequently 
been  made  that  railroads  do  make  discriminating  rates  on  freight  of  differ- 
ent kinds  at  different  times.  Have  you  in  your  business  had  reason  to 
believe  that  your  competitors  were  receiving  special  favors  against  you? 
A.  I  would  rather  not  go  into  that  question.  I  do  not  feel  that  I  am  prepared 
to  go  into  it.  That  we  have  strong  suspicion  on  that  line  is  true  enough, 
but  I  am  not  here  to  make  charges  against  other  people  on  that  line.  I  am 
not  here  prepared  to  do  it.  If  in  the  course  of  the  testimony  of  others  they 
should  allege  these  faults  against  us,  it  would  be  necessary  for  us  to  look 
up  the  records.    If  so,  I  would  be  glad  to  do  it. 

Q.  You  have  no  evidence  to  present  on  that  to-day?  A.  I  have  nothing 
to  present  at  all  on  that  subject. 

Q.  You  made  a  suggestion  toward  the  close  of  your  direct  testimony 
with  reference  to  legislation.  Would  you  consider  it  advantageous  to  the 
country  as  a  whole  to  have  greater  publicity  than  now  exists  in  reference  ta 
the  business  of  all  the  great  corporations?  For  example,  in  reference  to 
the  amounts  of  stock  that  are  represented  by  plant,  by  good  will,  the 
amounts  that  are  water,  and  so  on.  In  other  words,  would  you  consider  it 
an  advantageous  thing  for  the  country  to  have  substantially  the  English 
corporation  law  applied  in  this  country?  A.  If  it  could  be  put  under  Federal 
influence,  yes. 

Q.  Under  Federal  influence?     A.  Yes,  sir;   by  all  means. 

Q.  And  you  would  favor  a  recapitulation  of  accounts,  the  making  of  re- 
ports in  detail  to  the  Federal  government  and  so  on?  A.  Yes,  sir;  unques- 
tionably. 

Q.  Somewhat  of  the  same  system  that  is  applied  to  our  National  banks? 
A.  Unquestionably  I  would. 


JOHN  D.  ARCHBOLD.  253 

*Q.  I  may  perhaps  call  your  attention  to  the  fact  that  you  are  to  furnish 
to  us  later  the  official  record  giving  the  reports  of  the  English  commission 
in  reference  to  Russian  oil  and  an  account  of  the  transactions  of  the  Penn- 
sylvania Railroad  Company  in  the  early  days;  the  prices  of  refined  oil  in 
Chicago,  Cincinnati  and  New  York  City,  the  total  exports,  and  also  the 
Canadian  rate  of  freight  on  oil,  and  the  statement  of  that  gentleman  in  Port- 
land, Ore.,  in  reference  to  the  driving  of  competitors  out  of  business.  There 
was  still  one  other  question  asked — whether  you  would  furnish  the  list  of 
your  stockholders?     A.  That  I  cannot  answer. 

O.  You  said  you  would  consider  that  afterwards?     A.  Yes,  sir, 

Q.  (By  Vice-Chairman  PHILLIPS.)  Will  you  state  the  highest  price 
the  Standard  Oil  Company's  stock  has  reached  on  the  market?  A.  I  think 
the  present  is  about  the  highest  price. 

Q.  What  is  the  last  quotation?    A.  I  think  it  is  460  or  465. 

Q.  That  would  represent  $460,000,000  or  $465,000,000?  A.  If  it  could  all 
he  sold  at  that  price;  yes,  sir. 

Q.  Do  you  object  to  stating  to  the  commission  the  amount  of  dividends 
you  have  been  paying  on  that?  A.  That  is  all  to  go  in  the  statement  asked 
for. 

*Vice-Chairman  PHILLIPS.  Mr.  Archbold  notifies  the  commission  that 
the  dividends  paid  on  this  stock  will   be  furnished  in  another  statement. 

Professor  JENKS.  I  have  furnished  to  Mr.  Archbold  one  of  the  sched- 
ules that  had  been  prepared  by  this  commission  and  that  is  to  be  filled  out 
and  returned  in  ten  days. 

Q.  (By  Mr.  RATCHFORD.)  I  asked  Mr.  Archbold  a  question  this  morn- 
ing which  he  promised  to  answer  later  on,  but  I  have  not  heard  the  answer. 
Has  your  company  received  any  rebates  from  the  transportation  of  oils  of 
other  companies?    A.  It  has  not.     I  thought  I  had  answered  that. 

Q.  What  have  you  to  say  as  to  the  charge  so  generally  made  against 
your  company,  and  particularly  believed  by  the  Western  States,  to  the  effect 
that  the  small  producers  and  refiners  are  forced  to  sell  their  product  to  the 
Standard  Oil  Company?  That  is  a  phase  of  the  question  which  I  believe  has 
not  been  touched  on  to-day?    A.  I  think  we  have  gone  into  it  very  fully. 

Q.  (Ry  Mr.  RATCHFORD.)  I  want  to  know  what  the  witness  has  to  say 
with  reference  to  the  charges  that  are  so  generally  made  to  the  effect  that 
small  concerns,  individual  producers  and  refiners  are  forced  to  sell  their 
products  to  the  Standard  Oil  Company?  A.  I  do  not  know  of  any  such  a 
thing. 

Q.  It  is  the  charge  that  is  made  under  oath  in  Colorado  which  I  ought 
to  give  you  the  opportunity  to  deny  if  it  is  untrue?  A.  It  is  untrue;  there 
is  no  such  compulsion  of  any  kind.  There  is  no  method  of  compulsion  with 
reference  to  the  producers  or  refiners.  Indeed  as  a  matter  of  fact  we  buy 
very  little  of  the  product  of  any  small  refinery  that  amounts  to  anything, 
from  one  year's  end  to  the  other. 

Q.  Your  company  has  made  no  agreement  with  these  small  concerns? 
A.  No,   sir. 

Q.  Do  any  of  the  papers  you  have  submitted  in  evidence  here  to-day 
state  that  certain  other  companies  have  received  rates  of  transportation  from 
certain  points  cheaper  than  your  company  has  ever  received?  A.  I  cited 
only  one  case  in   connection  with  the  transportation. 

Q.  That  will  serve  as  an  illustration.  A.  In  the  transportation  of  the 
oils,  there  was  a  certain  railroad  in  Nev/  Jersey  and  the  United  States  Pipe 
Line  can  file  a  statement  on  that. 

Q.  (By  Mr.  KENNEDY.)  In  regard  to  Mr.  Ratchford's  question,  the 
testimony  in  Colorado  was  to  the  effect  that  the  distributing  company  there 
took  all  the  products  of  the  two  refineries  of  the  Colorado  field,  and  ex- 
Senator  Hill,  of  Colorado,  who  owns  one  of  these  refineries,  or  is  largely 
interested  in  one  of  them,  testified  that  the  distributing  company,  or  the 
merchandising  company,  which  bousrht  all  of  this  refined  product,  was  the 
western  concern  of  the  Standard  Oil  Company?  A.  They  might  do  so,  but  it 
is  entirely  a  voluntary  act  on  the  part  of  the  company  refining  the  oil.  I  am 
sure.     There  is  certainly  no  compulsion  about  it. 


*Black   faced   type  Indicates  matter  omitted,  in   the  course  of  editing,   from  the 
official  report. 


254  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

Q.  You  said  you  did  not  buy  the  product?  A.  We  do  not  buy  here  in 
the  East.  I  do  not  know  enough  about  it  to  question  the  possible  purchases 
of  the  local  production  in  Colorado.  The  local  production  may  be  used  by 
the  local  distributing  company. 

Q.  (By  Mr.  RATCHFORD.)  Is  there  such  a  thing  as  cutting  the  prices  on 
that  distributing  company  and  forcing  them,  from  business  reasons,  to  dispose 
of  their  products  to  your  company?  A.  I  do  not  know  how  we  could  do  so. 
It  might  prove  they  were  incompetent  competitors.  I  am  not  familiar  with 
our  relation  to  the  distributing  company  out  there,  but  I  know  it  must  be 
voluntary.     There  is  certainly  no  compulsion  about  it. 

Q.  (By  Mr.  SMYTH.)  Do  we  understand,  Mr.  Archbold,  from  your  tes- 
timony, that  you  claim  the  Standard  Oil  Company  has  been  a  vast  benefit 
to  the  oil  industry  in  the  development  of  that  trade  in  the  United  States 
and  abroad?    A.  I  feel  and  believe  that  it  is  of  vast  benefit  to  the  country. 

Q.  Do  you  think  it  has  been  a  benefit  to  the  American  people?  A.  I 
think  it  has  been  a  benefit  to  the  American  people.  It  has  been  a  benefit  to 
the  American  producer  of  oil.  I  firmly  believe  that  America  would  not  have 
the  markets  of  the  world  to-day  if  it  had  not  been  for  the  Standard  Oil 
Company. 

Q.  You  have  stated  that  since  the  passage  of  the  interstate  commerce 
law,  which  you  favored,  after  1887  your  company  received  no  rebates  of  any 
kind  from  any  railroad  company  or  transportation  company?  A.  I  say  we 
have  obeyed  the  strict  letter  of  the  law  in  all  that  pertains  to  the  interstate 
transportation. 

Q.  And  yet  you  say  that  since  that  period  the  prosperity  of  your  com- 
pany has  been  greater  than  ever  before?   A.  Yes,  sir. 

Q.  How  do  you  account  for  that  state  of  affairs?  A.  I  have  said  that 
it  is  the  result  of  the  greater  stability  that  has  attached  to  the  trade  since 
the  passage  of  the  interstate  commerce  law.  Of  course  it  is  accounted  for 
also  by  the  extension  of  the  business,  the  utilization  of  the  by-products,  and, 
I  think,  a  very  largely  controlling  feature  is  the  greater  stability  of  busi- 
ness incident  to  the  stability  of  rates  through  the  interstate  commerce  law. 

Q.  I  suppose  the  Standard  Oil  Company  buys  the  best  goods  in  the 
market  for  the  conduct  of  their  business?  A.  They  are  on  the  alert  at  all 
times  for  the  best. 

Q.  And  probably  their  success  is  due  to  their  nerve  and  ability?  A.  It 
is  unqualifiedly. 

Q.  And  their  money?  A.  And  to  the  further  fact,  which  I  must  repeat 
even  with  some  little  appearance  of  monotony,  that  we  treat  the  trade  fairly. 
We  realize  that  no  business  can  have  any  permanent  success  that  is  not 
carried  on  on  fixed  principles,  and  you  will  not  find  our  customers  complain- 
ing about  their  treatment. 

Q.  (By  Mr.  CLARKE.)  You  have  stated  that  you  would  favor  the  forma- 
tion of  National  corporations?    A.  Yes,  sir. 

Q.  Would  you  have  the  capital  of  these  corporations  limited  by  law, 
or  by  a  National  commissioner  of  corporations,  or  would  you  have  it  un- 
limited? A.  I  would  have  it  unlimited  and  would  put  about  its  issue  such 
restrictions  as  to  the  value  involved  in  it  as  should  fairly  protect  the  com- 
munity. 

Q.  By  the  community  you  mean  the  community  of  individuals  as  well 
as A.   (Interrupting.)      I   mean   the   general    public. 

Q.  The   community   of  consumers?    A.  Yes,    sir. 

Q.  Would  you  have  these  National  corporations  subject  to  the  supervi- 
sion of  a  commissioner?  A.  Unquestionably. 

Q.  Or  some  other  official?  A.  Undoubtedly  as  in  the  case  under  the 
English  corporation  law. 

Q.  Do  you  not  think  that  one  of  the  greatest  evils  of  State  corporations 
is  the  lack  of  supervision?  A.  The  lack  of  supervision  and  the  entire  lack 
of  uniformity  among  the  States. 

Q.  Do  you  think  that  the  formation  of  National  corporations  would 
overcome  most  of  the  objects  that  are  now  raised  to  the  combinations  com- 
monly called  trusts?  A.  I  do.  I  believe  it  would  do  away  with  the  talk  of 
monopoly  and  make  every  business  free  to  all  comers  within  the  law  and 
under  the  provisions  of  the  law. 


HENRY   H.   ROGERS.  255 

Q.  (By  Mr.  KENNEDY.)  Favoring  National  charters  and  National 
supervision,  as  you  say,  would  you  go  to  the  extent  of  favoring  an  inspec- 
tion of  the  books  and  the  affairs  of  these  concerns  as  the  National  banks  are 
inspected  by  government  officials?  A.  I  have  not  made  a  study  of  the 
subject  so  as  to  make  a  statement  in  detail  just  what  the  supervision  and 
restriction  should  be.  I  should  say  this  question  ought  to  be  very  care- 
fully considered  before  expressing  any  opinion,  and  I  can  hardly  answer 
you  to-day.  It  should  be  a  fair  supervision  and  the  making  of  statements 
that  would  enlighten  the  public. 

Q.  (By  Mr.  FARQUHAR.)  Is  it  not  a  fact,  Mr.  Archbold,  that  con- 
sidering that  you  control  so  much  of  the  product  of  petroleum  in  this  coun- 
try, and  having  your  plants  so  widely  scattered,  when  you  acquire  by  pur- 
chase or  through  the  genius  of  your  own  men  the  formula  of  a  better  oil  or 
a  better  way  of  producing  oil,  that  you  can  beat  all  competitors  by  the  fact 
that  you  can  put  it  into  effect  in  every  single  one  of  your  plants?  Has  that 
not  been  one  of  the  great  reasons  of  your  success — the  carrying  of  your  oils 
all  over  the  country,  made  in  the  same  way  at  each  refinery,  and  accepted 
as  standard  wherever  sold?    A.  It  is  undoubtedly. 

Q.  And  that  the  smaller  concerns,  independent  or  otherwise,  can  onl> 
work  a  formula  within  themselves,  whereas,  when  you  acquire  a  formula 
you  can  put  it  in  50  or  60  refineries?  A.  That  statement  is  entirely  correct. 
That  is  one  of  the  great  secrets  of  success  in  our  business,  particularly  be- 
cause of  our  combination  alike  of  capital  and  skill. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Have  you  any  supplementary  state- 
ment to  make?      A.  No,  sir;    *l   think  you  have  granted   me  every  courtesy. 

Vice-Chairman  PHILLIPS.  Mr.  Archbold,  I  am  authorized  by  the  com- 
mission to  extend  their  thanks  to  you  for  your  very  full  statement  in  regard 
to  the  Standard  Oil  Company.     I   am  obliged  to  you  for  appearing  before   us. 

The  WITNESS.  I  thank  you  very  cordially,  Mr.  Chairman,  for  your 
kindness  and  your  patience  with   me. 

Vice-Chairman  PHILLIPS.  If  the  commission  will  give  attention  one 
minute  the  chair  has  a  statement  to  make.  The  chair  will  state  that  when 
Mr.  Rogers  is  through  he  (the  chairman)  desires  to  be  put  on  the  stand  to 
make  some  corrections  or  statements  in  regard  to  Mr.  Archbold's  testimony 
which  was  given  this  forenoon.  I  desire  to  be  put  upon  the  stand  because, 
as  it  now  appears,  I  do  not  think  it  is  just  to  the  commission.  I  care  but 
little  for  my  own  personality,  but  I  care  a  great  deal  for  the  reputation  of 
this  commission,  and  at  the  conclusion  of  this  hearing  I  shall  take  the  stand 
myself. 

On  motion  the  commission  adjourned  until  the  following  morning  at 
10  o'clock. 

CHAPTER  XIII. 

TESTIMONY  OF  HENRY  H.  ROGERS,  VICE-PRESIDENT 

OF  THE  STANDARD  OIL  COMPANY 

OF  NEW  JERSEY. 

Mr.  Henry  H.  Rogers,  of  New  York  City,  one  of  the  vice-presidents  of 
the  Standard  Oil  Company  of  New  Jersey  and  president  of  the  National 
Transit  Company,  appeared  before  the  commission  September  9,  1899,  having 
been  present  when  Mr.  Archbold  gave  his  testimony  on  the  previous  day. 
He  was  on  the  stand  only  a  short  time  replying  to  such  questions  as  were 
asked  him.  Many  of  these  questions  were  mere  repetitions  of  questions 
that  were  asked  Mr.  Archbold  and  they  received  substantially  the  same 
replies.  He  had  heard  Mr.  Archbold's  testimony,  and  he  said  he  agreed 
substantially  with  all  the  former  had  said. 


♦Black   faced   type   indicates   matter  omitted,  in  the  course  of  editing,  from  the 
ofRcial  report. 


■256  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

In  reply  to  questions  by  Professor  Jenks,  Mr.  Rogers  said,  speaking 
from  memory,  he  thought  the  charges  on  the  pipe  line  were  lowered  to  20 
cents  about  20  years  ago.    He  said: 

"You  will  understand  that  the  pipe  line  charges  of  20  cents  a  barrel  are 
what  are  termed  'gathering  charges.'  That  is  to  say,  the  oil  is  taken  from 
the  wells  of  the  producer  and  delivered  at  the  stations  of  the  pipe  line  to 
their  tanks.  Wherever  the  oil  is  found  we  run  a  line  to  it.  We  are  fre- 
quently called  upon  to  run  a  line  15  or  20  miles.  We  have  never  made 
an  extra  charge  for  that,  and  while  in  some  instances  we  pump  oil  but  a 
very  short  distance  to  the  tanks  in  other  instances  we  pump  it  15  and  20 
and  25  miles,  so  that  we  consider  it  an  average  rather  than  an  arbitrary 
charge." 

Q.  (By  Mr.  FARQUHAR.)  You  mean  not  an  average,  but  an  equalizing 
charge?    A.  An  equalizing  charge,  if  you  please  to  term  it  so. 

Q.  (By  Mr.  SMYTH.)  It  puts  all  the  producers  on  the  same  footing  as 
to  that  charge?  A.  It  gives  the  producer  who  is  a  patron  of  our  line,  an 
advantage  always,  in  feeling  that  no  matter  where  he  finds  oil  in  the  vicinity 
of  the  pipe  line  system,  it  may  be  15  or  20  miles  away,  if  he  is  a  patron  of 
our  line  and  he  has  a  producing  well  on  a  paying  basis,  we  will  spend 
the  money  to  run  the  line  to  him  and  take  care  of  his  oil. 

Q.  (By  Professor  JENKS.)  Is  there  any  competition  in  the  pipe  line 
business?     A.  Yes,  sir. 

Q.  What  is  the  competition?  A.  The  competition  in  the  Butler  county 
field  is  with  the  Producers  &  Refiners'  Pipe  Lines.  The  competition  in 
the  Ohio  field  is  with  the  Manhattan  Oil  Company,  and  in  the  Indiana  field 
v\'ith  the  Cudahy  Pipe  Line  Company. 

Q.  (by  Vice-Chairman  PHILLIPS.)  Any  competition  in  the  Scio  field,  in 
Ohio?  A.  Yes.  sir,  there  is  a  trifling  competition.  The  competition  in  the 
Scio  field  is  about  6,000  barrels  a  day  of  the  average  run.  The  run  of  the 
outside  lines  last  month  was  between  400  and  500  barrels  a  day. 

Q.  (By  Professor  JENKS.)  These  competing  pipe  lines  that  you  speak 
of  are  run  on  the  same  territory,  so  that  they  can  equally  as  well  take  the 
product  that  you  otherwise  would  take?  A.  Well,  if  they  had  the  capacity 
to  handle  it,  yes,  sir,  *but  many  of  them  have  not. 

Q.  I  mean  as  regards  the  location?  A.  Well,  so  far  as  the  location  goes, 
yes,  sir. 

Q.  Are  the  prices  of  this  independent  pipe  line  in  Pennsylvania  the 
same  as  yours?    A.  I  don't  know;  I  can't  answer  that  question. 

Q.  You  do  not  know  in  reference  to  their  charges?  A.  I  don't  know;  I 
have  hearsay  evidence,  that  is  all. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Mr.  Rogers,  have  you  any  premium 
on  oil  in  any  competing  field  except  the  Scio  field  now?    A.  Yes.  sir. 

Q.  (By  Vice-Chairman  PHILLIPS.)  What  other  field  have  you  a  pre- 
mium on?    A.  Tiona  and  the  Franklin  field. 

Q.  (By  Vice-Chairman  PHILLIPS.)  The  Franklin  field  is  a  lubricating 
oil  field,  is  it  not?    A.  The  oil  is  superior  to  the  ordinary  petroleum. 

Q.  (By  Vice-chairman  PHILLIPS.)  And  the  oil  in  the  Tiona  field  is  also 
superior?    A.  Yes,  sir. 

Q.  (By  Vice-chairman  PHILLIPS.)  That  is  generally  understood?  A. 
Yes,  sir. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Now  the  Scio  field  is  a  newer  field. 
Do  you  understand  that  to  be  puperior?    A.  Yes.  sir.  it  is 

Q.  (By  Vice-Chairman  PHILLIPS.)  Now,  Mr.  Archbold  testified  yester- 
day that  you  had  placed  premiums  on  oil  in  fields  where  there  was  no  dif- 
ference, no  special  difference,  in  the  quality  of  the  oil.  as,  for  instance, 
in  Butler.  Allegheny  and  Washington  counties,  when  there  was  competition 
there.  Do  you  understand  that  to  be  substantially  correct,  Mr.  Rogers?  A.  I 
understood  Mr.  Archbold's  statement  to  be  absolutely  correct. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Now,  Mr.  Archbold  testified  that 
they  put  this  premium  on  and  did  not  eive  a  rebate.  Now  I  would  like  you 
to  explain  to  this  commission  the  difference  between  paying  a  rebate  of  10 


♦Rlark   ffired   type   indicates   matter  omitted,  in  the  course  of  editing,   from  the 
official  report. 


HENRY   H.    ROGERS.  257 

or  15  or  20  cents  per  barrel  on  oil  or  granting  a  reduction  in  the  transporta- 
tion prices  from  time  to  time  to  the  same  parties.  Would  it  not  in  effect 
be  the  same?  A.  First,  I  would  lil^e  to  say  that  as  I  understand  Mr.  Arch- 
bold,  he  did  not  testify  that  we  had  been  the  first  to  put  premiums  on  the 
oil,  but  that  it  had  been  brought  about  by  competition.  I  do  not  think  the 
money  that  goes  into  the  producer's  pocket  as  an  advanced  price  for  his  oil 
can  be  classed  as  a  rebate,  because  the  producer  loses  interest  in  the  oil  as 
soon  as  it  gets  into  the  pipe  line.  The  pipe  line  charges  are  paid  by  the  man 
who  transports  the  oil  for  refining  or  export. 

Q.  (By  Vice-chairman  PHILLIPS.)  Now,  do  they  not,  all  that  ship  in 
those  fields,  get  an  advantage  over  other  producers  in  other  fields,  the  same 
as  if  it  was  a  rebate.    Is  it  not  another  name  for  the  same  thing?   A.  No,  sir. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Or  nearly  so?  A.  Not  nearly  so, 
as  I  have  explained.  Remember  that  the  producer  loses  interest  in  the  oil 
the  very  instant  that  he  delivers  it  to  the  pipe  line.  If  he  gets  a  premium 
on  the  oil  the  producer  is  benefited  by  it.  He  has  surrendered  it  to  the  man 
who  owns  the  oil  after  it  goes  into  the  pipe  line  for  refining  or  for  sale  in 
foreign  markets,  for  export.  The  producer  has  no  interest  in  the  oil  after  he 
parts  with  it  at  his  well. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Could  he  not  get  a  larger  price  for 
it  if  there  was  a  rebate  on  that  oil  in  selling  it?  A.  I  cannot  answer  such 
a  hypothetical  question. 

Q.  (By  Mr.  SMYTH.)  Do  we  understand  that  there  are  two  instances 
or  two  fields  where  you  say  there  is  a  premium  that  is  due  to  the  superior 
quality  of  the  oil?    A.  Yes,  sir. 

Q.    (By  Vice-Chairman   PHILLIPS.)      At  the  present  time?    A.   Yes,  sir. 

*Vice-Chairman  PHILLIPS.  At  the  present  time  that  we  are  speaking 
about  there  are  premiums  in  other  fields  where  there   is  no  difference. 

Q  (By  Mr.  SMYTH.)  1  understand  that  there  is  no  premium  allowed 
now  except  in  two  cases  where  the  oil  is  of  a  superior  quality?  A.  There 
are  three  points  to-day  *where  the  oil   is  of  a  superior  quality. 

Q.  And  at  these  three  points  there  is  a  premium  allowed?  A.  There 
is  a  premium,  yes,  sir,  and  there  is  a  difference  in  the  price  of  oil  in  Ohio. 
That  is  to  say,  there  are  two  fields  in  Ohio,  one  called  the  North  Lima  and 
the  other  the  South  Lima  field.  The  oil  of  the  North  Lima  field  is  more 
valuable  than  the  oil  of  the  South  Lima  field  and  there  is  a  difference  in 
price  of  five  cents. 

Q.  And  that  difference  goes  to  the  producer?    A.  Yes,  sir. 

Mr.  Rogers  was  not  sufficiently  familiar  with  the  Canadian  branch  of 
the  Standard  Oil  Company's  business  to  give  testimony  in  regard  to  it  and 
in  reference  to  rates  to  Canadian  points  10  years  ago. 

Mr.  Rogers  was  questioned  regarding  the  way  certificate  holders  in  the 
old  Standard  Oil  Trust  received  stock  in  the  constituent  companies,  re- 
garding the  credit  balances  of  the  National  Transit  Company  and  the 
amount  of  crude  oil  in  the  pipe  lines  of  the  National  Transit  Compauy.t 


*Black  faced  type  indicates  matter  omitted,  in  the  course  of  editing,  from  tlie 
official  report. 

tin  resFonse  to  a  request  by  Professor  Jenks,  Mr.  Rogers,  some  weeks  after 
giving  liis  testimony,  furnished  a  statement  of  the  credit  balances  in  the  National 
Transit   Company,   as   follows:     [In   barrels  of  crude  oil  of  42  gallons  each.] 

Time.  Barrels.  Time.  Barrels. 

June   30,    1889 3,217,T49.1G        December  31,  1894 1,644.2.».1.3 

December  31,  1889 3,160,156.81        June  -30,  1895 783,592.96 

June  30,  1890 3,794,873.84        December  .31,  1895 1,809,325.78 

December  31,  1890 2,758,654.30        June  30.  1896 3,275.07.5.49 

June  30,  1891 5,403,170.38        December  31,  1896 4,215.060.28 

December  31,  1891 3,201,351.34        June  30,  1897 5,413,417.10 

June  30,  1892 5,987,.319.53        December  31,  1897 4.523.0.54.39 

December  31,  1892 5,532,079.21        June  30,  1898 4,4.50,703.02 

June  30,  1893 4,340,713.15        December  31,  1898 3.822.997.28 

December  31,  1893 2,705,563.20        June  30.  1899 4,910.451.22 

June  30,  1894 2,453,417.82        September  30,  1899 5,349,392.54 

Estimate  supplied  later:    The  estimate- d   amour;t   of   what   is   known   as   Pennsyl- 
vania crude  oil  in  pipes  of  five  inches  in  diameter    and    over,    of   the    National    Transit 
Company  and  connecting  pipe  lines,  as  of  7  o'clock  a.  m.,  October  1,  1899,  in  barrels 
of  42  gallons  each,  is  535,528  barrels. 
17 


258  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

Q.  (By  Mr.  SMYTH.)  There  was  a  matter  mentioned  yesterday  that 
"several  of  the  commissioners  did  not  clearly  understand.  That  was  in  ref- 
erence to  a  pipe  line  (this  was  in  Mr.  Archbold's  testimony)  in  which  the 
Standard  Oil  Company  owned  a  half-interest.  I  think  it  was  in  Pennsyl- 
vania?    A.  The  Producers'   Oil  Company,  was  it  not? 

Q.  The  Standard  Oil  Company  I  understood  owned  a  half-interest  and 
sold  it  to  Colonel  Carter,  who  was  a  minority  stockholder?    A.  Yes,  sir. 

Q.  With  this  company's  interest  he  had  the  control  of  the  company, 
that  is,  he  owned  a  majority  of  the  stock,  but  under  some  decision  of  the 
courts  of  Pennsylvania  he  is  not  allowed  to  control  or  manage  that  com- 
pany. We  want  to  ask  you  who  owns  the  minority  shares?  A.  I  only  know 
from  hearsay,  Mr.  Smyth.     The  report  is  that  Mr.  Phillips  and  his  friends. 

Q.  The  Pure  Oil  Company?  A.  Well,  not  the  Pure  Oil  Company.  The 
Pure  Oil  Company  is  a  company,  you  understand,  that  contemplates  the 
ownership  of  the  Producers'  Oil  Company,  the  Producers  &  Refiners'  Pipe 
Line  Company,  the  United  States  Pipe  Line  Company  and  numerous  re- 
fineries in  the  oil  regions,  and  one  or  more  at  the  seaboard.  In  practice  it 
would  prove  to  be  a  trust  if  they  carry  it  out.  What  we  understand  they 
want  is  practically  a  repetition  of  the  Standard  Oil  Trust — a  very  wise  thing^ 
to  do,  I  conclude. 

Q.  These  individuals  who  own  a  minority  of  the  stock,  according  to  the 
testimony  yesterday,  really  control  the  management  of  the  company?  A.  It 
seems  so,  yes,  sir. 

Q.  (By  Mr.  SMYTH.)  You  state  that  the  Standard  Oil  Company  has 
no  interest  whatever  in  Colonel  Carter's  interest?    A.  None  whatever. 

*Q.    (By  Vice-chairman   PHILLIPS.)      At  the  present  time?    A.  Yes,  sir. 

Q.  (By  Mr.  RATCHFORD.)  Was  it  conceded  in  the  opinion  of  the  court 
that  Carter  did  own  a  majority  of  the  stock?    A.  I  so  understood  it. 

Q.  You  could  not  positively  give  testimony  as  to  that?  A.  Only  from 
hearsay. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Was  not  Mr.  Carter  furnished  the 
money  to  buy  that  stock  by  a  trust  company  in  New  York?  A.  That  I 
do  not  know;   I  think  not. 

Q.  (By  Vice-Chairman  PHILLIPS.)  And  he  was  introduced  to  that 
company  by  a  member  of  the  Standard  Oil  Company?  A.  What  was  the 
name  of  the  company? 

*Q.  (By  Vice-Chairman  PHILLIPS.)  Or  they  introduced  them  to  him? 
A.   I  do  not  know  the  name  of  the  company. 

Q.  (By  Vice-Chairman  PHILLIPS.)  I  do  not  know  the  name,  the  facts 
can  be  ascertained  very  well.  A.  He  may  have  been  introduced  to  the  com- 
pany, I  could  not  answer  that  question  for  the  moment.  I  suppose  that  if 
Mr.  Carter  or  Mr.  Phillips  came  to  me  I  would  feel  perfectly  free  to  intro- 
duce them. 

Q.  (By  Vice-Chairman  PHILLIPS.)  One  question  before  we  leave  this 
matter.  Did  you  not  understand  Mr.  Archbold  yesterday  to  state  that  the 
Standard  Oil  Company  or  Trust  or  the  United  Pipe  Lines  at  one  time  con- 
trolled a  majority  of  this  stock  that  was  sought  to  be  voted  by  Colonel 
Carter?  A.  He  testified,  I  think,  that  they  did  not.  The  Standard  Oil  Com- 
panj^  never  owned  any  of  the  stock  of  the  parties  in  interest. 

Q.  (By  Vice-Chairman  PHILLIPS.)  But  the  independent  companies, 
owned  or  controlled  by  the  Standard  Oil  Company,  did?  A.  It  seems  to  be 
a  question  of  memory  between  Senator  Lee  and  Mr.  Archbold  and  myself 
as  to  whether  Colonel  Carter  owned  a  majority  of  the  stock  or  we  owned 
a  majority  of  the  stock  before  his  purchase.     I  cannot  answer. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Can  these  facts  be  ascertained  from 
the  proceedings  brought  and  the  hearings  held  in  New  York?  A.  There  were 
no  proceedings  brought  there. 

Q.  (By  Vice-Chairman  PHILLIPS.)  I  am  not  really  certain  whether  it 
was  brought  there  or  not,  but  from  the  Senator  I  understood  that  there  were 
some  proceedings  and  some  testimony  taken  in  New  York.  A.  Well,  I  never 
heard  of  it. 


♦Black  faced  type  Indicates  matter  omlttod,  In  the  course  of  editing,  from  the 
official  report. 


HENRY   H.   ROGERS.  259 

*Q.  (By  Vice-chairman  PHILLIPS.)  Weil,  then  I  am  mistaken  about 
that  point.  A.  I  would  like  to  say  that  Colonel  Carter  did  commence  an 
action  in  Pennsylvania  and  the  court  decided  that  he  was  the  bona  fide 
owner  of  the  stock  and  that  he  ought  to  be  allowed  to  vote  it,  but  under  the 
rules  he  could  not  do  it. 

Q.  (By  Vice-Chairman  PHILLIPS.)  And  that  was  carried  to  the  Su- 
preme Court  and  affirmed  there?  A.  I  cannot  answer  as  to  that.  I  know 
nothing  of  it. 

Q.  (By  Mr.  RATCHFORD.)  I  was  going  to  follow  my  previous  ques- 
tion with  a  second  one,  but  other  matters  were  interjected.  If  this  is  an 
organization,  I  would  like  to  have  the  name  of  it  mentioned.  Is  it  an  or- 
ganization under  the  laws  in  the  State  of  Pennsylvania?  A.  May  I  ask  which 
company? 

Q.  The  company  to  which  you  referred;  I  think  you  referred  to  it  as 
"Mr.  Phillips'  friends"?  A.  The  Pure  Oil  Company  is  an  organization  under 
the  laws  of  the  State  of  New  Jersey. 

*Q.  Would  the  witness  object  to  a  suggestion?     A.   No,  sir,  not  at  all. 

Q.  That  in  the  taking  of  testimony,  I  venture  to  make  the  suggestion, 
Mr,  Chairman,  that  where  your  purpose  will  be  served  by  referring  to  the 
company  would  it  not  be  better  to  do  so,  than  to  refer  to  individual  mem- 
bers of  the  company?  A.  I  think  I  answered  the  question.  I  intended  to 
answer  the  question   when  the  company  was   referred  to. 

Q.  When  the  company  was  referred  to,  who  did  you  refer  to  in  the  be- 
ginning?    A.   I    referred  to  the  company,   I   did   not   mean   any  offense   at  all. 

Q.  (By  Mr.  SMYTH.)  I  understood  the  witness  to  say  that  the  minority 
of  the  stock  in  that  pipe  line  was  owned  by  Mr.  Phillips  and  his  friends, 
and  that  he  did  not  know  who  they  were?  A.  I  think  I  was  rather  pressed 
along  there. 

Mr.  KENNEDY.     I  think  he  was  asked  who  owned  the  minority  stock? 

Mr.  SMYTH.  I  was  asking  who  the  minority  stockholders  that  con- 
trolled  the   company  were.     A.   I    so  understood   it,   Mr.   Smyth. 

The  witness  said  he  favored  Mr.  Archbold's  suggestion  of  conducting  a 
large  interstate  business,  such  as  is  carried  on  by  the  Standard  Oil  Com- 
pany, under  a  National  incorporation.  He  thought  that  the  English  laws 
that  had  been  referred  to  when  Mr.  Archbold  was  on  the  stand  on  the  pre- 
vious day,  were  most  admirable  in  their  operation  and  most  encouraging 
to  capital  and  protective  to  labor  and  everybody  in  interest.  If  there  was 
such  an  incorporation  law  in  the  United  States  he  would  be  willing  to  or- 
ganize under  it  instead  of  under  State  laws.  He  favored  the  publication  of 
reports  and  a  supervision  by  the  Federal  authorities  of  the  stock  issued.  He 
thought  that  such  National  incorporation  could  not  be  secured  without 
amending  the  constitution,  which  he  was  in  favor  of  doing.  Such  an  in- 
corporation would  lessen  litigation  in  respect  to  corporations  and  would 
especially  benefit  new  and  young  industries.  ■ 

Speaking  of  over-capitalization,  the   witness  said: 

"Well,  of  course  there  may  be  a  large  amount  of  watered  stock  of  that 
kind  and  undoubtedly  many  of  the  properties  that  are  put  in  these  organiza- 
tions can  be  reproduced  for  less  money  than  has  been  put  into  them,  but  at 
the  same  time  you  must  not  forget  that  in  the  organization  of  a  great  busi- 
ness there  has  been  a  great  deal  of  time  and  money  spent  that  could  not  be 
accounted  for.  Take,  if  you  please,  the  case  of  a  newspaper  in  New  York 
City;  it  has  a  large  circulation  there,  their  plant  could  probably  be  repro- 
duced for  $100,000,  yet  the  paper  would  sell  readily  for  half  a  million  dol- 
lars. A  certain  amount  of  allowance  for  good  will  of  that  character  must 
necessarily  go  with  any  business.  It  is  practically  the  same  in  the  case  of 
a  lawyer.  A  man  of  standing  in  the  law  and  of  years  of  experience,  very 
naturally  receives  larger  fees  than  a  younger  man  who  has  just  taken  his 
diploma.  *l  think  that  when  you  come  to  consider  many  of  these  economic 
questions  you  will  find  that  the  over-capitalization  has  not  been  so  large  a 
feature  in  bringing  out  these  properties  as  perhaps  the  desire  on  the  part 
of  those  who  are  interested  in  certain  properties  to  get  them  into  a  tangible 

♦Black  faced  type  indicates  matter  omitted,  in  the  course  of  editing,  from  the 
ofRclal  report. 


260  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

*form  to  market,  enabling  their  estates,  if  you  please,  to  be  settled  easily  and 
readily.       *       *       *       * 

"If  a  corporation  is  over-capitalized  and  is  unable  to  pay  dividends  on  its 
capitalization  the  stock  will  depreciate  in  value.  All  investors  certainly 
look  first  to  the  security,  and  then  for  the  amount  of  return  they  get  for 
their  money.  They  will  take  a  little  gamble  on  an  over-capitalized  com- 
pany if  they  feel  it  can  earn  dividends  and  pay  them.  They  will  be  very 
glad  to  invest  their  money  in  stock  that  sells  for  75  and  pays  6  to  8  per  cent, 
in  dividends.  They  will  take  some  chances  and  invest  it  when  they  may 
not  be  willing  to  put  it  away  in  their  banks." 

Q.  (By  Mr.  SMYTH.)  It  was  stated  by  Mr.  Boyle,  in  his  testimony  the 
day  before  yesterday,  that  to  his  knowledge,  in  Pittsburg,  numerous  articles 
were  published  from  time  to  time  attacking  the  Standard  Oil  Company.  He 
said  they  were  published  gratuitously  as  communications,  but  the  replies 
of  the  Standard  Oil  Company,  when  they  were  made,  had  to  be  paid  for 
always,  even  if  published  in  the  local  columns  or  in  the  news  columns.  Can 
you  give  us  any  information  about  that?  A.  I  do  not  think  we  have  under- 
taken to  answer  these  anonymous  communications  very  much.  I  know  of  a 
case  (I  do  not  think  I  would  like  to  be  personal  about  it)  where  I  at  one 
time  undertook  to  get  in  a  little  communication  in  reply  to  an  article,  and 
I  received  a  bill  of  $12,  and  I  paid  it. 

Q.  The  Standard  Oil  Company  receives  no  favors  from  the  press  in 
general  in  the  way  of  defending  them  or  publishing  their  communications? 
A.  I  think  the  papers  publish  a  great  many  things  that  are  prejudicial  to 
the  Standard  Oil  Company,  perhaps  through  ignorance  about  it.  But  we  are 
so  busy  that  we  haven't  time  to  think  much  about  it.  But  I  think  the  news- 
papers mean  to  be  generally  pretty  fair  and  undoubtedly  would  open  their 
columns  to  us  freely  if  we  cared  to  talk.  But  talk  is  so  awful  cheap  in  these 
days  that  we  have  preferred  to  keep  on  sawing  wood,  and  so  we  haven't 
had  our  side  of  the  case  fairly  presented,  perhaps. 

The  witness,  in  reply  to  a  question  by  Mr.  Phillips,  said  he  thought  the 
capital  stock  of  the  National  Transit  Company  was  $25,000,000.  It  operates 
under  a  charter  granted  by  the  State  of  Pennsylvania  a  great  many  years 
ago,  which  was  considered  a  special  charter.  He  did  not  recall  the  name  of 
the  company  to  which  it  was  granted,  but  in  due  time  it  came  into  the 
possession  of  the  National  Transit  Company.  After  the  constitutional  con- 
vention of  the  State  of  Pennsylvania,  held  about  20  years  ago,  no  special 
charters  were  granted,  so  that  they  had  an  advantage  through  that  par- 
ticular charter.  It  was  practically  the  same  charter  that  was  given  to  the 
Pennsylvania  Company,  which  is  owned  by  the  Pennsylvania  railroad.  The 
charter  is  liberal  in  its  form.  He  did  not  know  what  was  paid  for  this 
charter. 

He  said  the  charge  on  their  main  trunk  line  for  carrying  oil  to  the  sea- 
board at  New  York  was  45  cents.  The  cost  of  a  pipe  line  to-day  would  be 
100  per  cent,  more  for  some  of  the  materials  than  it  would  have  been  a  year 
or  two  ago.  He  thought  that  the  charge  of  20  cents  per  barrel  for  piping  the 
oil  in  the  field  was  very  reasonable.  When  a  well  in  a  certain  locality  gives 
out,  the  pipe  line  there  is  of  no  use,  though  there  is  a  certain  amount  of 
salvage  in  it  as  it  could  be  taken  up  and  used  elsewhere.  He  thought  it  had 
been  pretty  clearly  established  now  that  the  pipe  line  charge  makes  no  dif- 
ference to  the  producer,  but  is  a  matter  that  concerns  the  purchaser  of  the 
oil.  Twenty  cents  a  barrel  for  piping  oil  was  infinitely  cheaper  than  rail- 
road, wagon,  or  other  classes  of  transportation.  They  sometimes  carry  oil 
as  high  as  25  or  30  miles  for  20  cents  a  barrel.     He  said: 

"*  *  *  Allow  me  to  explain  a  little  and  say  that  our  affiliated  inter- 
ests, so  to  speak,  of  the  pipe  lines,  gather  oil  in  Ohio,  Indiana,  West  Vir- 
ginia, Pennsylvania,  and  New  York.  All  the  competing  lines  gather  oil  in 
some  small  local  field,  as,  for  instance,  the  Producers  &  Refiners'  line.  It 
occurs  to  me  that  I  have  heard  that  their  charge  is  15  cents  a  barrel  to  the 
refiners,  but  they  only  go  a  short  distance.     I  don't  know,  and  I  do  not  think 


*Rlack   faced   type  indicates  matter   omitttd,  in  the  course  of  editing,  from  the 
official  report. 


VICE-CHAIRMAN   THOMAS  W.   PHILLIPS.  261 

I  should  speak  of  this.  But  I  will  say  that  we  are  willing  to  run  a  line  15  or 
20  miles,  and  we  do  it  for  the  patrons  of  our  lines  at  times.  I  don't  know 
whether  they  can  do  that  or  not.  I  don't  think  they  do,  because  I  think  they 
are  in  a  confined  district." 

Q.  (By  Mr.  SMYTH.)  I  suppose  you  investigate  a  well  very  thoroughly 
before  you  run  a  pipe  25  or  30  miles?  A.  Oh,  naturally  we  look  into  the 
business  in  a  conservative  way. 

Q.  But  at  the  same  time  there  is  a  certain  amount  of  risk  as  to  the  con- 
tinuance of  the  well?    A.  Oh,  yes,  sir. 

Q.  And  all  that  risk  you  assume?     A.  Yes,  sir. 

Q.  Is  the  only  salvage  you  have,  Mr.  Rogers,  the  pipes,  when  you  aban- 
don a  line?    A.  Yes,  sir. 

Upon  concluding  his  testimony,  Mr.  Rogers  said  Mr.  Archbold's  state- 
ment before  the  commission  on  the  previous  day  was  a  practical  expression 
of  his  own  views.  He  was  familiar  with  what  Mr.  Archbold  was  going  to 
say  before  he  said  it  and  he  was  quite  willing  to  rest  his  case  on  his  state- 
ment. 


CHAPTER  XIV. 

TESTIMONY  OF  VICE-CHAIRMAN  THOMAS  W,  PHILLIPS, 

OF  THE  PURE  OIL   TRUST,  AND  POPULARLY 

KNOWN  AS  THE  ^'FATHER  OF  THE 

INDUSTRIAL  COMMISSION." 

The  testimony  of  Vice-Chairman  Phillips,  who  is  popularly  known  as  the 
"father  of  the  Industrial  Commission,"  is  given  here  in  full.  Mr.  Archbold, 
while  on  the  stand,  had  made  some  startling  statepients  regarding  Mr. 
Phillips  in  relation  to  the  Pure  Oil  Trust,  and  Mr.  Phillips  took  occasion, 
on  the  following  day,  to  reply  to  this  testimony. 

Those  who  read  this  testimony  will  be  struck  by  the  remarkable  state- 
ment? it  contains.  The  witness  appeared  to  be  blind  to  what  would  have 
been  the  real  effect  of  his  own  proposition  to  Mr.  Archbold  which,  had  it 
been  accepted,  would  have  wiped  out  competition  in  the  oil  industry 
through  an  understanding  between  the  Pure  Oil  Trust  and  the  Standard  Oil 
Company.  It  would  have  been  a  very  convenient  arrangement  for  Mr.  Phil-* 
lips,  as  it  would  have  had  the  effect  of  allowing  the  Pure  Oil  Trust  to  enjoy 
the  benefits  of  monopoly,  instead  of  being  placed  at  the  inconvenience  of 
competition.  He  appeared  to  think  that  it  would  have  been  right  that  he 
should  have  had  some  "arrangement"  which  would  "let  him  live,"  whether 
or  not  he  was  able  to  "live"  under  a  competitive  system. 

The  reader  can  judge  of  the  real  effect  of  the  character  of  the  "voting 
trust"  under  which  the  Producers'  Oil  Company.  Limited,  was  organized. 
This  trust  eliminated  the  stockholders  as  a  controlling  power  in  the  organi- 
zation and  placed  all  such  power  in  perpetuity  in  the  hands  of  15  trustees. 

When  the  fact  was  so  forcibly  demonstrated  that  Mr.  Phillips  was  one 
of  the  leadins?  men  in  the  organization  and  management  of  the  Pure  Oil 
Trust,  and  that  the  trust  features  of  that  company  surpassed  any  provisions 
that  could  be  found  in  the  old  Standard  Oil  Trust,  members  of  the  commis- 
sion were  shocked  to  a  degree  that  was  evidenced  by  their  manner  and  in 
several  cases  by  their  language.  Those  who  had  cherished  the  idea  that 
the  Industrial  Commission  was  to  be  the  means  for  bettering  the  condition 
of  the  toiling  masses  and  for  raising  labor  to  a  higher  plane  throughout  the 
country,  were  filled  with  regret  that  it  had  become  apparent  to  every  one 
that  the  man  who  had  proposed  in  Congress,  and  secured  the  passage  of  the 
law  authorizing  the  President  to  appoint  the  commission,  was  really  using  It 


262  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

as  a  club  to  injure  his  competitor  in  business,  and  whereas  they  had  re- 
garded him  as  a  pure  philanthropist,  suspicion  was  created  that  he  was 
chiefly  engaged  in  adding  to  his  wealth. 

This  revelation  caused  the  circulation  of  a  report  that  Vice-Chairman 
Phillips  would  resign  his  position  on  the  commission,  in  order  not  to  nullify 
the  effect  of  its  recommendations  to  Congress  and  to  State  Legislatures  by 
the  suspicion  that  he  was  inspired  by  selfish  motives  in  the  course  he  had 
taken.  Mr.  Phillips  apparently  had  no  such  intention.  He  had  not  worked 
for  years  for  a  chance  to  inflict  injury  on  his  business  competitors  only  to 
resign  at  the  approach  of  what  he  perhaps  regarded  as  his  great  oppor- 
tunity. He  was  succeeding  in  spreading  scandalous  stories  about  the  Stand- 
ard Oil  Company  throughout  the  newspapers  of  the  country  and  he  doubt- 
less hoped  for  still  greater  victories.  Doubtless  he  also  felt  less  interest  in 
the  good  reputation  of  the  Industrial  Commission  than  he  did  in  his  success 
in  his  own  private  affairs.  In  order  to  check  any  scandal  caused  by  his 
conduct,  some  members  of  the  commission  assembled  and  gave  their  vice- 
chairman  a  vote  of  confidence,  at  the  same  time  declaring  that  they  did  not 
intend  to  ask  him  to  resign. 

As  will  be  seen  by  anyone  who  reads  this  testimony,  a  good  many  state- 
ments of  the  witness  were  in  the  nature  of  hearsay  evidence  or  were 
acknowledged  to  be  guess-work  of  a  very  wholesale  character. 

Mr.  Phillips  acknowledged  that  the  privileges  of  the  Pure  Oil  Company 
under  the  laws  of  New  Jersey,  were  identical  with  those  of  the  Standard 
Oil  Company.  He  was  very  positive,  however,  in  saying  that  the  organiza- 
tion of  the  Pure  Oil  Company  was  not  for  the  purpose  of  securing  a  monop- 
oly, and  before  he  concluded  his  testimony,  he  stated  very  plainly  that, 
should  the  trust  in  which  he  is  interested,  in  the  course  of  events,  become 
too  successful  in  securing  the  great  bulk  of  the  oil  trade  of  this  country,  he 
would  have  nothing  to  do  with  it.  In  other  words,  he  was  nurturing  a  child 
which,  under  his  tender  care,  was  already  showing  evidence  of  vigorous 
manhood;   yet,  should  it  become  strong  and  powerful,  he  would  disown  it, 

Mr.  Phillips  said  that  the  dividends  of  the  Standard  Oil  Company 
showed  that,  beside  their  accumulated  surplus,  they  had  made  at  times 
more  profit  on  every  barrel  of  oil  they  handled  than  they  paid  to  the  pro- 
ducer for  it.  He  arrh^ed  at  this  conclusion  through  the  means  of  a  very 
vague  calculation.  He  expressed  himself  as  very  much  shocked  because  of 
this  exorbitant  profit,  as  he  regarded  it.  He  frequently  asked  other  wit- 
nesses what  they  thought  of  such  a  state  of  affairs,  by  which  men  could 
make  as  much  profit  on  every  barrel  of  oil  they  handled  as  they  paid  for  it. 
Had  Mr.  Phillips  been  questioned  he  would  have  been  obliged  to  admit  that  as 
a  producer  he  had  received  not  only  as  much  but  many  times  as  much  profit 
on  every  barrel  of  oil  he  had  handled  as  he  had  paid  the  farmers  from  whose 
fend  it  had  been  taken,  for  it.  No  testimony  was  submitted  to  the  commis- 
sion to  show  that  Mr.  Phillips  had  ever  regarded  his  profit  as  a  producer  as 
excessive,  or  that  he  had  ever  sought  to  lower  his  profits  in  order  to  keep 
them  from  being  exorbitant,  although  according  to  common  report  these 
profits  made  him  a  multi-millionaire  in  comparatively  a  few  years, 

Mr.  Phillips  made  various  positive  statements  retiarding  the  profits  of 
the  Standard  Oil  Company  and  said  that  the  profit  of  the  independent 
refiners  was  not  so  great,  but  when  asked  to  give  an  estimate  of  the  profits 
of  the  latter  he  merely  replied  that  he  was  not  well  informed,  but  that 
during  a  number  of  years  they  had  lost  a  very  considerable  amount  of 
money.  He  appeared  to  be  more  familiar  with  the  business  of  his  competi- 
tors than  with  his  own  business.  He  promised  to  submit  a  statement  of  all 
the  companies  with  which  he  was  connected,  but  when  that  statement  was 
submitted  it  was  treated  by  the  commission  as  a  confidential  document,  not 
being  publi'^hed  in  its  report. 

Considerable  surprise  was  expressed  that  the  witness  could  state  the 
profits  of  the  Standard  Oil  Company  off-hand,  while  he  could  not  say  what 
were  the  profits  of  his  own  company.  His  testimony  in  this  connection  was 
remarkable.  When  questioned  about  his  own  stock  in  the  Pure  Oil  Com- 
pany he  «aid  he  would  not  sell  it  for  100  per  cont.  premium,  as  he  consid- 
ered it  worth  more  than  that  "prospectively,"     He  said  they  (the  Standard 


VICE-CHAIRMAN   THOMAS  W.  PHILLIPS.  263 

Oil  Company)  had  "offered  to  pay  that,"  but  this  statement  does  not  appear 
in  the  official  report.  He  wanted  it,  he  said,  to  protect  his  interest  as  a  pro- 
ducer of  oil. 

Mr.  Phillips  admitted  that  three  or  four  years  previous  to  giving  his. 
testimony  he  had  sought  a  combination  with  the  Standard  Oil  Company,  his 
object  being  to  obtain  from  that  company  a  "cessation  of  hostilities  against 
iim,"  both  in  regard  to  piping  the  oil  and  selling  it.  It  was  to  secure  with- 
out their  opposition,  the  right  to  deliver  in  New  York  the  capacity  of  the 
then  existing  lines  of  the  Pure  Oil  Trust,  which  he  said  would  not  exceed 
7,000  or  8,000  barrels  of  oil  per  day.  He  said  Mr.  Archbold  had  refused 
absolutely  to  grant  any  concessions.  He  denied  that  he  had  called  upon 
Mr.  Archbold  since  the  organization  of  the  commission  for  the  purpose  of 
combining  with  the  Standard  Oil  Company.  He  said  that  if  others  had 
called  upon  the  "Standard  Oil  Company  people"  it  was  without  his  knowl- 
edge,  advice  or  approval. 

The  witness,  in  explaining  how  the  Pure  Oil  Company  was  organized 
T)y  uniting  a  number  of  companies  under  one  head,  said  that  it  was  not  their 
purpose  to  get  control  of  any  other  per?on's  business.  They  sought  to  con- 
solidate the  companies  into  one,  because  practically  the  stockholders  were 
the  same.  He  might  have  added  that  a  similar  condition  is  found  in  most 
■cases  of  consolidation. 

Mr.  Phillips  said  he  did  not  wish  to  be  connected  with  a  monopoly,  and 
that  he  would  not  be  connected  with  a  company  to  control  a  great  product. 
He  said  that  if  his  company  should  become  large  enough  to  monopolize  the 
lausiness  by  means  of  fair  competition  he  would  no  longer  have  anything  to 
<lo  with  it.  He  would  be  willing  to  accept  the  profits  as  long  as  they  were 
"'fair."  The  testimony  did  not  develop  any  statement  that  he  had  ever 
refused  enormous  profits  when  crude  oil  was  selling  at  a  high  price. 

The  evidence  shows  that  a  great  deal  of  surprise  was  expressed  by 
members  of  the  commission  when  the  charter  of  the  Pure  Oil  Company  was 
read.     Mr.  Phillips'  replies  are  humorous  in  effect,  if  not  by  intent. 

Commissioner  Farquhar,  in  commenting  upon  the  charter  of  the  Pure 
Oil  Company,  said:  "I  must  confess  that  I  was  startled  when  these  papers 
were  placed  in  my  hands  yesterday.  *  *  *  i  never  heard  of  a  corpora- 
tion that  was  as  well  put  down  as  this  is  for  a  perpetual  monopoly  or  a  per- 
petual trust." 

The  following  is  an  amusing  bit  of  testimony: 

Q.  (By  Mr.  SMYTH.)  Now,  the  charter  of  the  Pure  Oil  Company  is 
taken  in  the  State  of  New  Jersey  and  the  charter  of  the  Standard  Oil  Com- 
pany is  now  being  taken  there.  You  spoke  of  the  Standard  Oil  Company  as 
the  Standard  Oil  Trust.  You  do  not  deny  in  any  manner  that  the  Pure  Oil 
Company  is  a  trust?     How  do  you  distinguish  them? 

Vice-Chairman  PHILLIPS.     It  is  a  monopoly. 

Q.  (By  Mr.  SMYTH.)  How  can  the  Standard  Oil  Company  be  a  monop- 
oly when  the  Pure  Oil  Company  is  not?  The  Standard  Oil  Company  handles 
only  80  per  cent,  of  the  product. 

Vice-Chairman  PHILLIPS.  It  does  not  require  all  of  any  commodity  to 
make  a  monopoly  and  fix  prices.  Any  person  knows  that.  They  do  own  a 
sufficient  control,  a  sufficient  control  to  make  a  monopoly. 

The  attention  of  the  witness  was  called  to  the  statement  of  Mr.  Arch- 
T)old.  in  which  the  latter  said  that  he  was  distinctly  and  clearly  in  favor  of 
the  interstate  commerce  law  and  he  .gave  positive  testimony  that  since  the 
passage  of  that  law  in  1887  no  rebates,  special  rates  of  frei.ght,  nor  advan- 
tages of  any  kind,  had  been  given  the  Standard  Oil  Company  by  any  railroad 
or  other  transportation  company  or  canal.  When  asked  if  he  could  say  the 
same  for  the  Pure  Oil  Company.  Mr.  Phillips  answered  in  the  affirmative, 
"but  acknowledged  that  such  rates  might  have  been  given  the  Pure  Oil  Com- 
pany without  his  knowledge.  If  it  had  been  done  it  was  without  his  knowl- 
edge. 

In  view  of  the  fact  that  Mr.  Phillips  was  vice-chairman  of  the  Industrial 
Commission  and  presided  at  the  meetings  of  that  body  when  it  adopted 
rules  for  the  guidance  of  the  editor  of  the  testimony  taken  by  the  commis- 
sion, it  is  strange  that  the  testimony  of  Mr.  Phillips  himself  has  been  edited 


264  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

in  a  remarkably  liberal  way,  and  in  such  a  manner  as  to  cause  the  suspicion 
that  either  Mr.  Phillips  or  the  editor  of  the  testimony  violated  the  rules,  or 
that  the  commission  itself  authorized  changes  in  Mr.  Phillips'  testimony 
that  materially  changed  its  meaning  in  many  instances  and  allowed  Mr. 
Phillips  to  insert  his  "second  thoughts"  when  his  answers  given  before  the 
commission  did  not  convey  the  meaning  that  it  was  desired  to  go  to  Con- 
gress and  to  the  American  public.  This  statement  is  made  as  a  result  of  a 
comparison  of  the  testimony  of  the  vice-chairman  as  stenographically  re- 
ported with  the  official  report  of  the  testimony  and  in  view  of  the  following 
rule  adopted  by  the  commission: 

"Witnesses  will  not  be  permitted,  without  the  consent  of  the  commis- 
sion, to  eliminate  material  parts  of  their  testimony  or  change  the  form  of 
questions." 

The  significance  of  the  changes  made  by  Mr.  Phillips  in  his  testimony 
would  not  seem,  on  the  part  of  the  disinterested  reader,  to  be  warranted  by 
the  following  remark  explanatory  of  the  these  rules  which  appears  in  the 
report  of  Mr.  William  E.  Sackett,  secretary  of  the  commission: 

"The  witness  is  expected  to  make  in  his  copy  only  such  verbal  changes 
as  he  thinks  necessary  for  the  better  expression  of  his  ideas  or  the  better 
statement  of  his  facts.  Witnesses  have  been  permitted  to  add  information 
not  at  hand  at  the  time  of  their  appearance  before  the  commission,  but  in 
all  cases  this  was  agreed  upon  at  the  hearing." 

If  the  above  explanation  of  the  rules  was  intended  to  cover  such 
changes  as  were  made  by  somebody  in  the  testimony  of  Mr.  Phillips,  it  is 
believed  that  the  commission  departed  in  its  treatment  of  testimony  from 
customary  rules  in  relation  to  such  matters. 

Some  instances  of  these  changes  in  the  testimony  are  shown  in  the 
comparisons  of  the  stenographic  report  and  the  edited  or  officially  published 
testimony,  which  follow.  A  careful  comparison  of  these  two  reports  shows 
that  while  Mr.  Phillips  promptly  replied  that  the  Pure  Oil  Company  was  "in 
no  sense  a  trust,"  the  official  report  modifies  that  statement  by  making  the 
answer  read:  "The  Pure  Oil  Company  is  not  a  trust  in  the  commonly 
accepted  sense  of  that  term." 

Mr.  Phillips'  predictions  that  industrial  combinations  mean  "either  evo- 
lution or  revolution"  and  that  if  the  methods  of  the  Standard  Oil  Company 
are  pursued  by  other  industrial  combinations  they  would  result  in  revolu- 
tion, and  so  forth,  were  stricken  from  the  testimony,  as  also  were  his  rec- 
ommendations that  in  this  event  "they  should  be  abolished  by  law." 

When  he  was  asked  if  he  could  give  an  estimate  of  the  profits  made  by 
the  independent  refiners,  he  said  he  was  not  well  informed  upon  that, 
although  he  had  very  positively  stated  what  he  believed  to  have  been  the 
profits  of  the  Standard  Oil  Company.  When  asked  if  he  could  make  that 
statement  on  the  day  of  giving  his  testimony,  he  said  he  would  not  have 
time  to  do  it  that  day,  but  that  he  would  be  willing  at  any  time  to  submit 
a  complete  and  full  statement  in  regard  to  that  matter,  believing  there  would 
be  no  objection  by  any  of  the  stockholders.  There  was  no  intimation  in  this 
answer  that  the  witness  would  not  make  it  public,  although  the  only  infor- 
mation given  in  regard  to  it  in  the  official  report  of  the  testimony  is  con- 
tained in  a  foot  note  as  follows  (p.  591):  "Detailed  balance  sheets  of  the 
Pure  Oil  Company,  the  United  States  Pipe  Line  Company,  and  the  Pro- 
ducers &  Refiners'  Oil  Company,  Limited,  were  afterwards  filed  with  the 
commission;  together  with  a  full  analysis  of  profits  and  losses." 

So  it  can  be  seen  that  the  information  which  Mr.  Phillips  did  not  have 
time  to  give  that  day  has  been  consigned  to  the  inner  recesses  of  the  com- 
mission's files. 

Mr.  Phillips  testified  that  the  Standard  Oil  Company  had  offered  to  pay 
twice  the  par  value  of  his  stock  (referring  to  oil  companies  with  which  he 
was  connected),  but  this  statement  was  dropped  out  before  the  official 
report  of  the  testimony  was  issued. 

Referring  to  the  Pure  Oil  Trust,  he  said:  "The  trustees  have  a  majority 
of  the  stock  and  they  vote  in  connection  with   the  other  stockholders  and 


VICE-CHAIRMAN  THOMAS  W.   PHILLIPS.  265 

they  elect  a  board  of  directors."  This  reference  to  the  other  stockholders 
is  a  very  pretty  concession  to  them,  and  might  impress  the  thoughtless 
reader  with  the  idea  that  their  voting  was  a  matter  of  some  consequence, 
but  as  "the  trustees  have  a  ma.lority  of  the  stock."  it  is  readily  seen  that 
the  voting  by  "the  other  stockholders"  is  rather  an  empty  honor. 

When  asked  if  the  object  of  the  two  trusts,  the  Pure  Oil  and  the  Stand- 
ard, was  not  the  same,  he  replied:  "I  would  say  that  we  believe  we  only 
want  a  fair  portion  of  the  competitors'  business."  Possibly,  for  the  fear  that 
someone  might  think  that  Mr.  Phillips  and  his  associates  misrht  want  to 
become  monopolists,  in  the  official  report  of  testimony  the  statement  is 
added  that  they  did  not  want  the  whole  of  it. 

In  explaining  why  he  and  his  associates  had  gone  into  a  "trust,"  he  said 
it  "was  only  to  preserve  this  stock  intact,  so  that  the  Standard  Oil  Company 
could  not  monopolize  it  as  they  did  monopolize  one  of  the  companies."  This 
statement  that  the  Standard  Oil  Company  had  monopolized  one  of  the  com- 
panies was  eliminated  in  the  official  report,  so  that  it  was  made  to  read:  "I 
have  explained  how  they  attempted  to  monopolize  one  of  the  companies." 
It  is  a  queer  statement  anyway,  as  it  was  equivalent  to  saying  the  stock 
was  monopolized  by  one  trust  in  order  to  prevent  another  trust  from  monop- 
olizing it. 

Mr.  Phillips'  testimony  regarding  the  competition  between  the  com- 
panies that  he  said  it  was  expected  would  be  combined  with  the  Pure  Oil 
Company  under  an  increased  capitalization  was  strangely  contradictory. 
He  said  that  these  "Independent  companies"  "have  been  competitors  in 
every  way,"  and  remarked  further:  "They  were  perfectly  willing  to  give 
and  take.     They  were  affiliated;  you  might  have  them  all  as  one  company." 

In  the  editing  of  this  contradictory  answer,  the  remark  about  the  com- 
panies being  willing  to  "give  and  take,"  etc.,  was  stricken  out  and  it  does 
not  appear  in  the  official  report  of  the  testimony.  The  statement  in  itself 
sounds  more  rational  with  the  elimination,  as  the  idea  of  the  "independent 
companies"  being  "competitors  in  every  way,"  when  "you  might  have  them 
aU  as  one  company"  would  not  appear  consistent  to  those  who  arp  not 
initiated  in  the  mysteries  of  this  peculiar  competitive  struggle.  It  would  bo 
interesting  to  know  whether  Mr.  Phillips,  or  the  editor  of  the  commission, 
or  the  commission  itself  was  responsible  for  this  particular  garbling  of  his 
testimony. 

He  testified  that  the  "independent"  pipe  line  had  never  paid  the  pro- 
ducers less  than  the  Standard  was  paying  "unless  it  was  by  voluntary  con- 
tribution on  the  part  of  the  producers  to  help  them."  This  suggested  possi- 
ble exception  was  stricken  from  the  official  testimony. 

When  asked  if  the  so-called  "independents"  who  were  co-operating  with 
him  were  not  millionaires,  he  said  he  did  not  know  the  wealth  of  these  gen- 
tlemen with  whom  he  was  associated,  and  added:  "I  am  quite  sure  they 
would  have  much  more  wealth  if  they  had  got  better  prices;  if  they  had 
shared  in  the  profits  of  the  Standard."  In  the  official  report  of  the  testi- 
mony Mr.  Phillips  is  made  to  say:  "I  do  not  know  the  wealth  of  those 
gentlemen,  but  very  few  are  considered  millionaires.  I  am  quite  sure  that 
they  would  have  much  more  wealth  if  prices  had  not  been  depressed  by  the 
Standard." 

It  mi!?ht  be  regarded  as  a  self-evident  fact  that  they  could  have  had 
more  wealth  if  they  "had  got  better  prices."  Here  again  Mr.  Phillips 
showed  his  grievance  against  the  Standard  Oil  Company  for  making  oil 
cheap  to  the  consumers. 

Previously  he  had  been  asked  whether  the  men  engaged  in  the  "inde- 
pendent" movement  had  made  money  out  of  the  oil  business,  and  he  replied: 
"A  great  many  of  them  are  quite  well  to  do."  In  the  official  testimony  the 
following  saving  clause  is  added:  "But  a  majority  of  the  producers  are 
comparatively  poor." 

It  will  be  seen  that  Mr.  Phillips  in  his  testimony  admitted,  although 
rather  indirectly,  that  the  Standard  Oil  Company  was  first  in  the  field  in 
exportine  oil.  but  in  the  official  report  of  the  testimony  in  this  respect  the 
following  is  added:      "But  millions  of  barrels  of  oil   were  exported  before 


266  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

the  Standard  Oil  Trust  existed."  Other  parts  of  the  testimony  were  changed 
in  a  way  that  made  this  idea  prominent. 

He  was  reminded  that  Mr.  Archbold  had  testified  that  no  special  rates 
of  freight  had  been  given  the  Standard  Oil  Company  since  the  passage  of 
the  interstate  commerce  law,  and  was  asked  whether  his  company  had 
received  any  such  special  rebates.  He  replied:  "Yes;  there  were  con- 
tracts made  when  we  could  not  get  through  to  New  York."  In  his  edited 
testimony  he  is  made  to  reply:  "No;  unless  you  consider  contracts  made 
when  we  could  not  get  through  to  New  York." 

Upon  being  asked  by  Mr.  Smyth  if  he  would  be  willing  to  give  a  list  of 
the  dividends  paid  by  his  company,  he  replied:.  "Yes,  and  the  surplus  put 
away  might  be  given."  In  the  official  report  of  the  testimony  the  statement 
that  "the  surplus  put  away  might  be  given"  does  not  appear. 

Mr.  Phillips  had  a  convenient  refuge  from  questions  he  found  it  incon- 
venient to  answer  by  resorting  to  the  plea  that  he  was  a  member  of  the 
commission.  He  was  asked  whether  he  considered  it  was  legal  for  any 
company  to  gain  all  the  advantage  that  it  could,  fairly  and  legitimately. 
This  seems  a  very  simple  question  and  one  that  might  have  been  answered 
with  very  few  words,  but  the  witness  replied: 

"I  have  pretty  strong  views  in  regard  to  competitors  and  competition 
and,  being  a  member  of  this  commission,  I  would  rather  not  enter  into  this 
subject  and  give  my  views  in  regard  to  it.  But  if  you  should  desire  that  I 
should  do  so,  and  the  chair  so  desires,  of  course  I  am  subject  to  the  com- 
mission, as  is  any  other  witness." 

Of  course  that  stopped  the  asking  of  further  questions  which  might 
have  developed  Mr.  Phillips'  views  on  the  subject  of  competition.  While  he 
thus  evaded  the  answering  of  a  question,  he  retained  all  the  rights  of  a  wit- 
ness to  testify  to  things  that  he  considered  to  his  advantage  notwithstand- 
ing he  was  a  member  of  the  commission. 

A  comparison  of  the  following  extracts  from  Mr.  Phillips'  testimony  as 
actually  given,  and  as  it  apears  in  the  official  report,  will  show  numerous 
significant  changes: 

STENOGRAPHIC  REPORT.  OFFICIAL  REPORT    (p.  .591). 
Vice-Chairman      PHILLIPS.       The  Mr.  PHILLIPS.    The  Pure  Oil  Corn- 
Pure  Oil  Company  is  in  no  sense  a  pany  is  not  a  trust  in  the  commonly 
trust.  accepted  sense  of  that  term. 

STENOGRAPHIC  REPORT.  OFFICIAL  REPORT    (p.   .591). 

Vice-Chairman  PHILLIPS.     In  re-  Mr.    PHILLIPS.      The    Standard's 

gard  to  the  new  industrial  combina-      dividends   will   show,   perhaps,   with- 
tions  as  they  are  denominated,  I  have      out  regard  to  the  surplus  they  have 
to  say  that  they  form  one  of  the  most      accumulated,  that  they  have  at  times 
marvelous    movements    of    the    age.      made  more  profit  on  every  barrel  of 
They  mean  either  evolution  or  revo-      oil   they   handled  than  they  paid   to 
lution.     If  the  methods  are  pursued      the  producer  for  it.     I  have  known 
by     these     industrial     combinations      a  producer  to  pay  $100,000  or  more 
that  have  been  pursued  by  the  Stand-      for   a   limited   number   of  leases,   on 
ard  Oil  Company,  in  my  judgment  it     which    wells    were    obtained    which 
will  result  in  revolution.    The  Stand-     would  flow  from  2,500  to  3,000  barrels 
ard  Oil  Trust  has  levied  more  tribute      a    day.    and    yet   the   profit  that   the 
on  the  producers  and  consumers  of      Standard  Oil   Trust  reaped  on  each 
petroleum    than    any   emperor,    mon-      barrel   of  oil   from   these  wells  was 
arch  or  tyrant  ever  levied  upon  his      evidently  more  than  they  paid  for  the 
subjects  in  any  period  of  the  world's      oil. 
history.      Their   own    dividends    will 
show,  perhaps,  without  regard  to  the 
surplus   they    have    accumulated    be- 
sides  in   different  periods,  that  they 
have  at  times  made  more  profit  on 
every  barrel  of  oil  they  handled  than 
they  paid  to  the  producer  for  it.     I 
have  known  a  producer  to  pay  $100,- 


VICE-CHAIRMAN  THOMAS  W.  PHILLIPS. 


267 


000  or  more  for  a  limited  number  of 
leases  on  which  were  obtained  wells 
which  would  flow  from  2,500  to  3,000 
barrels  per  day,  and  yet  the  Stand- 
ard Oil  Trust  reaped  more  profit  on 
each  barrel  of  oil  from  each  of  these 
wells  than  they  paid  to  the  owner  for 
the  oil. 

STENOGRAPHIC  REPORT. 
Vice-chairman  PHILLIPS.  I  will 
state  that  I  am  in  favor  of  putting  all 
these  industrial  combinations  under 
the  most  rigid  law,  restricting  their 
power  in  the  interest  of  the  whole 
people,  and  if  this  cannot  be  done, 
and  if  they  attempt  to  exercise  such 
power  as  the  Standard  Oil  Trust  has 
exercised,  they  should  be  abolished 
by  law.  As  an  illustration,  if  the 
price  of  grain  and  its  transportation, 
the  profit  of  grinding  the  same  and 
the  price  of  flour,  were  fixed  as  ab- 
solutely as  the  Standard  fixes  the 
price  of  petroleum,  it  would  not  and 
could  not  be  endured.  Speaking  of 
transportation  alone,  if  there  was 
but  one  railroad,  to  control  absolute- 
ly 80  per  cent,  or  more  of  the  trans- 
portation of  all  freight  and  passen- 
gers and  fix  the  prices  for  the  same, 
as  the  Standard  Oil  Trust  fixes  its 
prices,  the  public  would  certainly  re- 

TOlt. 

In  the  time  the  Standard  Oil  Trust 
has  been  engaged  in  the  oil  business 
they  have  made  more  than  $1  per 
barrel  on  all  oil  produced.  This  is 
capable  of  easy  demonstration.  The 
entire  production  of  what  is  known 
as  Pennsylvania  oil  for  17  years,  in 
round  numbers,  is  500.000,000  barrels. 
The  market  value  of  the  Standard 
stock  is  very  close  to  $500,000,000. 
This  has  been  made  chiefly  out  of 
the  proflts  of  the  company.  This  is 
practically  equivalent  to  $1  a  barrel 
on  all  oil  produced  since  they  have 
been  in  business. 

I  believe  it  has  been  testified  be- 
fore this  commission  that  it  is  at 
least  $450,000,000.  During  this  pe- 
riod, or  for  the  last  10  years,  oil  has 
averaged  about  90  cents  per  barrel, 
and  their  profit  has  been  about  $1 
per  barrel. 

Q.  (By  Mr.  SMYTH.)  That  has 
been  the  profit  of  the  independent 
refiner?,  too?  A.  No,  sir:  not  ])y  a 
great  deal. 

Q.  Can  you  give  an  estimate  of  the 
profits  made  by  the  indeD^ndpnt  re- 
finers?    A.  I  am  not  well   informed 


OFFICIAL  REPORT    (p.  591). 

Mr.  PHILLIPS.  During  the  time 
the  Standard  Oil  Trust  has  been  en- 
gaged in  the  oil  business  they  have 
made  more  than  $1  per  barrel  on  all 
oil  produced.  This  is  capable  of 
easv  demonstration.  The  entire  pro- 
duc'ticn  of  what  is  known  as  Pennsyl- 
vania oil  for  17  years,  in  round  num- 
bers, is  500,000,000  barrels.  The 
market  value  of  the  Standard  stock  is 
very  close  to  $500,000,000.  I  believe 
it  lias  been  stated  before  this  com- 
mission that  it  is  at  least  $450,000,- 
000.  This  has  been  made  chiefly  out 
of  the  profits  of  the  company,  and  it 
is  practically  equivalent  to  $1  a  bar- 
rel on  all  oil  produced  since  they 
have  been  in  business.  During  this 
period,  or  from  the  time  the  Stand- 
ard came  into  power,  oil  has  aver- 
aged about  90  cents  a  barrel;  their 
profit  has  been  more  than  $1  per  bar- 
rel. This  does  not  take  into  consid- 
eration their  enormous  dividends 
nor  their  vast  reputed  surplus. 

Q.  (By  Mr.  SMYTH.)  That  has 
been  the  profit  of  the  independent 
refiners,  too?  A.  No,  sir;  not  by  a 
great  deal. 

Q.  You  could  not  give  an  estimate 
of  the  profits  made  by  the  independ- 
ent refiners?  A.  Upon  this  I  am  not 
well  informed.  I  will  say  this:  For 
a  number  of  years  they  lost  a  very 
considerable  amount  of  money.  They 
sold  what  is  known  as  cut  cargoes. 
At  the  close  I  will  srive  all  the  infor- 
mation I  can  and  will  submit  a  state- 
ment of  all  the  companies  with 
which  I  am  connected.  I  have  reason 
to  believe  the  companies  will  not  ob- 
ject. 

Q.  Will  that  statement  be  made  to- 
day. A.  I  should  not  have  time  to 
dothat  to-day.  but  will  be  willing  at 
any  time  to  submit  a  complete  and 
fuil  statement. 


268 


REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 


upon  that.  I  will  say  this:  For  a 
number  of  years  they  lost  a  very  con- 
siderable amount  of  money.  They 
sold  what  is  known  as  cut  cargoes. 
I  think  I  refer  to  this  in  my  testi- 
mony. At  the  close  I  will  give  all 
the  information  I  can  and  will  sub- 
mit a  statement  of  all  the  companies 
with  which  I  am  connected. 

Q.  Will  that  statement  be  made  to- 
day? A.  I  would  not  have  time  to 
do  that  to-day.  but  I  will  be  at  any 
time  willing  to  submit  a  complete 
and  full  statement  of  this.  I  think 
there  would  be  no  objection  by  any 
stockholders:  there  certainly  would 
not  be  by  me. 

STENOGRAPHIC  REPORT. 

Q.  (By  Mr.  KENNEDY.)  You  con- 
sider this  stock  to  be  worth  a  pre- 
mium of  100  per  cent,  on  the  par 
value?  A.  Prospectively.  I  would 
not  sell  it,  because  I  am  a  producer 
of  oil  and  I  am  thoroughly  convinced 
and  it  is  understood  by  the  directors, 
if  we  were  to  get  twice  the  amount 
from  the  Standard — they  have  offer- 
ed to  pay  that — if  we  got  double  the 
cost  of  it,  we  would  be  assessed  to 
pay  it.  We  do  not  know  how  much 
money  the  producers  have  been  reap- 
ing from  the  benefits  of  these  com- 
panies. We  would  not  sell  as  long 
as  we  are  producers.  We  would  not 
sell  for  self-preservation. 

Q.  As  great  and  powerful  as  the 
Standard  Oil  monopoly  is,  you  say  it 
is  not  so  powerful  as  to  prevent  your 
company  making  enormous  profits  in 
the  oil  business?  A.  I  will  come  to 
a  consideration  of  that  hereafter.  Mr. 
Archbold  stated  in  his  testimony  be- 
fore this  commission  that  he  was  in 
favor  of  the  Interstate  Commerce 
Commission.  If  there  had  been  such 
a  commission,  with  proper  authority 
over  the  transportation  of  oil,  the 
Standard  Oil  monopoly  would  not  be 
in  existence  to-day. 

STENOGRAPHIC  REPORT. 
Q.  (By  Mr.  FARQUHAR.)  There 
is  the  same  object  before  the  two 
trusts — your  company  and  the  Stand- 
ard? A.  I  would  not  say  so.  I  would 
say  that  we  believe  we  only  want  a 
fair  portion  of  the  competitor's  busi- 
ness. Take  the  Pennsylvania  Rail- 
road system.  They  go  on  and  absorb 
others  and  lease  and  all  that.  I  would 
not  desire  to  be  connected  with  a 
monopoly.     I  would  not  be  connected 


OFFICIAL  REPORT  (pp.  592-593). 
Q.  (By  Mr.  KENNEDY.)  You  con- 
sider this  stock  to  be  worth  a  pre- 
mium of  100  per  cent,  on  the  par 
value?  A.  Prospectively.  You  see, 
I  would  not  sell  it,  because  I  am  a 
producer  of  oil,  and  I  am  thoroughly 
convinced,  and  it  is  understood  by 
the  directors,  that  if  we  were  to  get 
twice  its  cost  from  the  Standard  we 
should  be  assessed  to  pay  it.  We  do 
not  know  how  much  money  the  pro- 
ducers have  been  deriving  through 
the  existence  of  these  companies. 
We  would  not  sell  as  long  as  we  are 
producers;  we  keep  the  stock  for 
self-preservation.  Mr.  Archbold 
stated  before  this  commission  that 
he  was  in  favor  of  the  Interstate 
Commerce  Commission.  If  there  had 
been  such  a  commission  with  proper 
authority  over  the  transportation  of 
oil,  the  Standard  Oil  monopoly  would 
not  be  in  existence  to-day. 


OFFICIAL  REPORT  (p.  597). 
Q.  (By  Mr.  FARQUHAR.)  There 
is  the  same  object  before  the  two 
trusts,  your  company  and  the  Stand- 
ard? A.  I  would  not  say  so.  I  would 
say  that  we  only  want  a  fair  portion 
of  the  competitor's  business,  not  the 
whole  of  it.  I  would  not  be  connect- 
ed with  a  mononoly.  T  would  not  con- 
trol a  ereat  product  and  fix  the  price 
at  which  I  would  buy,  transport  and 
sell.     It  is  too  great  a  responsibility 


VICE-CHAIRMAN  THOMAS  W.   PHILLIPS. 


269 


with  a  company  to  control  a  great 
product  where  I  would  fix  the  price 
at  which  I  bought  and  at  which  I 
sold.  It  is  too  great  a  responsibility 
for  any  one  man  to  have  and  it  is  a 
greater  responsibility  than  ever  ty- 
rants, as  a  rule,  exercise  over  their 
subjects,  when  they  fix  the  price. 
The  profits  which  have  been  fixed 
by  this  trust  are  enormous. 

STENOGRAPHIC  REPORT. 

Q.  (By  Mr.  FARQUHAR.)  *  *  * 
How  can  it  be  possible  to  escape  the 
idea  that  this  Pure  Oil  Company  is  a 
trust?  What  explanation  have  you 
to  make?  A.  I  explained  that  fully 
in  my  paper  if  you  had  paid  atten- 
tion to  it. 

Q.  Oh,  I  listened  to  it  this  morn- 
ing. A.  It  is  a  voting  trust.  The 
company  itself  is  organized  vmder 
the  laws  of  the  State  of  New  Jersey 
and  all  those  trust  papers,  as  I  un- 
derstand it — I  think  they  were  drawn 
by  competent  attorneys  but,  being 
very  busy,  I  did  not  pay  much  atten- 
tion to  the  legal  matters — were 
drawn  solely  for  the  purpose  of  pro- 
tecting the  stockholders  in  voting 
this  stock  and  electing  directors.  The 
stock  itself  was  put  into  a  trust  so 
that  it  could  not  be  sold  or  alienated 
or  monopolized. 

STENOGRAPHIC  REPORT. 

Q.  (By  Mr.  FARQUHAR.)  How  do 
you  provide  for  dissolution?  Because, 
imder  the  general  laws,  that  is  under 
the  power  of  the  trustees,  and  you 
have  trustees  here  who  hold  the  en- 
tire property  in  their  hands.  They 
make  their  own  board  of  directors. 
The  adminstrative  power  of  your 
whole  concern  is  contained  in  men 
who  are  creatures  of  your  trustees. 
How  much  worse  than  that  is  the 
Whisky  Trust  or  the  Standard  Oil? 
A.  I  have  defined.  Major  Farquhar. 
my  meaning  of  the  word  "trust."  and 
it  has  been  so  often  repeated  that 
the  intention  in  that  agreement  was 
only  to  preserve  this  stock  intact,  so 
that  the  Standard  Oil  Company  could 
not  monopolize  it  as  they  did  monop- 
olize one  of  the  companies,  as  there 
explained.  That  was  the  whole  ob- 
ject of  it.  There  will  be  other  wit- 
nesses here  who  can  testify  on  that 
subject  and  can  give  you  all  the  legal 
definitions  regarding  it,  if  you  so  de- 
sire. 


for  any  one  man  to  have,  and  it  is  a 
greater  responsibility  than  tyrants, 
as  a  rule,  assume  toward  their  sub- 
jects. The  profits  are  enormous 
which  have  been  fixed  by  this  trust. 


OFFICIAL  REPORT  (p.  598). 
Q.  (By  Mr.  FARQUHAR.)  *  *  * 
How  can  it  be  possible  to  escape  the 
idea  that  this  Pure  Oil  Company  is  a 
trust?  What  explanation  have  you  to 
make?  A.  It  is  a  voting  trust.  The 
company  itself  is  organized  under 
the  laws  of  the  State  of  New  Jersey, 
and  all  those  trust  papers,  as  I  un- 
derstand it,  were  drawn  solely  for  the 
purpose  of  protecting  the  stockhold- 
ers in  voting  this  stock  and  electing 
directors.  The  stock  itself  was  put 
into  a  trust,  a  voting  trust,  so  that  it 
could  not  be  sold  or  alienated  or 
monopolized,  and  if  the  stock  were 
sold  the  trustees  would  have  a  voice 
in  electing  directors. 


OFFICIAL  REPORT   (p.  598). 

Q.  (By  Mr.  FARQUHAR.)  How  do 
you  provide  for  dissolution?  Because, 
under  the  general  laws,  that  is  under 
the  power  of  the  trustees,  and  you 
have  trustees  here  who  hold  the  en- 
tire property  in  their  hands;  they 
make  their  own  board  of  directors; 
the  administrative  power  of  your 
whole  concern  is  in  men  who  are 
creatures  of  your  trustees.  How 
much  worse  than  that  is  the  Whisky 
Trust  or  the  Standard  Oil?  A.  I  have 
defined  my  meaning  of  the  word 
"trust."  and  it  has  been  often  re- 
peated that  the  intention  in  that 
agreement  was  only  to  preserve  this 
stock  intact,  so  that  the  Standard  Oil 
Company  could  not  monopolize  it.  I 
have  explained  how  they  attempted 
to  monopolize  one  of  the  companies. 

Q.  Do  the  producers  who  sell  oil  to 
independent  refiners  get  better  prices 
than  producers  who  sell  to  the  Stand- 
ard? A.  That  varies  at  different 
times.  In  the  beginning,  when  the 
Standard  had  so  stopped  the  outlet 


270 


REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 


Q.  I  must  confess  that  I  was 
startled  when  these  papers  were 
placed  in  my  hands  yesterday.  Here- 
tofore I  have  changed  my  mind  on  a 
good  many  things  in  this  commission. 
I  have  had  a  great  deal  to  do  with 
New  Jersey  corporations  and  I  think 
I  Ijnow  the  law  pretty  thoroughly.  It 
has  cost  me  money  to  find  it  out.  I 
never  heard  of  a  corporation  that 
was  as  well  organized  as  is  this  for 
a  perpetual  monopoly  or  a  perpetual 
trust.  I  would  like  to  ask  you,  Mr. 
Phillips,  if  the  producers  who  sell  oil 
to  independent  refiners  get  better 
prices  than  are  paid  to  producers 
who  sell  to  the  Standard.  A.  That 
varies  at  different  times.  I  would 
state  for  the  information  of  the  com- 
mission, that  in  the  beginning  when 
the  Standard  had  so  crippled  the  out- 
put abroad  and  had  so  monopolized 
everything  and  had  thrown  every- 
thing in  their  pathway,  the  produ- 
cers got  together  and  made  sacri- 
fices for  the  benefit  of  the  refiners, 
because  we  were  selling  cargoes  at 
a  great  loss.  We  have  given  them  a 
reduction  in  the  pipe  line  charges. 
In  other  times  when  the  market  was 
good  the  pipe  lines  have  sold  to  the 
refiners  at  a  profit  or  have  advanced 
the  market.  That  is  what  I  mean. 
Now  in  this  recent  advance  the  Pro- 
ducers &  Refiners'  Pipe  Line  ad- 
vanced the  oil  three  cents  more  than 
the  Standard.  The  Standard  in  a 
few  days  came  up  to  it,  and  then 
they  advanced  again  to  $1.37,  and 
this  line  advanced  it  to  $1.40.  They 
were  very  anxious,  however,  to  get 
the  oil  to  win  the  fall  trade. 

Q.  That  was  simply  incidental?  A. 
Yes,  incidental.  They  have  been 
competitors  in  every  way.  They  were 
perfectly  willing  to  give  and  take. 
They  were  affiliated;  you  might  have 
them  all  as  one  company. 

Q.  At  the  present  time  is  the  mar- 
ket on  all  fours  to  the  producers, 
M'hether  they  are  sellers  to  the  inde- 
pendents or  to  the  Standard?  Does 
it  pay  the  producers  to  sell  to  the 
independent  refiners  as  well  as  to  the 
Standard?  A.  Yes;  they  have  the 
privilege  of  selling  to  other  pipe 
lines.  There  is  sometimes,  as  I  said, 
an  advance  by  the  one  and  not  by  the 
other.  But  this  line  has  never  paid 
the  producers  less  than  the  Standard 
was  paying,  unless  it  was  by  volun- 
tary contribution  to  help  them  over. 


abroad  and  had  so  monoplized  ev- 
erything in  the  pathway,  the  pro- 
ducers got  together  and  made  sacri- 
fices for  the  benefit  of  the  refiners. 
They  were  selling  cargoes  at  great 
loss  and  we  gave  them  a  reduction 
in  the  pipe  line  charges.  There  were 
other  times  when  the  market  was 
good,  when  the  pipe  lines  have  sold 
to  the  refiners  at  a  profit.  Now,  in 
this  recent  advance  the  Producers  & 
Refiners'  Pipe  Line  advanced  the  oil 
three  cents  more  than  the  Standard. 
The  Standard  in  a  few  days  came 
up  to  it;  and  then  they  advanced 
again  to  $1.37,  and  this  line  advanced 
it  to  $1.40.  They  were  very  anxious, 
however,  to  get  the  oil  to  win  the 
fall  trade. 

Q.  That  was  simply  incidental?  A. 
Yes,  incidental.  They  have  been 
competitors  in  every  way. 

Q.  Now,  at  the  present  time,  is  not 
the  market  on  all  fours  to  the  pro- 
ducers, whether  they  are  sellers  to 
the  independents  or  the  Standard? 
As  prices  go,  does  it  pay  the  pro- 
ducers to  sell  to  the  independent  re- 
finers as  well  as  to  the  Standard?  A. 
Yes;  they  have  the  privilege  of  sell- 
ing to  other  pipe  lines.  There  is 
sometimes,  as  I  said,  an  advance  by 
the  one  and  not  by  the  other.  But 
this  line  has  never  paid  the  pro- 
ducers less  than  the  Standard  was 
paying.  It  has  always  kept  pace  with 
the  Standard  in  advancing,  and  very 
frequently  has  advanced  one,  or  two, 
or  three,  or  five  cents  more.  We  are 
handling  the  high-grade  oil — Pennsyl- 
vania oil.  That  is  very  desirable  both 
at  home  and  abroad. 


VICE-CHAIRMAN  THOMAS  W.   PHILLIPS. 


271 


It  has  always  kept  pace  with  the 
Standard  in  advancing  and  very  fre- 
quently has  advanced  one,  two,  three 
or  five  cents  more.  We  are  moving 
the  pure  oil,  Pennsylvania  oil.  That 
is  very  desirable  both  at  home  and 
abroad. 

STENOGRAPHIC  REPORT. 

Q.  (By  Mr.  FARQUHAR.)  These 
men  that  are  engaged  in  the  inde- 
pendent movement  have  made  money 
out  of  the  oil  business?  A.  A  great 
many  of  them  are  quite  well  to  do. 

Q.  Many  of  them  are  millionaires? 
A.  Some  of  them  have  made  a  great 
deal  of  money. 

Q.  So  these  men  who  are  co-operat- 
ing with  you  are  millionaires,  and 
the  Standard  is  simply  a  greater  ag- 
gregation of  millionaires?  A.  I  do 
not  know  the  wealth  of  those  gen- 
tlemen. I  am  quite  sure  they  would 
have  much  more  wealth  if  they  had 
got  better  prices;  if  they  had  shared 
in  the  profits  of  the  Standard. 


STENOGRAPHIC  REPORT. 

Q.  (By  Mr.  SMYTH.)  One  must 
be  first?  A.  Oh,  yes — when  it  orig- 
inally started. 

Q.  I  asked  the  question  concerning 
your  company  or  the  Standard?  A. 
Oh,  yes;  they  were  in  existence  first, 
but  there  was  a  great  deal  of  export- 
ing done  by  the  Standard  and  there 
was  a  great  deal  done  by  the  others. 
It  is  a  marketing  company,  but  there 
is  an  effort,  which  we  presume  will 
be  successful,  to  combine  the  others 
as  I  have  explained,  into  this  Pure 
Oil  Company,  with  an  increased  cap- 
ital. 

STENOGRAPHIC  REPORT. 

Q.  (By  Mr.  SMYTH.)  You  do  not 
consider  the  Standard  Oil  Company 
the  pioneer  in  building  up  the  export 
oil  business?    A.  Not  at  all,  no. 

Q.  At  the  same  time  they  had  a 
large  proportion  of  it  to  meet?  A. 
Oh.  certainly  they  did. 

Q.  And  covered  the  world  as  we 
learned  yesterday  from  Mr.  Arch- 
bold?  A.  Yes,  but  I  do  not  believe, 
as  was  stated  by  Mr.  Archbold  yes- 
terday, that  they  have  better  talent 
than  the  outsiders  have. 


OFFICIAL  REPORT   (p.  599). 

Q.  (By  Mr.  FARQUHAR.)  These 
men  that  are  engaged  in  the  inde- 
pendent movement  have  made  money 
out  of  the  oil  business?  A.  A  great 
many  of  them  are  quite  well  to  do, 
but  a  majority  of  the  producers  are 
comparatively  poor. 

Q.  Many  of  them  are  millionaires?' 
A.  Some  of  them  have  made  a  great 
deal  of  money. 

Q.  So  these  men  who  are  co-oper- 
ating with  you  are  millionaires  and 
the  Standard  is  simply  a  greater  ag- 
gregation of  millionaires?  A.  I  do 
not  know  the  wealth  of  those  gentle- 
men, but  very  few  are  considered 
millionaires.  I  am  quite  sure  they 
would  have  much  more  wealth  if 
prices  had  not  been  depressed  by  the 
Standard. 

OFFICIAL  REPORT  (p.  600). 
Q.  (By  Mr.  SMYTH.)  One  must 
have  been  first.  A.  The  Pure  Oil 
Company  was  organized  in  1S9.5,  and 
the  Standard  Oil  Trust,  I  am  inform- 
ed, was  organized  in  18S2,  and  of 
course  shipped  oil  abroad  before  the 
Pure  Oil  Company;  but  millions  of 
barrels  of  oil  were  exported  before 
the  Standard  Oil  Trust  existed. 


OFFICIAL  REPORT   (p.  600). 

Q.  (By  Mr.  SMYTH.)  You  do  not 
consider  the  Standard  Oil  Company 
the  pioneer  in  building  up  the  export 
business?    A.  Not  at  all,  no. 

Q.  At  the  same  time  they  had  a 
large  proportion  of  it  to  meet?  A.  Oh, 
certainly  they  did,  but  they  were  not 
the  pioneers. 

Q.  And  covered  the  world,  as  we 
learned  yesterday  from  Mr.  Arch- 
bold?  A.  Yes;  but  others  preceded 
them  in  almost  all  countries.  I  do 
not  believe,  as  was  stated  by  Mr. 
Archbold  yesterday,  that  they  have 
better  talent  than  others  engaged  itt 
the  same  business. 


272 


REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 


STENOGRAPHIC  REPORT. 

Q.  (By  Mr.  SMYTH.)  Mr.  Arch- 
bold  stated  that  he  was  distinctly 
and  clearly  in  favor  of  the  interstate 
commerce  law,  and  that  since  the 
passage  of  that  law  in  1887  he  affirm- 
ed and  gave  positive  testimony  that 
no  rebates,  special  rates  of  freight, 
nor  advantages  of  any  kind  had  been 
offered  by  any  railroad  company  or 
transportation  company  or  canal  nor 
accepted  by  the  Standard  Oil  Com- 
pany, nor  asked  for  by  them.  Do  you 
say  the  same  for  the  Pure  Oil  Com- 
pany and  the  companies  with  which 
you  are  connected?  A.  Yes,  to  the 
best  of  my  knowledge  and  belief 
there  has  been  nothing  of  that  kind. 

Q.  No  special  rates  have  been 
given  to  your  company  at  all?  A.  Yes, 
there  were  contracts  made  when  we 
could  not  get  through  to  New  York. 
Of  course  there  was  a  rate  through 
to  New  York,  when  our  pipe  line 
reached  one  road  and  when  it  reach- 
ed a  certain  further  point  there  was 
a  lower  rate.  The  freight  was  very 
large  and  it  was  the  only  way  we 
could  get  oil  through  to  the  market. 
It  was  an  open  rate. 


OFFICIAL  REPORT   (p.   601). 

Q.  (By  Mr.  SMYTH.)  Mr.  Arch- 
bold  stated  that  he  was  distinctly 
and  clearly  in  favor  of  the  interstate 
commerce  law,  and  that  since  the 
passage  of  that  law  in  1887  he  af- 
firmed and  gave  positive  testimony 
that  no  rebates,  no  special  rates  of 
freight,  no  advantages  of  any  kind, 
had  been  offered  by  any  railroad 
company  or  transportation  company 
or  canal,  or  accepted  by  the  Stand- 
ard Oil  Company,  or  asked  for  by 
them.  Do  you  say  the  same  for  the 
Pure  Oil  Company  and  the  com- 
panies with  which  you  are  connect- 
ed? A.  Yes,  to  the  best  of  my  knowl- 
edge and  belief  there  has  been  noth- 
ing of  that  kind. 

Q.  No  special  rates  have  been 
given  to  your  company  at  all?  A. 
No;  not  unless  you  consider  con- 
tracts made  when  we  could  not  get 
through  to  New  York.  Of  course 
there  was  a  rate  through  to  New 
York  when  our  pipe  line  reached  a 
certain  point  in  New  Jersey,  and 
when  it  reached  a  certain  further 
point  there  was  a  lower  rate,  etc. 
The  freight  was  very  large,  and  it 
was  the  only  way  we  could  get  oil 
through  to  the  market.  It  was  an 
open  rate. 


STENOGRAPHIC  REPORT. 

Q.  (By  Mr.  SMYTH.)  Would  you 
be  willing  to  give  a  list  of  the  divi- 
dends paid  by  your  companies?  A. 
Yes.  and  the  surplus  put  away  might 
be  given.  I  am  assuming  that  we 
would  be  perfectly  willing  to  have  all 
our  companies,  and  certainly  I  should 
be  willing  to  have  anything  that  I 
am  in,  open  to  State  and  govern- 
mental inspection,  and  if  it  was  doing 
an  injury  I  would  not  object  to  hav- 
ing it  abolished — either  abolished  or 
restricted. 

Q.  You  stated  positively  that,  to 
your  knowledge,  no  rebate  has  been 
received  or  accepted  by  any  of  your 
companies  since  the  passage  of  the 
interstate  law?  A.  Not  to  my  knowl- 
edge. If  it  is,  it  is  without  my  knowl- 
edge. 

Q.  Do  you  know  of  any  such  rebate 
being  given  to  the  Standard  Oil  Com- 
pany? A.  I  will  qualify  my  former 
statement  in  regard  to  the  rebates. 
A  pipe  line  sometimes  sold  for  less 
to  these  refiners,  who  were  stock- 
holders and  a  part  of  the  system,  and 


OFFICIAL  REPORT    (p.  601). 

Q.  (By  Mr.  SMYTH.)  Would  you 
be  willing  to  give  a  list  of  the  divi- 
dends paid  by  your  companies?  A. 
Yes;  I  am  assuming  this,  that  we 
would  be  perfectly  willing  to  have  all 
our  companies,  and  certainly  I  should 
be  willing  to  have  anything  that  I  am 
in,  open  to  State  and  governmental 
inspection;  and  if  it  was  doing  any 
injury  I  would  not  object  to  having 
it  either  abolished  or  restricted. 

Q.  You  stated  positively  that,  to 
your  knowledge,  no  rebate  has  been 
received  or  accepted  by  any  of  your 
companies  since  the  passage  of  the 
interstate  law?  A.  Not  to  my  knowl- 
edge. 

Q.  Do  you  know  of  any  such  re- 
bate being  given  to  the  Standard  Oil 
Company?  A.  Personally  I  have  no 
absolute  knowledge  on  this  question, 
but  have  been  told  and  believe  they 
have  received  such  rebate.  I  will 
qualify  my  former  statement.  Pipe 
lines  may  have  sold  to  independent 
refiners  at  special  rates,  as  stated 
heretofore. 


VICE-CHAIRMAN  THOMAS  W.  PHILLIPS. 


273 


-they    did    it    simply    to    help    them 
through. 

Q.  To  that  extent  it  was  a  special 
rate  extended  to  the  Pure  Oil  Com- 
pany? A.  No,  it  was  to  the  refiners. 
The  Pure  Oil  Company  is  a  market- 
ing company.  It  was  extended  to 
the  refiners  and  it  caused  the  Stand- 
ard to  compete  in  Germany.  We  had 
to  sell  cut  cargoes,  and  we  did  this 
so  we  might  live  and  not  die. 


Q.  To  that  extent  it  was  a  special 
rate  extended  to  the  Pure  Oil  Com- 
pany? A.  No;  it  was  to  the  refiners. 
The  Pure  Oil  Company  is  a  market- 
ing company. 


STENOGRAPHIC  REPORT. 

Q.  (By  Mr.  FARQUHAR.)  Do  you 
believe  that  any  of  the  independent 
refiners  or  producers  of  this  country 
could  have  ever  reached  the  field 
that  the  Standard  reached  all  over 
the  world  unless  they  had  combined? 
A.  I  may  answer  that  by  asking  an- 
other question.  What  would  you  say 
in  regard  to  the  Vanderbilt  system 
of  railroad,  and  the  Pennsylvania 
system?  What  could  they  reach? 
What  could  they  do? 

Q.  The  Vanderbilt  system  is  ex- 
tending from  New  York  to  Buffalo, 
and  now  goes  clear  to  the  Pacific. 
A.  Don't  you  think  the  country  is 
"better  served  by  two  or  three  or  four 
systems  of  railroad?  And  the  same 
logic  would  show 


OFFICIAL    REPORT     (pp.    601-602). 

Q.  (By  Mr.  FARQUHAR.)  Do  you 
believe  that  any  of  the  independent 
refiners  or  producers  of  this  country, 
any  number  of  them,  could  ever  have 
reached  the  field  that  the  Standard 
have  all  over  the  world  unless  they 
combined?  A.  Yes;  the  markets  of 
the  world  were  largely  reached  be- 
fore the  Standard  combination. 


STENOGRAPHIC  REPORT. 
Q.  (By  Mr.  KENNEDY.)  And  the 
Standard  can  make  a  profit  of  a  dol- 
lar a  barrel  and  you  can  only  get  a 
profit  of  10  cents?  A.  Oh,  we  have 
met  this  great  opposition  in  the 
markets.  We  expected  to  make  more 
than  that  perhaps  after  a  time,  but 
if  we  could  average  10  cents  a  bar- 
rel and  could  do  one-fourth  of  the 
business  of  the  Standard  Oil  Com- 
pany we  would  get  enormously  rich. 
My  dear  sir,  if  a  party  of  capitalists 
Tiad  purchased  the  right  from  the 
Standard  in  the  State  of  Pennsylva- 
nia, where  we  could  not  get  any  free 
pipe  line  for  a  long  time,  to  manu- 
facture and  sell  one-quarter  of  the 
oil  that  the  Standard  did  when  they 
were  organized,  they  would  have 
made  two  or  three  hundred  million 
dollars  very  readily.  It  would  have 
been  a  splendid  investment  to  have 
bought  the  right  from  the  Standard 
to  do  business  in  this  country  with- 
out their  opposition. 


OFFICIAL  REPORT  (p.  602). 
Q.  (By  Mr.  KENNEDY.)  And  the 
Standard  can  make  a  profit  of  a  dol- 
lar a  barrel  and  you  can  only  get  a 
profit  of  10  cents?  A.  We  have  met 
with  this  great  opposition.  We  ex- 
pected to  make  more  than  that  per- 
haps after  a  time;  but  if  we  should 
average  10  cents  a  barrel  and  could 
do  one-fourth  of  the  business  the 
Standard  does,  the  company  would 
get  enormously  rich.  If  a  party  of 
capitalists  had  purchased  the  right 
from  the  Standard  in  the  State  of 
Pennsylvania — where  we  could  not 
get  any  free  pipe  line  for  a  long 
time — to  manufacture  and  sell  one- 
fourth  of  the  oil  that  the  Standard 
did  when  they  M'ere  organized,  they 
could  have  made  two  or  three  hun- 
dred million  dollars  very  readily  had 
they  been  willing  to  exact  the  prices 
the  Standard  did.  It  would  have 
been  a  splendid  investment  to  have 
bought  the  right  from  the  Standard 
to  do  business  in  this  country  with- 
out their  opposition. 


18 


274  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

Vice-Chairman  PHILLIPS'  testimony  in  full  follows: 

At  a  meeting  of  the  commission  Saturday,  September  9,  1899,  Mr.  A.  L. 
Harris  presiding,  Mr.  Thomas  W.  Phillips  appeared  at  11:15  a.  m.,  and  after 
being  duly  sworn,  testified. 

Mr.  A.  L.  HARRIS.  I  have  been  called  to  the  chair  at  the  instance  of 
the  vice-chairman,  in  order  that  he  may  give  some  testimony  as  a  witness 
to  the  commission.    Mr.  Phillips  desires  to  make  a  statement  in  his  own  way. 

The  WITNESS.  I  desire  to  state  to  the  commission  that  Mr.  Archbold 
and  another  witness  have  testified  before  the  commission  that  I  am  con- 
nected with  a  trust.  They  assume  that  I  am  here  as  a  member  of  this  com- 
mission opposing  trusts:  thus  giving  the  impression  that  I  have  prejudged 
the  case,  by  alleging  that  I  am  connected  with  a  trust. 

I  am  free  to  state  that  I  am  connected  with  a  corporate  organization, 
the  object  of  which  is  to  combine  several  Interests  in  the  same  company 
organized  imder  the  laws  of  New  Jersey  and  called  the  Pure  Oil  Company. 

This  company  has  a  fraction  of  over  one-half  of  its  stock  in  the  shape 
of  a  voting  trust,  the  trustees  being  charged  with  the  sole  duty  of  electing 
directors  of  the  company  in  connection  with  the  other  stockholders  yet 
haAang  no  right  to  manage  its  business  affairs.  The  stockholders  who  have 
subscribed  to  the  stock  of  the  company  have  consented  in  writing  to  this 
voting  trust.  The  reasons  for  creating  this  voting  trust  are  as  follows: 
A  very  large  number  of  independent  producers  in  the  oil  country  organized 
a  number  of  years  ago  what  is  known  as  the  Producers'  Protective  Associa- 
tion. I  was  the  first  president  of  that  organization.  As  a  means  of  protec- 
tion the  Producers'  Oil  Company,  Limited,  was  formed  in  .Tune,  1891,  with 
a  capital  of  $n00,000.  Shortly  after  the  formation  of  this  company  the 
Standard  Oil  Trust,  through  one  of  its  affiliated  companies,  the  National 
Transit  Company,  commenced  to  buy  stock  in  this  company,  and  continued 
to  do  so  until  it  had  accumulated  a  small  per  cent  over  half  the  stock  of 
the  company,  paying  in  some  instances  as  high  as  220  or  120  per  cent, 
above  par,  this  at  a  time  when  this  company  had  not  yet  earned  any  money, 
but  had,  in  fact,  lost  money.  Before  parting  with  this  stock,  as  they  allege, 
they  had  turned  it  over  to  the  same  man  (Mr.  Carter)  to  whom  they  allege 
they  afterwards  sold  it,  and  he  attempted  to  vote  it  at  an  important  meet- 
ing of  the  company  as  his  own  and  secure  control  *in  a  measure  that  was 
then  before  the  company.  This  was  in  March.  1894.  He  returned  it  to  the 
National  Transit  Company  after  his  fraudulent  attempt  to  use  it  as  his  own 
to  accomplish  a  purpose  which  the  Standard  Oil  Company  evidently  de- 
sired. Subsequently,  on  the  16th  day  of  January,  1896,  the  same  individual 
alleged  that  he  purchased  the  stock  from  the  National  Transit  Company, 
the  affiliated  company  mentioned  above,  and  in  evidence  it  was  proven  that 
this  person  had  been  introduced  to  a  trust  company  in  New  York,  from 
which  he  borrowed  the  $300,000  with  which  the  purchase  was  alleged  to 
have  been  made.  When  it  was  attempted  to  show  that  this  money  came 
from  the  Standard  Oil  Trust,  the  witness,  Mr.  Archbold,  and  other  agents 
of  the  Standard  Oil  Trust,  declined  to  answer  all  important  questions  touch- 
ing the  ownership  of  that  money. 

The  Producers'  Oil  Company,  Limited,  declined  to  permit  Mr.  Carter  to 
vote  the  additionally  acquired  stock,  amounting  to  $297,000.  without  first 
being  elected  to  membership  by  a  majority  in  number  and  value  of  interest 
remaining  in  the  company. 

This  was  in  accordance  with  the  statute  of  Pennsylvania  of  1874,  and 
supplemented  in  1885,  creating  and  regulating  limited  partnerships;  a  by- 
law of  the  company  also  providing  that  such  election  should  take  place  in 
such  case  before  admission  to  membership. 

As  to  his  effort  to  vote  this  stock  without  being  elected,  the  decision 
was  asainst  him  in  the  Court  of  Common  Pleas  of  Warren  county,  Penn- 
sylvania, after  a  two  weeks'  trial.  An  appeal  was  taken  by  Mr.  Carter, 
the  alleged  owner,  to  the  Supreme  Court  of  Pennsylvania,  and  that  court 
derided  that  both  according  to  the  letter  and  spirit  of  the  statute,  he  was 
not  entitled  to  vote  that  stock  as  a  member  of  the  company  without  having^ 


♦Black  faced  type  Indicates  matter  omitted,  in  the  course  of  editing,  from  the- 
ofnrial  report. 


VICE-CHAIRMAN   THOMAS  W.   PHILLIPS.  275 

been  elected  as  indicated  above.  That  decision  I  have  here,  and  submit 
it  to  the  commission  as  sustaining  the  position  which  the  company  took. 

The  Standard  Oil  Trust,  through  the  same  affiliated  company,  the  Na- 
tional Transit  Company,  acquired  large  amounts  of  stock  in  the  United 
States  Pipe  Line  Company,  another  company  organized  by  the  independent 
oil  producers  and  refiners  for  the  purpose  of  transporting  both  refined  and 
crude  oil  to  the  seaboard  with  the  view  of  cheapening  transportation  and 
avoiding  discriminating  rates.  The  United  States  Pipe  Line  Company  ex- 
cluded the  Standard  from  the  meetings  of  the  company  on  the  ground  that 
the  stock  was  acquired  for  the  purpose  of  compassing  the  destruction  of 
that  company  and  securing  information  that  would  lead  to  the  destruction 
of  the  independent  movement. 

Mr.  Archbold,  in  his  testimony  yesterday,  stated  that  one  of  the  objects 
of  the  Standard  in  buying  that  stock  was  for  the  purpose  of  securing  in- 
formation. The  National  Transit  Company  brought  a  bill  in  equity  to 
compel  admission  to  the  meetings  of  the  company  and  permission  to  vote 
that  stock.  The  decision  in  the  lower  court  was  in  their  favor.  On  appeal 
to  the  Supreme  Court  the  case  was  prepared  on  both  sides  with  elaborate 
briefs  for  argument  and  counsel  on  both  sides  were  present  in  the  Supreme 
Court  to  argue  the  case.  When  it  was  called  for  argument,  instead  of  pro- 
ceeding to  an  argument  upon  its  merits,  counsel  for  the  National  Transit 
Company  moved  to  quash  the  appeal  on  the  technical  ground  that  the 
affidavit  to  show  that  the  appeal  was  not  "taken  for  the  purpose  of  delay" 
was  not  made  by  the  chief  officer  or  secretary  of  the  company.  The  Supreme 
Court,  because  the  statute  required  such  an  affidavit,  quashed  the  appeal, 
and  the  case  was  not  heard  on  its  merits.  It  was  then  too  late  under  the 
statute  to  take  another  appeal  and  have  the  case  heard  on  its  merits. 

The  entire  stock  acquired  by  the  National  Transit  Company  in  the 
United  States  Pipe  Line  Company  was  $383,000  out  of  a  total  of  $1,190,000. 
To  defend  these  two  companies  from  the  hostile  invasion  of  the  Standard 
Oil  Trust  cost  them  about  $15,000  in  actual  money,  besides  vast  labor  and 
trouble.  Because  of  the  attempt  of  the  Standard  Oil  Trust  to  force  them- 
selves into  these  independent  organizations,  without  invitation  and  against 
the  will  of  all  the  independent  members,  it  was  thought  wise,  in  the  or- 
ganization of  the  Pure  Oil  Company,  to  have  at  least  half  of  its  stock  put 
into  a  voting  trust  in  the  names  of  men  of  known  and  tried  loyalty  to  the 
independent  interests.  This  was  done  solely  for  the  purpose  of  securing 
that  company  against  the  hostile  inroads  of  this  giant  monopoly  and  to  pre- 
vent its  destruction. 

The  Pure  Oil  Company  is  in  no  sense  a  trust.  A  trust,  as  I  under- 
stand it,  is  a  corporation  or  combination  of  corporations  with  vast  capital, 
organized  for  the  purpose  of  securing  a  monopoly  in  any  branch  of  trade. 
The  Pure  Oil  Company  is  not  organized  for  the  purpose  of  securing  a  mo- 
nopoly, but  to  prevent  a  monopoly  and  preserve  competition  in  the  petroleum 
industry,  its  promoters  believing  that  by  fair  competition  the  highest  and 
best  interests  of  the  producer  and  consumer  can  be  secured,  and  the  public 
interests  best  conserved. 

Mr.  Archbold  was  therefore  incorrect  in  stating  that  the  Pure  Oil  Com- 
pany is  a  trust,  or  that  any  of  the  independent  producers  or  refiners  are 
members  of  a  trust  in  the  obnoxious  sense  in  which  that  word  is  under- 
stood, meaning  monopoly. 

*In  regard  to  the  new  industrial  combinations  as  they  are  denominated, 
I  have  to  say  that  they  form  one  of  the  most  marvellous  movements  of  the 
age.  They  mean  either  evolution  or  revolution.  If  the  methods  are  pursued 
by  these  industrial  combinations  that  have  been  pursued  by  the  Standard 
Oil  Company,  in  my  judgment,  it  will  result  in  revolution.  The  Standard 
Oil  Trust  has  levied  more  tribute  on  the  producers  and  consumers  of  pe- 
troleum than  any  emperor,  monarch,  or  tyrant  ever  levied  upon  his  subjects 
in  any  period  of  the  world's  history.  Their  own  dividends  will  show,  per- 
haps, without  regard  to  the  surplus  they  have  accumulated  ])esides  in  dif- 
ferent periods,  that  they  have  at  times  made  more  profit  on  every  barrel 


*Black   faced   type   Indicates   matter  omitted.  In  the  course  of  editing,  from  the 
official  report. 


276  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

of  oil  they  handled  than  they  paid  to  the  producer  for  it.  I  have  known 
a  producer  to  pay  as  much  or  more  than  $100,000  for  a  limited  number  of 
leases  on  which  were  obtained  wells  which  would  flow  from  2,500  to  3.000 
barrels  per  day,  and  yet  the  Standard  Oil  Trust  reaped  more  profit  on  each 
barrel  of  oil  from  each  of  these  wells  than  they  paid  to  the  owner  for 
the  oil.* 

As  to  the  amount  and  principles  involved,  the  tax  on  tea  and  other 
articles,  against  which  our  fathers  revolted,  was  nothing  in  comparison  to 
the  tribute  the  Standard  has  levied  on  the  oil  producer  and  consumer. 

tl  will  state  that  I  am  in  favor  of  putting  all  these  industrial  combina- 
tions under  the  most  rigid  law,  restricting  their  power  in  the  interest  of  the 
whole  people,  and  if  this  cannot  be  done,  and  if  they  attempt  to  exercise 
such  power  as  the  Standard  Oil  Trust  has  exercised,  they  should  be  abolish- 
ed by  law.  As  an  illustration,  if  the  price  of  grain  and  its  transportation, 
the  profit  of  grinding  the  same  and  the  price  of  flour,  were  fixed  as  abso- 
lutely as  the  Standard  fixes  the  price  of  petroleum  it  would  not  and  could 
not  be  endured.  Speaking  of  transportation  alone,  if  there  was  but  one 
railroad  to  control  absolutely  80  per  cent,  or  more  of  the  transportation  of 
all  freight  and  passengers,  and  fix  the  prices  for  the  same  as  the  Standard 
Oil   Trust  fixes   its   prices,  the   public  would   certainly   revolt. 

In  the  time  the  Standard  Oil  Trust  has  been  engaged  in  the  oil  busi- 
ness they  have  made  more  than  $1  per  barrel  on  all  oil  produced. 
This  is  capable  of  easy  demonstration.  The  entire  production  of  what  is 
known  as  Pennsylvania  oil  for  17  years  in  round  numbers  is  500,000.000 
barrels.  The  market  value  of  the  Standard  stock  is  very  close  to  $500,000,000. 
This  has  been  made  chiefly  out  of  the  profits  of  the  company.  This  is  prac- 
tically equivalent  to  $1  a  barrel  on  all  oil  produced  since  they  have  been 
in  business. 

I  believe  it  has  been  testified  before  this  commission  that  it  is  at  least 
$450,000,000.  During  this  period,  or  for  the  last  10  years,  oil  has  averaged 
about  90  cents  per  barrel,  and  their  profit  has  been  about  $1  per  barrel. 

Q.  (By  Mr.  SMYTH.)  That  has  been  the  profit  of  the  independent  re- 
finers, too?     A.  No,  sir,  not  by  a  great  deal. 

Q.  Can  you  give  us  an  estimate  of  the  profits  made  by  the  independent 
refiners?  A.  I  am  not  well  informed  upon  that.  I  will  say  this:  For  a  num- 
ber of  years  they  lost  a  very  considerable  amount  of  money.  They  sold 
what  is  known  as  cut  cargoes.  I  think  I  refer  to  this  in  my  testimony.  At 
the  close  I  will  give  all  the  information  I  can,  and  will  submit  a  statement 
of  all  the  companies  with  which  I  am  connected. 

Q.  Will  that  statement  be  made  to-day?  A.  I  would  not  have  time  to 
do  that  to-day.  but  I  will  be  at  any  time  willing  to  submit  a  complete  and 
full  statement  of  this.  I  think  there  would  be  no  objection  by  any  stock- 
holder; there  certainly  would  not  be  by  me. 

Q.  (By  Mr.  KENNEDY.)  I  would  like  to  ask  why,  if  you  are  able  to 
state  the  profits  of  the  Standard  Oil  Company,  you  are  not  able  to  state 
the  profits  of  your  own  company?  A.  That  is  very  easy  to  answer,  I  think. 
I  have  given  the  facts  of  their  stock.  It  is  a  very  large  concern,  and  we 
know  the  market  value  of  their  stock.  We  could  not  estimate  the  market 
value  of  our  stock.     For  my  part  I  would  not  take  100  per  cent. 

0.  (By  Mr.  SMYTH.)  How  do  you  know  they  made  a  profit  of  $1  a 
barrel?  A.  Their  capital  stock  has  been  selling  at  about  $500,000,000  and 
since  they  organized  there  have  been  about  500,000.000  l)arrels  of  oil  pro- 
duced, and  the  average  price  of  that  oil  has  been  about  90  cents.  This  is 
saying  nothing  about  the  enormous  dividends  they  paid,  which  I  believe 
last  year  amounted  to  $35,000,000,  which  does  not  include  their  surplus. 
There  is  no  question  about  our  deduction  and  figures. 


*Hac]  Mr.  Phillips  been  questioned  he  would  have  been  obliged  to  admit  that  he 
and  other  producers  not  only  had  "reaped  more  profit"  on  each  barrel  of  oil  pro- 
duced than  did  the  farmers  from  whose  land  it  was  taken,  but  that  they  had  "reap- 
ed" many  times  more  protit  than  the  farmers,  wlio,  under  the  terms  of  leases,  have 
received  one-eighth  of  tiie  oil  produced. 

tBlar-k  faced  type  indicates  matter  omitted,  in  the  course  of  editing,  from  the 
official  report. 


VICE-CHAIRMAN  THOMAS   W.   PHILLIPS.  277 

Q.  That  is  only  an  estimate  or  a  guess?  A.  Not  when  we  take  into  con- 
sideration the  fact  that  they  built  their  lines  and  establishments  out  of 
their  profits. 

Q.  How  do  you  know  that?  A.  We  have  every  reason  to  believe  it, 
because  of  the  capital  stock  with  which  the  company  was  originally  or- 
ganized and  the  dividends  that  they  have  made.     They  built  it  in  that  way. 

Q.  (By  Representative  LIVINGSTON.)  Have  you  any  exact  way  of 
getting  at  the  market  value  of  your  stock  or  of  the  Standard  Oil  Company's 
stock?  Are  both  of  them  listed  on  the  market?  A.  No,  they  are  not.  The 
Standard  has  always  kept  its  stock  from  being  listed  on  the  stock  market, 
but  the  papers  give  quotations  of  it  from  time  to  time.  Ours  is  not  listed 
on  the  stock  market;  there  have  only  been  individual  sales.  I  can  give  the 
cost  of  our  company,  though,  and  the  profits;  then  you  can  better  judge 
what  the  value  is. 

Q.  What  would  you  take  for  your  stock?  A.  Now,  since  we  have  won 
against  the  greatest  opposition  that  ever  existed  in  the  commercial  world, 
*that  is  the  greatest  monopoly  that  ever  existed  in  the  commercial  world, 
by  cutting  our  way  through  to  Germany  and  getting  a  market  there,  I  con- 
sider this  stock  very  valuable,  even  though  we  sell  at  lower  rates. 

Q.  What  will  you  take  for  your  stock?  A.  I  would  not,  under  the  cir- 
cumstances, take  100  per  cent,  profit. 

Q.  At  how  much  can  you  buy  Standard  oil?  A.  At  the  rate  of  about 
$465,000,000,  I  think  Mr.  Archbold  stated  yesterday,  is  the  last  market  quo- 
tation.    It  has  sold  within  a  fraction  of  $500,000,000  within  a  year. 

Q.  (By  Mr.  KENNEDY.)  You  say  you  would  not  take  100  per  cent, 
profit?  A.  I  would  not  sell  now.  I  will  make  a  statement  here  in  that  re- 
gard since  the  matter  is  brought  up.  In  our  best  judgment,  that  is,  that  of 
the  most  intelligent  producers,  when  the  Standard  buys  a  pipe  line  system 
and  refineries  they  charge  them  up  to  the  producers.  They  take  off  the 
premium  or  reduce  prices.  On  the  occasion  of  one  of  their  largest  pur- 
chases or  on  the  next  day  the  price  of  oil  was  put  down  seven  cents  per 
barrel.  They  were  then  shipping  about  60,000  barrels  per  day  through  the 
pipe  lines,  and  that  seven  times  six  would  be  42 — $4,200  per  day  that  they 
assessed  to  pay  for  that.  And  I  heard  Mr.  Archbold  say  the  producers  would 
never  know  what  that  pipe  line  cost  them,  and  we  do  not  know  to-day; 
but  the  price  was  assessed  and  a  short  time  afterward  oil  was  dropped  again. 
Now  along  that  line  I  could  state  that  the  Standard  has  bought  very  large 
amounts  of  property  when  oil  is  very  low,  and  especially  in  1895,  when  oil 
went  up  from  less  than  $1  to  $2.60  a  barrel.  *That  was  in  the  dry  period.t 
They  bought  a  number  of  million  dollars  worth  of  producing  property.  It 
was  fair  to  say  that  that  property  did  not  cost  them  anything  because  the 
world,  the  consumer,  would  necessarily  be  assessed  for  that.  In  my  best 
judgment  the  Standard  in  purchasing  either  pipe  lines  or  producing  prop- 
erty since  its  organization,  has  not  paid  any  money  directly  that  they  have 
not  recouped  indirectly.  It  is  of  record  that  they  assess  the  producers 
when  they  buy  a  pipe  line  by  dropping  the  price  of  oil.  When  they  buy 
large  amounts  the  universal  custom  is  to  purchase  property  when  oil  is  low 
and  at  the  same  time  to  advance  the  oil  to  the  consumer.  They  fix  both 
the  price  at  which  they  buy  and  at  which  they  sell. 

Q.  (By  Mr.  KENNEDY.)  You  consider  this  stock  to  be  worth  a  pre- 
mium of  100  per  cent,  on  the  par  value?  A.  Prospectively.  I  would  not  sell 
it  because  I  am  a  producer  of  oil  and  I  am  thoroughly  convinced  and  it  is 
understood  by  the  directors,  if  we  were  to  get  twice  the  amount  from  the 
Standard — *they  have  offered  to  pay  that — If  we  got  double  the  cost  of  it,  w" 
would  be  assessed  to  pay  it.     We  do  not  know  how  much  money  the  pro- 


*Black  faced  type  indicates  matter  omitted,  in  the  course  of  editing,  from  the 
official  report. 

tThis  explanation  of  why  oil  went  up  in  price  is  not  in  the  official  report.  Nat- 
urally this  explanation  was  a  contradiclion  of  the  witness'  former  statement  that 
the  Standard  arbitrarily  raised  the  price  after  they  had  bought  producing  property. 
It  showed  a  natural  cause  for  the  increase  In  price.  As  will  be  seen  that  reason 
was  omitted  from  the  official  report. 


278  REVIEW   OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

ducers  have  been  reaping  from  the  benefits  of  these  companies.  We  would 
not  sell  as  long  as  we  are  producers.   We  would  not  sell  for  self-preservation. 

*Q.  As  great  and  powerful  as  the  Standard  Oil  monopoly  is,  you  say  it 
is  not  so  powerful  as  to  prevent  your  company  making  enormous  profits  in 
the  oil  business?  A.  I  will  come  to  a  consideration  of  that  hereafter.  Mr. 
Archbold  stated  in  his  testimony  before  this  commission  that  he  was  in 
favor  of  the  Interstate  Commerce  Commission.  If  there  had  been  such  a 
commission  with  proper  authority  over  the  transportation  of  oil,  the  Stand- 
ard Oil  monopoly  would  not  be  in  existence  to-day. 

I  am  present  as  a  member  of  this  commission  with  a  full  determination 
to  hear  impartially  and  to  endeavor,  to  the  best  of  my  ability,  to  suggest 
such  remedial  legislation  (as  this  commission  is  instructed  to  do)  as  will  be 
for  the  greatest  good  to  the  greatest  number,  not  only  in  regard  to  combina- 
tions, but  also  with  respect  to  all  industrial  questions. 

In  regard  to  the  statement  of  Mr.  Archbold  that  I,  in  company  with 
others  connected  with  the  independent  movement,  called  upon  the  Standard 
Oil  Trust  seeking  a  combination  with  them,  I  will  state  that  this  is  true  in 
so  far  as  calling  upon  them  some  three  or  four  years  ago  is  concerned,  but 
it  was  after  the  purchases  by  them  of  their  affiliated  companies,  as  stated 
above.  It  was  also  after  they  had  purchased  a  number  of  the  independent 
refineries  connected  with  the  independent  pipe  lines.  It  was  also  after  they 
had  made  every  effort  possible  to  prevent  our  marketing  oil  in  Germany  and 
other  places,  and  after  they  had  bought  out  Mr.  Poth,  who  was  handling  and 
selling  the  oil  of  the  independent  refineries  in  Germany,  and  after  they  had 
secured  or  controlled  almost  wholly  the  German  petroleum  installation 
plants  or  receiving  tanks.  The  remaining  refineries,  as  well  as  those  who 
had  sold  out,  had  met  with  great  losses  in  handling  oil  in  Germany,  selling 
what  are  denominated  by  them  "cut  cargoes." 

The  object  in  calling  upon  them,  so  far  as  I  was  personally  concerned, 
and  I  believe  it  to  have  been  the  object  of  the  other  persons  who  were  with 
me  at  the  time  and  who  were  men  of  the  highest  character,  was  to  obtain 
from  the  Standard  Oil  Trust  cessation  of  hostilities  in  regard  to  piping  the 
oil  and  selling  it.  It  was  to  secure  the  right  to  deliver  in  New  York  without 
their  opposition,  the  capacity  of  the  then  existing  lines,  which  would  not 
exceed  seven  or  eight  thousand  barrels  of  oil  per  day. 

We  believed  then,  and  still  believe,  that  the  opposition  to  laying  our 
pipe  lines  across  the  State  of  New  Jersey  to  reach  the  harbor  of  New  York, 
was  instigated  by,  *or  came  directly  through,  the  Standard's  *influence.  I 
am  informed  that  Mr.  William  Rockefeller,  a  trustee  in  the  Standard  Oil 
Trust,  is  a  director  in  the  principal  opposing  road,  the  Delaware,  Lacka- 
wanna &  Western  Railroad. 

The  members  of  the  Standard  Oil  Trust  with  whom  we  conversed — and 
Mr.  Archbold  was  one  of  them — refused  absolutely  to  grant  us  any  conces- 
sions or  to  meet  us  on  any  fair  proposition  to  ship  and  market  oil  without 
such  aggressive  opposition  as  Mr.  Archbold  admits  they  employ  to  defeat 
competition.  But  in  lieu  thereof  they  proposed  to  buy  our  pipe  line  system, 
a  proposition  which  was  not  entertained  by  us.  It  was  then  proposed  by 
one  of  the  members  of  the  Standard  Oil  Trust  to  purchase  our  producing  prop- 
erty. This  was  also  rejected,  as  we  did  not  desire  to  go  out  of  the  producing 
industry. 

No  proposition  was  made  to  those  gentlemen  by  me,  or  by  any  gentle- 
man with  me,  to  the  best  of  my  knowledge  and  belief,  on  that  or  any  other 
occasion,  that  any  fair  and  honorable  business  man  could  not  make  to 
another. 

I  had  not  then,  and  have  not  now.  any  conscientious  scruples  about  any- 
thing that  was  said  to  them,  and  would  be  perfectly  willing,  were  it  possible, 
to  have  all  the  conversation  that  then  occurred  repeated  now  before  this 
commission. 

In  regard  to  the  statement  made  by  Mr.  Archbold  that  they  had  not 
entertained  a  proposition  for  combination  because  of  lack  of  faith  both  in 
the  legality  of  the  proposition  and  in  the  men  connected  with  the  independ- 


*Black   faced   type   Indicates  matter  omitted,  in  the  course  of  editing,   from  the 
official  report. 


VICE-CHAIRMAN   THOMAS  W.   PHILLIPS.  279 

ent  movements,  I  have  to  say  that  there  has  never  been  a  time  that  I  have 
been  willing  personally  to  have  gone  into  a  combination  with  the  Standard 
Oil  Trust.  In  proof  of  this  I  will  state  that  in  the  year  1890  I  sold  to  the 
Standard  Oil  Trust  quite  a  large  oil  field  in  Butler  county.  Pennsylvania, 
composed  of  7.500  acres  of  land  held  by  lease,  with  125  producing  wells. 
The  chief  reason  for  selling  this  property  to  the  Standard  Oil  Trust  was 
that  at  that  time  they  had  purchased  the  Union  Oil  Company's  interests, 
also  those  of  the  Anchor  Oil  Company,  and  the  McKinney  Bros.'  property, 
and  the  Forest  Oil  Company's  property,  these  being  the  largest  oil  properties 
in  the  country. 

The  Forest  Oil  Company  was  negotiating  for  my  property  before  they 
sold  to  the  Standard,  and  after  having  sold  their  interest  they  stated  that 
the  Standard  would  purchase  mine  if  I  so  desired  and  the  price  could  be 
agreed  upon. 

Fearing  the  power  of  the  Standard,  and  that  they  might  reduce  the  price 
of  oil,  and  in  view  of  their  having  purchased  the  largest  properties  in  the 
oil  field,  I  concluded  to  enter  into  negotiations  with  them  for  the  sale  of  this 
property. 

The  negotiations  continued  for  two  days  at  their  office,  26  Broadway, 
New  York.  During  this  period,  at  two  or  three  times  when  we  differed  in 
regard  to  the  value  of  the  property  they  asked  me  whether  I  would  act  in 
harmony  with  them.  At  each  time  I  absolutely  refused  to  consent  to  this 
proposition  and  finally  stated  that  if  they  should  insist  upon  that  as  a  condi- 
tion I  would  not  sell,  stating  to  them  that  I  was  willing  to  sell  the  property, 
but  would  retain  my  individuality;  that  I  had  nothing  to  sell  but  my  prop- 
erty. They  bought  the  property  for  $750,000  which  was  paid  partly  in  cash 
and  partly  in  stock.  I  subsequently  sold  the  stock  for  a  less  price  than  that 
for  which  I  took  it  in  payment  for  the  property,  not  desiring  to  be  connected 
with  them  in  any  way. 

As  further  evidence  that  the  Standard  Oil  Trust  desired  my  co-opera- 
tion, a  few  months  after  the  sale  of  this  property,  while  spending  a  brief 
period  at  Lake  George  with  my  family,  I  met  Mr.  Dodd,  the  attorney  of  the 
Standard  Oil  Trust,  at  Fort  McHenry  House.  In  talking  to  my  son  and 
myself  in  regard  to  the  Standard  Oil  Trust,  he  said  that  the  Standard  always 
sought  connection  with  successful  men,  and  turning  to  my  son,  said  they 
had  sought  "your  parent."  This  conversation  is  fixed  most  distinctly  upon 
my  mind  because  of  the  use  of  the  word  "parent." 

As  a  result  of  these  large  purchases  which  the  Standard  made,  the 
vendors  became  active  in  the  producing  department  of  the  Standard  Oil 
Trust,  and  I  presume  that  it  was  in  that  connection  that  they  desired  my 
work  or  influence. 

There  is  not  now.  and  there  never  was,  any  inducement  that  the  Stand- 
ard could  hold  out  to  me  sufficiently  strong  to  induce  me  to  become  an 
active  participant  in  their  business. 

The  statement  of  Mr.  Archbold  that  they  declined  any  business  arrange- 
ment with  the  independent  producers,  because  of  lack  of  faith  in  them, 
cannot  be  true  and  is  a  gratuitous  insult  to  a  large  body  of  business  men  of 
high  character.  For  four  years  they  have  been  trying  to  force  business 
relations  with  us  by  buying  large  blocks  of  stock  in  the  companies  and 
going  into  court  to  force  us  to  receive  them  as  business  associates,  and  they 
have  so  far  succeeded  as  to  have  a  director  in  the  United  States  Pipe  Line 
Company.  His  statement  is,  therefore,  both  false  and  slanderous.  I  think 
I  have  quite  covered  the  ground. 

Q.  You  asked  the  previous  witness  what  the  cost  of  transporting  a 
barrel  of  oil  to  the  seaboard  was,  and  he  declined  to  answer — said  he  did 
not  know.  Now,  we  may  learn  whether  the  Standard  charges  of  45  cents  a 
barrel  is  extortionate  or  not  if  we  can  learn  from  you  the  cost  per  barrel  for 
transporting  oil  through  the  United  States  Pipe  Line.  A.  *lf  you  will  allow 
me  to  be  prompted  on  that  question.  I  am  informed,  and  this  is  a  matter 
of  book  accounts,  that  with  a  half  capacity  of  the  line — about  3,000  barrels 
a  day — it  is  about  five  cents  a  barrel  to  the  terminal  in  New  .Jersey,  and 
with  full  capacity  of  the  line  it  would  cost  less  than  four  cents.     I  would 


•Black  faced  type  Indicates  matter  omitted,  In  the  coursis  of  editing,  from  the 
official  report. 


280  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

state  that  in  the  gathering  in  the  field — and  I  have  personal  experience  with 
pipe  lines — we  estimate  from  three  to  five  cents  per  barrel,  and  yet  the 
Standard's  price  is  20  cents  per  barrel.* 

Q.  Twenty  cents?  A.  Yes,  and  it  is  the  same  now  as  when  they  were 
organized. 

Q.  Mr.  Archbold  stated  under  oath  yesterday,  I  think,  that  you  had 
called  upon  him  for  the  purpose  of  combining  with  the  Standard  Oil  Com- 
pany since  the  organization  of  this  commission,  and  you  state  positively 
under  oath  that  that  is  false?  A.  I  positively  state  it  is  false.  I  have  had 
nothing  to  do  with  them  except  as  I  have  stated  here  in  my  testimony.  If 
others  have  called  upon  them  it  was  without  my  knowledge,  advice  or 
approval. 

Q.  (By  Mr.  KENNEDY.)  You  stated  that  the  members  of  the  voting^ 
trust  in  this  company  with  which  you  are  connected,  simply  vote  for  direc- 
tors and  have  no  voice  in  the  management  of  the  business  affairs  of  the  com- 
pany. Do  not  the  directors,  who  are  their  creatures,  have  the  control  of 
the  affairs  of  the  company?  A.  Oh,  yes;  those  who  are  elected — they  have 
a  majority  of  the  stock  and  they  vote  in  connection  with  the  other  stock- 
holders and  elect  a  board  of  directors.  They  expect  to  elect  men  of  char- 
acter and  ability  to  conduct  the  business  affairs  of  the  company  just  as  any 
other  corporation  would  be  conducted,  and  it  is  expected  that  everything" 
will  be  open  to  inspection,  and  it  will  if  I  have  my  way  or  if  I  can  induce  it. 
I  do  not  think  there  will  be  any  objection  to  furnishing  at  any  time  to  this 
commission,  or  to  the  States,  or  to  the  United  States,  a  statement  of  any 
of  these  lines  or  a  full  statement  of  the  Pure  Oil  Company  which  will  prob- 
ably absorb  the  other  lines  in  the  manner  I  have  stated. 

Q.  Well,  is  it  not  true  that  this  voting  trust  of  five  members,  who  vote 
simply  more  than  a  majority  of  the  stock,  do  manage  the  affairs  of  the  com- 
pany through  this  board  of  directors?  A.  Yes;  the  voting  trustees  are  15. 
The  number  was  made  large  so  as  to  be  very  representative  throughout  the 
oil  country.  The  voting  trustees  are  15.  They  do  elect  the  directors  and 
that  is  the  object  of  it.  I  have  fully  stated  the  reason  why  it  was  done, 
which  was  to  prevent  being  crushed  lay  this  great  monopoly.  That  was  the 
only  object.  Without  it,  it  would  have  been  open  to  every  person,  and  it 
was  the  only  means,  as  we  have  learned  by  experience,  that  we  can  do  this, 
I  will  further  state  that  voting  trusts  are  not  uncommon  either  in  Europe 
or  America.     It  is  nothing  new  to  have  a  voting  trust. 

Q.  Mr.  Chairman,  you  are  perhaps  more  familiar  than  anybody  else  in 
the  room  with  the  affairs  of  the  old  Standard  Oil  Company.  Will  you  state 
how  this  voting  trust  feature  of  your  company  differs  from  the  old  Standard 
Oil  Trust's  manner  of  doing  business?     A.  The  voting  question? 

Q.  Yes.     A.  At  the  present  time? 

Q.  Yes.  A.  I  know  nothing  about  their  methods  of  later  years  except 
that  I  know  one  suit  was  brought  against  them  in  Ohio  to  dissolve  their 
trust  and  they  agreed  to  dissolve  it.  I  know  of  persons  holding  certificates 
of  the  same  trust  and  receiving  dividends  on  them  up  to  a  very  recent  day 
and  it  was  also  acknowledged  here  yesterday  that  they  were  still  paying 
dividends  on  these  trust  certificates  and  you  have  the  information  in  the 
record. 

Q.  Was  not  the  old  Standard  Oil  Trust,  through  a  voting  trust,  electing 
a  board  of  directors  to  manage  the  affairs  of  the  trust?  A.  No;  they  were  a 
close  corporation,  as  I  imderstand. 

Q.  A  what?  A.  What  we  would  call  a  close  corporation.  I  mean  a 
trust,  a  body  of  men  associated  together  in  the  most  secret  form,  probably, 
that  exists  in  any  business  enterprise  of  magnitude,  and  they  conducted 
their  business  and  they  would  make  no  statement  to  the  public.  The  most 
I  have  heard  was  at  the  time  they  bought  this  property  from  another  indi- 
vidual who  said  he  had  had  the  privilege  to  look  at  what  he  called  their 


*Mr.  IvPe  (p.  301)  stated,  when  questioned  regarding  local  pipag-e,  that  the  cost, 
he  thought,  would  be  between  seven  and  eight  cents  a  barrel  and  that  this  cost  did 
not  Include  interest  on  the  capital  invosterl.  TTis  statement  in  regard  to  interest  on 
the  capital  Invested  was  eliminated  from  the  nffirial  repnrt.  Mr.  Philliiis  was  no- 
asked   whether  his  estimate  Included   fixed  charges. 


VICE-CHAIRMAN   THOMAS   W.   PHILLIPS.  281 

quick  assets  and  they  were  enormous.  That  was  in  1890.  I  do  not  know 
about  their  business  affairs  after  that. 

Q.  Do  you  state  that  this  voting  trust  feature  of  yours  is  not  similar  to 
the  old  voting  trust  feature  of  the  Standard  Oil  Company?  A.  Not  in  any 
way,  manner  or  form.  It  has  been  fully  explained  and  the  object  of  it  has 
been  fully  explained.  I  have  no  hesitancy.  I  have  nothing  to  conceal  about 
my  public  transactions  in  connection  with  that  business  or  anywhere  else. 

Q.  The  reason  I  asked  that  was  because  the  Standard  Oil  officials  have 
testified  that  in  this  respect  you  began  where  they  left  off.  A.  Well,  if  they 
said  that  they  said  what  was  not  the  truth,  because  the  matter  is  fully  before 
the  commission  and  the  only  object  of  the  voting  trust  is  the  one  I  have 
stated. 

Q.  (By  Representative  LIVINGSTON.)  I  have  an  allegation  here,  by  a 
party  who  signs  his  name  to  it,  that  the  Standard  purchased  stock  in  the 
name  of  a  spy  sufficient  to  place  one  director  on  the  board  of  the  following 
companies,  and  yours,  the  Producers',  is  included.  What  do  you  know 
about  that?    A.  From  what  do  you  read? 

Q.  I  am  reading  from  a  letter  signed  by  a  man.  It  does  not  make  any 
difference  who  he  is.  Has  the  Standard  Oil  Company  a  member  on  your 
board  of  directors?  A.  Yes;  they  have  a  member  on  the  board  of  the 
United  States  Pipe  Line  Company.  They  failed  to  secure  an  election  in  the 
other  company,  although  they  had  a  majority  of  the  stock,  as  I  explained. 
One  of  their  members,  who  is  openly  connected  with  them,  though  not  in  a 
managing  capacity,  is  on  the  board. 

Q.  On  your  board?  A.  On  the  board  of  the  United  States  Pipe  Line 
Company.  I  have  stock  in  it  and  I  am  also  a  director  in  that  company  and 
I  have  met  with  him. 

Q.  There  are  several  companies  here  mentioned  in  which  they  did  pur- 
chase stock  enough  to  put  one  member  on  the  board,  among  them  the  Pro- 
ducers &  Refiners'  Oil  Company,  and  the  United  States  Pipe  Line  Company. 
Now,  this  man  charges  that  the  Standard  Oil  Company  and  your  company 
and  these  other  two  companies  are  one  and  the  same  thing  by  a  private 
agreement — by  a  private  understanding — to  the  extent  that  you  sold  stock 
enough  to  the  Standard  to  authorize  them  to  put  a  member  on  your  board, 
and  on  these  other  boards.  Is  that  correct?  A.  No;  it  is  absolutely  false, 
without  any  equivocation. 

Q.  Do  you  mean  that  it  is  false  in  toto — that  you  have  not  any  mem- 
ber? A.  No;  I  said  we  had  a  member,  but  we  did  not  consent — it  was 
bought  without  our  knowledge  and  consent  and  he  was  forced  there  by  law. 

Q.  I  understand  that.  They  had  purchased  stock  enough  to  force  a 
member  on  your  board?  A.  And  forced  him  on  us.  They  said  they  would 
not  be  associated  with  any  of  these  affiliated  companies  because  of  lack  of 
faith  both  in  their  ability  and  in  their  honesty. 

Q.  What  advantage  to  the  Standard  Oil  Company  is  that  member  of 
the  board  of  directors  of  your  company?  How  can  they  utilize  him?  A. 
They  get  all  the  information.  That  is,  he  is  called  to  all  the  meetings  and 
treated  as  any  other  member  of  the  board. 

Q.  They  find  out  all  your  secrets  in  that  way?  A.  The  witness  yester- 
day testified  that  one  object  in  purchasing  the  stock  was  to  get  information. 
We  have  never  had  a  doubt  that  their  purpose  in  these  purchases  was  to 
destroy  or  cripple  our  industry  and  break  down  opposition. 

*Q.  I  will  show  this  letter  both  to  yourself  and  to  the  representatives 
of  the  Standard  Oil  Company.  I  do  not  want  to  do  either  of  you  an  injus- 
tice, and  maybe  you  better  see  it  before  you  get  off  the  stand?  A.  I  have  no 
objection  to  glancing  at  it. 

Q.  I  will  show  this  letter  both  to  yourself  and  to  representatives  of  the 
Standard  Oil  Company.  *There  are  some  charges  and  allegations  here 
which  are  right  serious.  The  gentleman  signs  his  name  to  it  and  gives  his 
postoffice.  I  do  not  know  the  gentleman  and  never  heard  of  him.  (Repre- 
sentative Livingston  here  produced  a  letter  and  handed  it  to  the  witness.) 
A.  Will  the  commission  indulge  me  a  minute  while  I  look  over  this? 


*Black   faced   type   Indicates   matter  omitted,  in  the  course  of  editing,   from   in- 
official report. 


282  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

*Mr.  FARQUHAR.  It  does  not  matter  much  about  that;  we  will  all 
know  what  it  is  before  long. 

Representative  LIVINGSTON.  I  do  not  want  to  violate  any  confidence. 
I   do  not  see  any  confidential   mark  on  it. 

Vice-Chairman  PHILLIPS.  The  person  whose  name  is  signed  is  not 
known  to  me. 

Mr.  FARQUHAR.     It  is  not  signed  by  W.  H.  Clark,  is  it? 

Representative  LIVINGSTON.  No,  indeed  it  is  not.  It  is  signed  by  a 
gentleman   in   West   Virginia. 

Vice-chairman  PHILLIPS.  I  do  not  know  the  gentleman.  I  may  have 
read  of  him.  Now,  there  are  some  other  matters  about  it;  I  would  say 
this 

Representative  LIVINGSTON.  You  can  read  it.  if  there  is  anything  in 
there  that  is  false  you  can  say  so. 

Vice-Chairman  PHILLIPS.  Now,  this  can  be  left  in  my  hands  or  in  the 
hands  of  Governor  Harris.  He  will  take  charge  of  this  paper  and  I  can  look 
at  it,  as  can   members  of  the  Standard  also  if  they  desire. 

Mr.  A.  L.  HARRIS  (Acting  Chairman).  We  do  not  want  to  take  the 
time  now.     Have  you  any  further  inquiries,  Colonel   Livingston? 

Representative   LIVINGSTON.     No;   the  questions  are  all  there. 

Q.  (By  Mr.  A.  L.  HARRIS.)  The  witness  desires  to  look  at  the  paper  a 
moment  and  probably  it  would  be  better  to  go  on  with  the  examination  and 
let  him  appear  again,  probably  after  the  noon  recess.  Are  there  any  further 
questions? 

Representative  LIVINGSTON.  I  request  Mr.  Phillips  that  if  I  am  not 
present  when  he  gets  through  with  the  letter  that  if  any  representative  of 
the  Standard  Oil  Company  is  present  he  may  have  the  same  use  of  it? 

Vice-Chairman  PHILLIPS.  If  any  use  is  made  of  it  by  one  side,  the 
other  shall  have  the  same  privilege. 

Q.  (By  Mr.  RATCHFORD.)  In  the  early  part  of  your  paper,  ISIr.  Phil- 
lips, you  observed  that  your  company  is  not  a  trust,  but  is  a  combination. 
Do  we  understand  that  it  is  chartered  under  the  laws  of  the  State  of  New 
Jersey,  as  is  also  the  Standard  Oil  Company?  A.  It  has  been  testified  here 
that  recently  the  Standard  Oil  Company  has  been  chartered. 

Q.  You  also  define  a  trust  to  be  a  monopoly.  Do  the  laws  of  New  Jer- 
sey give  to  the  Standard  Oil  Company  any  advantage  that  is  not  given  to 
your  company?  A.  Not  so  far  as  I  know.  All  these  large  combines  that 
have  been  organized  under  the  laws  of  New  Jersey  are  organized  alike,  as  I 
understand  it.  Some  have  preferred  and  common  stock  and  others  just 
common  stock,  etc. 

Q.  The  combinations  or  trusts  are  equal  before  the  law,  as  you  under- 
stand it?  That  being  the  case,  then,  the  Standard  Oil  Company  is  only  a 
monopoly  in  the  State  of  New  Jersey,  providing  it  is  able  to  monopolize  the 
business.     Is  tha,t  right.     A.  Yes. 

Q.  If  that  be  correct,  it  follows  that  your  company  will  also  be  a  monop- 
oly, provided  you  are  able  to  monopolize  the  business?  A.  Both  companies 
have  a  perfect  right 

Q.   (Interrupting.)     They  have  the  same  right  under  the  law?     A.  Yes. 

*Q.  That  is  what  I  want  to  bring  out.  A.  I  never  looked  at  their  char- 
ter, but  I  presume  that  Senator  Lee,  being  a  lawyer,  would  know.  (Turn- 
ing to  Former  State  Senator  Lee.)  Probably  that  would  be  the  true  case, 
would  it  not?     We  are  organized  under  the  same  law. 

Q.  What  I  wanted  to  know  was  whether  they  had  special  privileges 
under  the  law?  A.  I  imderstand  all  of  these  great  industries  organized  in 
the  State  of  New  Jersey  are  organized  under  this  same  law  and  have  the 
same  privileges. 

Q.  Another  statement  I  understood  you  to  make  is  that  the  Pure  Oil 
Company  will  eventually  absorb  the  other  lines?  A.  They  will  absorb  the 
other  lines  just  as  lines  have  been  absorbed  by  the  Standard. f 


•Black  faced  type  Indicates  matter  omitted,  In  the  course  of  editing,  from  the 
official  report. 

■Mn  the  offlcial  report  this  answer  is  made  to  read  as  follows:  "It  will  purchase 
a  majority  of  the  stock  of  the  independent  lines." 


VICE-CHAIRMAN  THOMAS   W.   PHILLIPS.  283 

Q.  This  is  the  company  you  are  interested  in?  A.  I  am  interested  in 
all  of  them.     I  am  interested  in  all  four  of  them. 

Q.  From  your  standpoint,  I  want  to  ask  if  the  absorption  of  smaller 
enterprises  is  not  the  greatest  objection  that  has  been  urged  against  the 
Standard  Oil  Company?  A.  Oh,  why  certainly;  but  these  independent  com- 
panies are  practically  the  same  already.  The  producers  formed  one  organi- 
zation and  then  another  and  another,  and  the  stockholders  are  all  alike  in 
these  companies;  very  little  difference  in  any  of  them.  They  simply  got 
together  because  the  Standard  was  liable  to  absorb  all  of  them  in  detail. 
But  if  organized  in  this  protective  form,  with  a  voting  trust,  it  will  be  im- 
possible for  the  Standard  to  buy  the  stock  and  control  these  companies.  It 
is  self-defense. 

Q.  But  is  it  not  the  purpose  of  the  stronger  companies  to  absorb  their 
smaller  competitors?  A.  I  do  not  know  the  purpose  of  others,  but  it  was 
the  purpose  of  this  Pure  Oil  Company  to  unite,  if  you  please,  to  consolidate, 
the  companies  in  one,  because  practically  the  stockholders  were  the  same. 
It  was  not  to  get  control  of  any  other  person's  business.  It  was  simply  to 
put  our  own  business  in  such  a  form  that  we  could  not  be  destroyed  by  this 
giant  monopoly. 

Q.  In  your  experience  with  the  Standard  Oil  Company,  has  that  not 
been  one  of  its  objects — to  absorb  the  smaller  concerns?  A.  The  smaller 
concerns  that  have  been  absorbed  have  been  independent  and  opposition 
companies.     These  are  not  and  the  cases  are  not  similar.* 

tQ.  That  is  all?  A.  I  want  to  answer  everything  in  the  most  complete 
manner  in  regard  to  this. 

Q.  (By  Mr.  CLARKE.)  Mr.  Phillips,  did  your  company  compete  with 
the  Standard  Oil  Company  in  any  operations  in  the  field?     A.  Yes. 

Q.  You  would  get  business  away  from  them  if  you  could  do  so  honestly 
and  fairly?  A.  Certainly,  that  is  in  an  honest  and  fair  manner.  Competi- 
tors will  always  do  that. 

Q.  You  would  get  away  all  their  business  if  you  could  honestly  and 
fairly.  I  suppose?    A.  It  would  be  very  difficult  to  do  that. 

Q.  Well,  suppose  you  could?     (No  answer.) 

Q.  (By  Mr.  FARQUHAR.)  There  is  the  same  object  before  the  two 
trusts — your  company  and  the  Standard?  A.  I  would  not  say  so.  I  would 
say  that  we  believe  we  only  want  a  fair  portion  of  the  competitor's  business. t 
Take  the  Pennsylvania  Railroad  system.  They  go  on  and  absorb  others  and 
lease  and  all  that.  I  would  not  desire  to  be  connected  with  a  monopoly.  I 
would  not  the  connected  with  a  company  to  control  a  great  product  where  I 
w^ould  fix  the  price  at  which  I  bought  and  at  which  I  sold.  It  is  too  great  a 
responsibility  for  any  one  man  to  have,  and  it  is  a  greater  responsibility 
than  ever  tyrants,  as  a  rule,  exercised  over  their  subjects,  when  they  fix  the 
price.     The  profits  which  have  been  fixed  by  this  trust  are  enormous. 

Q.  Now,  you  wish  us  to  understand  that  if  this  company  should  become 
large  and  be  an  octopus,  you  would  sell  out  and  be  no  longer  connected  with 
it?     A.  I  would  not.     I  would  not  be  connected  with  it. 

Q.  If  your  company  should  be  large  enough  to  monopolize  the  business 
by  means  of  fair  competition  you  would  no  longer  have  anything  to  do  with 
It?  A.  I  would  not  have  anything  to  do  with  it.  I  would  not  have  anything 
to  do  with  it  if  it  pursued  the  methods  of  the  Standard,  by  legislation  and 
by  preventing  others  from  doing  business.  If  it  grew  naturally,  and  the 
profits  were  fair,  I  would  be  willing  to  accept  them;  but  I  certainly  would 
not  want  the  responsibility  of  monopolizing  a  great  industry  and  fixing  the 
prices.  I  do  not  think  that  such  a  power  should  be  trusted  in  any  hands. 
I  would  be  in  favor  of  throwing  it  open  to  the  government  inspection, 
requiring  public  statements,  and  of  putting  it  under  any  laws  that  would  be 
fair  and  just  to  the  people. 


*Mr.  Phillips,  during  the  course  of  hia  testimony,  said  that  these  independent 
companies   "have   been   competitors   in   every  way." 

tBlack  faced  type  indicates  matter  omitted,  )n  the  course  of  editing,  from  the 
official  report. 

jIn  the  official  report  this  answer  reads:  "I  would  say  that  we  only  want  a 
fair  portion  of  the  competitor's  business,  not  the  whole  of  it." 


284  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

*Q.  You  have  heard  the  testimony  of  Mr.  Archbold  and  Mr.  Rogers  in 
favor  of  the  National   incorporation  of  companies.     Do  you  favor  that   idea? 

Mr.  A.  L.  HARRIS.  Let  me  make  a  suggestion.  Possibly  it  will  be  time 
to  take  that  up  later,  as  we  are  now  on  this  topic. 

Mr.  CLARKE.     All   right. 

Vice-Chairman  PHILLIPS.  At  the  proper  time  I  will  give  my  views  on 
any  of  these  questions. t 

Q.  You  would  not,  then,  if  you  could  by  perfectly  fair  and  legitimate 
means,  irrespective  of  the  means  of  the  Standard  Oil  Company,  monopolize 
the  oil  business  in  any  way?  A.  I  would  not  have  the  responsibility  of 
fixing,  according  to  my  own  judgment,  what  my  profits  should  be  from  a 
great  community — of  fixing  both  the  price  at  which  I  would  buy  and  sell.  I 
would  not  have  that  responsibility,  I  would  rather  die  poor  than  have  it. 

Q.  That  would  be  a  matter  of  your  own  conscience?     A.  Yes. 

Q.  How  would  it  be  under  the  law?  Do  you  consider  that  it  is  not  legal 
for  any  company  to  gain  all  the  advantage  that  it  can,  fairly  and  legiti- 
mately? A.  I  have  pretty  strong  views  in  regard  to  competitors  and  com- 
petition and,  being  a  member  of  the  commission,  I  would  rather  not  enter 
into  this  subject  and  give  my  views  in  regard  to  it.  But  if  you  should  desire 
that  I  should  do  so,  and  the  chair  so  desires,  of  course  I  am  subject  to  the 
commission,  as  is  any  other  witness. 

Q.  (By  Mr.  FARQUHAR.)  The  witness  states  that  the  Pure  Oil  Com- 
pany, so-called,  is  not  a  trust.  Will  you  explain  to  this  commission  why  it 
is  that  your  articles  of  agreement  all  through  characterize  it  as  a  trust  from 
beginning  to  end?  There  are  five  articles  in  your  agreement.  It  explicitly 
declares  in  the  first  arcticle:      (Reading.) 

"First — The  equitable  ownership  of  the  trust  shares  and  all  interests 
therein  shall  be  subject  to  the  terms  of  this  trust  agreement,  such  owner- 
ship of  the  shares  or  interests  therein  may  be  sold  at  the  will  of  the  holder; 
but  no  sale,  transfer  or  conveyance  of  such  ownership  or  interests  shall  give 
to  the  purchaser  any  rights  other  than  are  provided  for  in  the  by-laws,  rules 
and  regulations  of  the  company,  and  in  accordance  with  this  trust,  the 
trustees  hereunder  shall  at  all  times  be  recognized  as  the  legal  owners  and 
holders  of  the  trust  shares  to  carry  into  effect  the  purposes  of  this  trust  and 
all  equitable  owners  of  trust  shares  or  interests  therein  shall  specifically 
agree  in  writing  to  the  terms  of  this  trust  and  no  transfer  of  any  such 
shares  or  interest  shall  be  made,  or  be  effective  if  made,  unless  the  trans- 
feree of  such  equitable  ownership  or  interest  shall  have  agreed  in  writing 
to  receive  and  hold  the  same  subject  to  the  provisions  of  this  trust." 

*How  can  you  say  it  is  not  a  trust  when  it  says  in  so  many  words  that 
it  is  a  trust?  I  ask  the  question  whether  the  objects  set  forth  in  the  original 
trust  of  the  Standard  are  the  same,  with  just  one  exception,  as  are  claimed 
for  this  Pure  Oil  Company?  *The  same  objects  are  specified  at  the  begin- 
ning of  the  charter,  with  the  exception  of  one.  How  can  it  be  possible  to 
escape  the  idea  that  this  Pure  Oil  Company  is  a  trust?  What  explanation 
have  you  to  make?  *A.  I  explained  that  fully  in  my  paper,  if  you  had  paid 
attention  to  it. 

Q.  Oh,  I  listened  to  it  this  morning.  A.  It  is  a  voting  trust.  The  com- 
pany itself  is  organized  under  the  laws  of  the  State  of  New  .Jersey  and  all 
those  trust  papers,  as  I  understand  it — *l  think  they  were  drawn  by  com- 
petent attorneys  but,  being  very  busy,  I  did  not  pay  much  attention  to  the 
legal  matters — were  drawn  solely  for  the  purpose  of  protecting  the  stock- 
holders in  voting  this  stock  and  electing  directors.  The  stock  itself  was  put 
into  a  trust  so  that  it  could  not  be  sold  or  alienated  or  monopolized. 

Q.  It  is  a  closer  corporation  than  the  old  trust  was.  How  do  you 
explain  here  in  the  fourth  subdivision  of  this  agreement:     (Reading.) 

*Black  faced  type  Indicates  matter  omitted.  In  the  course  of  editing,  from  the 
official  report. 

tNo  furtiier  reference  to  the  subject  of  National  incorporations  was  made  while- 
Mr.  Phillips  was  on  the  stand. 


VICE-CHAIRMAN  THOMAS  W.  PHILLIPS.  285 

"Fourth — This  agreement  may  be  cancelled  and  the  trust  hereby  created 
dissolved,  only  by  the  winding  up  of  the  Pure  Oil  Company  or  by  the  con- 
sent in  writing  duly  executed,  of  the  equitable  owners  of  four-fifths  of  the 
shares  held  in  trust  hereunder  and  of  four-fifths  of  all  the  other  shares  of  the 
company,  after  providing  in  full  for  the  redemption  or  purchase  at  $110  per 
share  in  cash,  of  all  the  preferred  and  common  shares  of  the  company  at  the 
time  outstanding."* 

Is  not  that  trust  pretty  nearly  perpetual?  Is  not  that  company  a  per- 
petuity? A.  I  do  not  understand  it  to  be  so,  because  it  provides  for  its  own 
method  of  dissolution. 

Q.  How  do  you  provide  for  dissolution?  Because  under  the  general  laws 
that  is  under  the  power  of  the  trustees  and  you  have  trustees  here  who  hold 
the  entire  property  in  their  hands.  They  make  their  own  board  of  directors. 
The  administrative  power  of  your  whole  concern  is  contained  in  men  who 
are  creatures  of  your  trustees.  How  much  worse  than  that  is  the  Whisky 
Trust  or  the  Sandard  Oil?  A.  I  have  defined,  Major  Farquhar,  my  meaning 
of  the  word  "trust,"  and  it  has  been  so  often  repeated  that  the  intention  in 
that  agreement  was  only  to  preserve  this  stock  intact,  so  that  the  Standard 
Oil  Company  could  not  monopolize  it  as  they  did  monopolize  one  of  the 
companies.  vThat  was  the  whole  object  of  it,  as  there  explained.  There 
will  be  other  witnesses  here  who  can  testify  on  that  subject  and  can  give 
you  all  the  legal  definitions  regarding  it,  if  you  so  desire. 

Q.  I  must  confess  that  I  was  startled  when  these  papers  were  placed  in 
my  hands  yesterday.  Heretofore  I  have  changed  my  mind  on  a  good  many 
things  in  this  commission.  I  have  had  a  great  deal  to  do  with  New  Jersey 
corporations  and  I  think  I  know  the  law  pretty  thoroughly.  It  has  cost  me 
money  to  find  it  out.  I  never  heard  of  a  corporation  that  was  as  well  or- 
ganized as  is  this  for  a  perpetual  monopoly  or  a  perpetual  trust.  I  would 
like  to  ask  you,  Mr.  Phillips,  if  the  producers  who  sell  oil  to  independent 
refiners  get  better  prices  than  are  paid  to  producers  who  sell  to  the  Stand- 
ard? A.  That  varies  at  different  times.  I  would  state  this  for  the  informa- 
tion of  the  commission,  that  in  the  beginning,  when  the  Standard  had 
crippled  the  output  abroad  and  had  so  monopolized  everything  and  had 
thrown  everything  in  their  pathway,  the  producers  got  together  and  made 
sacrifices  for  the  benefit  of  the  refiners,  because  we  were  selling  cargoes  at 
great  loss.  We  have  given  them  a  reduction  in  the  pipe  line  charges.  In 
other  times  when  the  market  was  good  the  pipe  lines  have  sold  to  the  re- 
liners  at  a  profit  or  have  advanced  the  market.  That  is  what  I  mean.  Now, 
in  this  recent  advance  the  Producers  &  Refiners'  Pipe  Line  advanced  the 
oil  three  cents  more  than  the  Standard.  The  Standard,  in  a  few  days,  came 
up  to  it,  and  then  they  advanced  again  to  $1.37  and  this  line  advanced  it  to 
■$1.40.    They  were  very  anxious,  however,  to  get  the  oil  to  win  the  fall  trade. 

Q.  That  was  simply  incidental?  A.  Yes.  incidental.  They  have  been 
competitors  in  every  way.  tThey  were  perfecttly  willing  to  give  and  take. 
They  were  affiliated;   you   might  have  them  all  as  one  company. 

Q.  At  the  present  time  is  the  market  on  all  fours  to  the  producers, 
whether  they  are  sellers  to  the  independents  or  to  the  Standard?  Does  it 
pay  the  producers  to  sell  to  the  independent  refiners  as  well  as  to  the  Stand- 
ard? A.  Yes,  they  have  the  privilege  of  selling  to  other  pipe  lines.  There 
is  sometimes,  as  I  said,  an  advance  by  the  one  and  not  by  the  other.  But 
this  line  has  never  paid  the  producers  less  than  the  Standard  was  paying, 
funless  it  was  by  voluntary  contribution  to  help  them  over.  It  has  always 
kept  pace  with  the  Standard  in  advancing  and  very  frequently  has  ad- 
vanced one,  two.  three  or  five  cents  more.  We  are  moving  the  pure  oil, 
Pennsylvania  oil.     That  is  very  desirable  both  at  home  and  abroad. 

Q.  I  would  like  to  know  what  the  character  of  the  competition  was  that 
caused  the  United  States  Pipe  Line  to  put  up  the  price  10  cents  more.  Was 
it  the  Standard?     A.  That  forced  the  United  States? 


■^The  Pure  Oil  Trust  agreement  shows  thai  these  shares  to  be  redeemed  at  $110 
each  in  case  of  dissolution  had  a  par  value  of  $.5  each. 

tBlack  faced  type  indicates  matter  omitttd.  in  the  course  of  editing,  from  the 
official  report. 


286  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

Q.  Or  the  refiners  or  other  pipfe  lines?     A.  No,  we  did  not  do  that. 

Q.  I  thought  you  said  they  raised  three  cents  and  then  the  Standard 
raised  three?     A.  Yes. 

Q.  Was  it  the  presence  of  the  Standard  that  forced  them  up?  A.  I  do 
not  know  how  that  would  be. 

Q.  Well,  it  is  a  business  proposition?  A.  It  is  a  business  proposition 
that  in  order  to  benefit  their  friends  the  refiners  were  perfectly  willing  to 
take  the  advance,  because  it  was  the  time  of  year  when  they  wanted  to  ship 
this  oil  abroad  and  to  supply  the  markets  at  home. 

Q.  What  1  want  to  get  at  is  whether  the  producers  expect  any  greater 
benefit  through  this  pipe  line  company  than  through  the  Standard  in  selling 
their  oil?  A.  We  believe  that  were  it  not  for  these  companies  the  price  of 
oil  would  be  much  less  than  it  is.*  We  believe  we  have  reaped  more  benefit 
as  producers  because  of  the  competition,  limited  as  it  is.  It  is  remarkable 
what  a  little  competition  can  accomplish.  They  do  not  overlook  small  things. 
They  have  the  power  of  a  giant  and  they  use  it  as  a  giant. 

tQ.  That,  of  course,  is  all  argument.  We  have  too  much  of  that.  I  want 
to  know  if  these  producers  are  any  better  off  with  this  independent  or- 
ganization than  they  are  with  the  Standard  as  far  as  prices  go.  Then  I  want 
to  have  the  question  answered  after  that,  whether  the  refiner  pays  the  extra 
profit  that  is  paid  into  the  hands  of  the  producers?  A  There  is  no  doubt, 
in  my  judgment,  that  the  producers  are  better  off  on  account  of  this  inde- 
pendent movement.  There  is  no  doubt  that  independent  refiners  are  better 
off,  and  I  am  frank  to  say  that  if  it  were  not  for  these  pipe  lines  they  would 
not  be  living  to-day,  and  it  is  mutual  protection  that  caused  the  union  of 
these  people.  We  believe  we  have  received  much  better  prices  for  oil. 
During  the  last  year  the  refiners  have  given  much  better  prices  for  oil  than 
they  would  have  given  if  there  had  not  been  this  independent  movement. 

Q.  You  have  stated  repeatedly,  or  rather  it  has  been  stated  repeatedly 
before  this  commission,  that  the  Standard  has  made  inordinate  profits.  Is 
it  a  fact  that  the  independents  are  not  making  as  much  money,  either  as 
refiners  or  producers,  as  the  Standard  people  are?  I  am  not  talking  about 
commercial  conditions  at  the  seaboard,  1  am  speaking  about  the  field,  be- 
cause the  producer  is  not  concerned  with  anything  outside  of  the  Penn- 
sylvania and  Ohio  fields?  A.  I  think  that  as  far  as  production  is  concerned 
they  are  substantially  on  a  par,  but  as  far  as  the  selling  is  concerned  the 
Standard  has  an  advantage,  because  the  independents  have  not  an  accumu- 
lated capital  to  handle  all  the  by-products  and  so  on  as  the  others  have, 
which  has  been  explained  heretofore. 

Q.  So  we  come  to  the  plain  business  proposition  that  the  producer  is 
just  as  well  off  dealing  with  the  Standard  as  he  is  with  this  Pure  Oil  Com- 
pany?    A.  No,  indeed,  I  would  say  not. 

Q.  Why  is  he  not?  A.  Because  when  there  is  no  opposition  they  pay 
much  less  prices.  While  we  could  not  prove  it,  the  price  of  oil  has  been 
so  much  better  that  we  have  already  paid  for  the  plant  out  of  the  increased 
prices  placed  upon  oil  by  the  Standard  on  account  of  this  opposition. 

Q.  You  said  one  minute  ago  that  the  advance  made  by  the  independ- 
ents was  three  cents,  which  was  met  by  the  Standard  with  another  ad- 
vance? A.  How  do  we  know  but  the  oil  would  be  50  or  60  cents  to-day  if  it 
were  not  for  this  organization? 

Q.  That  is  entirely  hypothetical,  fit  has  nothing  to  do  with  the  com- 
mission's testimony.  I  want  to  know  if  they  are  any  better  off;  if  they 
have  any  advantage?  A.  I  said  they  are  better  off.  The  pioducers  are 
better  off,  probably  by  2.5  cents  per  barrel,  on  account  of  this  opposition 
to  the  Standard. 

*While  Mr.  Phillips  here  argues  that  the  competitinn  of  the  Pure  Oil  Company 
keeps  prices  of  oil  up,  it  will  be  noticed  that  elsewhere  he  and  his  associates  in  the 
oil  business  all  arRue  that  the  Standard  Oil  Company  absolutely  fixes  the  prices  at 
which  they  buy  and  sell  oil. 

tBlack  faced  type  indicates  matter  omitted,  in  the  course  of  editing,  from  the 
official  report. 


VICE-CHAIRMAN   THOMAS  W.  PHILLIPS.  287 

Q.  These  men  that  are  engaged  in  the  independent  movement  have 
made  money  out  of  the  oil  business?  A.  A  great  many  of  them  are  quite 
well  to  do.* 

Q.  Many  of  them  are  millionaires?  A.  Some  of  them  have  made  a 
great  deal  of  money. 

Q.  So  these  men  who  are  co-operating  with  you  are  millionaires,  and 
the  Standard  is  simply  a  greater  aggregation  of  millionaires?  A.  I  do  not 
know  the  wealth  of  these  gentlemen.  I  am  quite  sure  they  would  have 
much  more  wealth  if  they  had  got  better  prices;  if  they  had  shared  in  the 
profits  of  the  Standard. 

Q.  Of  course  that  is  a  business  question  like  railroading.  The  largest 
corporation  is  going  to  make  the  most  money.  A.  I  have  given  facts  and 
figures  here  which  will  convince  anybody.  I  think,  that  the  Standard  has 
been  making  more  profit  on  each  barrel  of  oil  than  they  paid  for  it.  Now 
that  affects  both  the  producer  and  the  consumer. 

tQ.  The  simple  matter  that  the  production  was  500,000,000  barrels  and 
that  the  stock  of  the  Standard  is  $465,000,000  does  not  count  for  anything 
before   this  commission. 

Mr.   A.   L.    HARRIS.     That   is  argument. 

Mr.  FARQUHAR.  These  figures  are  neither  argument  nor  anything 
else.  What  I  wanted  to  get  at  was  this  matter  of  the  producers.  I  want  to 
state  here  that  the  key  to  the  question  is  to  find  out  whether  these  pro- 
ducers are  able  to  eet  their  share  of  the  profits  that  belong  to  them. J 

tMr.  A.  L.  HARRIS.  What  the  chair  desires  is  a  proper  time  for  argu- 
ment, and  a  proper  time  for  testimony. 

Mr.  FARQUHAR.  I  do  not  want  to  argue  it.  I  merely  wanted  to  get 
out  that   feature    in   view   of  the    position   the   witness   has  taken. 

Vice-Chairman  PHILLIPS.  Take  their  dividends  and  add  the  stock  to 
it  and  it  will  show  that  they  are  very  large.  I  think  that  has  undergone  ab- 
solute demonstration   by  all   facts   sufficient  to   convince   any   person. 

Q.  (By  Mr.  SMYTH.)  Will  you  tell  us  what  is  the  capital  of  the  Pure 
Oil  Company — the  amount  of  its  capitalization?  A.  Something  over  $400.- 
000;  but  there  has  been  an  application  to  increase  it.  It  is  my  recollection — 
it  may  not  be  correct — that  the  authorized  capital  originally  was  $1,000,000, 
$377,000  of  which  was  paid  in. 

Q.  What  was  the  value  of  the  different  companies  associated  with  or 
controlled  by  the  Pure  Oil  Company?  A.  Not  any  of  them  are  controlled  by 
it  as  yet. 

Q.  Do  you  think  that  this  Pure  Oil  Company  will  be  a  competitor  in  the 
market  for  the  benefit  of  the  consumer?  A.  For  the  benefit  of  the  consumer 
and  producer. 

Q.  Can  you  tell  us  what  portion  of  the  products  of  these  companies  with 
which  you  are  connected  goes  abroad,  and  how  long  you  have  been  in  the 
export  busines?  A.  I  have  not  been  managing  that  department.  Will  you 
allow  me  to  go  on?  I  am  informed  by  the  president  of  the  company  that 
about  40  per  cent,  of  the  crude  we  handle  would  go. 

Q.  How  long  have  you  been  exporting  40  per  cent,  of  your  crude?  A. 
About  two  or  three  years. 

Q.  Was  your  company  the  first  to  export  oil,  or  was  the  Standard  Com- 
pany the  first  to  open  up  the  market?  A.  Oh,  they  never  were;  there  was  a 
large  amount  of  oil  shipped  abroad. 

Q.  One  must  have  been  first?     A.  Oh,  yes — when  it  originally  started. 

Q.  I  asked  the  question  concerning  your  company  or  the  Standard?  A. 
Oh,  yes;  they  were  in  existence  first,  but  there  was  a  great  deal  of  exporting 
done  by  the  Standard  and  there  was  a  great  deal  done  by  the  others.     It  is  a 


*In  the  official  report  the  following  is  added  to  this  answer:  "But  a  majority  of 
the  producers  are  comparatively  poor." 

tBlack  faced  type  indicates  matter  omitted,  in  the  course  of  editing,  from  the 
ofRcial  report. 

JThe  following  an.«wer  to  this  question  by  Mr.  Phillips  is  inserted  in  the  ofRcial 
report:  "The  producers  could  not  have  received  their  share  of  the  profits  when  it  is 
a  fact,  as  has  been  shown,  that  the  Standard  makes  more  en  each  barrel  of  oil  than 
they  pay  the  producer  for  it." 


288  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

marketing  company,  but  there  is  an  effort,  which  we  presume  will  be  suc- 
cessful, to  combine  the  others,  as  I  have  explained,  into  this  Pure  Oil  Com- 
pany with  an  increased  capital. 

Q.  What  would  be  the  aggregate  value  of  these  companies?  A.  There 
is  about  $3,000,000  invested  in  all  these  companies  to-day. 

Q.  Then  you  propose  to  increase  the  capital  of  the  Pure  Oil  Company? 
A.  Yes,  it  has  been  proposed  to  increase  it. 

Q.  Has  it  been  decided  to  what  amount?  A.  It  has  been  thought  we 
would  probably  increase  it  to  $10,000,000. 

Q.  Now,  in  your  judgment,  the  value  of  that  stock  would  be  about 
$20,000,000?     A.  No.  not  at  all. 

Q.  I  understood  you  to  say  a  short  time  ago  that  you  would  not  take  100 
per  cent,  advance  for  your  stock?  A.  I  would  not  feel  like  taking  100  per 
cent,  for  my  stock  in  all  these  companies,  because  I  think  I  am  benefited 
l)y  getting  a  better  price  for  my  production. 

Q.  They  did  not  go  into  the  refining  business  as  the  Standard  Company 
for  a  number  of  years  after  the  discovery  of  oil?    A.  Oh,  no. 

Q.  You  do  not  consider  the  Standard  Oil  Company  the  pioneer  in  build- 
ing up  the  export  oil  business?    A.  Not  at  all,  no. 

Q.  At  the  same  time  they  had  a  large  proportion  of  it  to  meet?  A.  Oh, 
certainly  they  did. 

Q.  And  covered  the  world,  as  we  learned  yesterday  from  Mr.  Archbold? 
A.  Yes,  but  I  do  not  believe,  as  was  stated  by  Mr.  Archbold  yesterday,  that 
they  have  better  talent  than  the  outsiders  have.* 

Q.  Now,  the  charter  of  the  Pure  Oil  Company  has  been  taken  in  the 
State  of  New  Jersey  and  the  charter  of  the  Standard  Oil  Company  is  now 
being  taken  there.  You  spoke  of  the  Standard  Oil  Company  as  the  Standard 
Oil  Trust.  Yet  you  deny  that  the  Pure  Oil  Company  is  in  any  manner  a 
trust.     How  do  you  distinguish  them?     A.  It  is  a  monopoly. 

Q.  How  can  the  Standard  Oil  Company  be  a  monopoly  when  the  Pure 
Oil  Company  is  not?  The  Standard  Oil  Company  handles  only  80  per  cent, 
of  the  product?  A.  It  does  not  require  all  of  any  commodity  to  make  a 
monopoly  and  fix  prices.  Any  person  knows  that.  They  do  own  sufficient  to 
make  a  monopoly. 

Q.  You  stated  just  now  that  you  had  advanced  the  price  of  the  crude  oil 
to  the  producers,  and  then  the  Standard  had.  So  you  were  not  alone  in  fixing 
the  price?    A.  That  was  in  one  locality. 

Q.  It  was  a  fact  that  it  was  done?  A.  Yes,  that  is  where  our  pipe  lines 
went,  and  I  may  say  it  was  universal  over  the  field. 

Q.  Mr.  Archbold  stated  that  he  was  distinctly  and  clearly  in  favor  of  the 
interstate  commerce  law,  and  that  since  the  passage  of  that  law  in  1887  he 
affirmed  and  gave  positive  testimony  that  no  rebates,  special  rates  of  freight, 
nor  advantages  of  any  kind  had  been  offered  by  any  railroad  company  or 
transportation  company  or  canal,  nor  accepted  by  the  Standard  Oil  Com- 
pany, nor  asked  for  by  them.  Do  you  say  the  same  for  the  Pure  Oil  Com- 
pany and  the  companies  with  which  you  are  connected?  A.  Yes,  to  the  best 
of  my  knowledge  and  belief,  there  has  been  nothing  of  that  kind. 

Q.  No  special  rates  have  been  given  to  your  company  at  all?  A.  Yes, 
there  were  contracts  made  when  we  could  not  get  through  to  New  York.  Of 
course  there  was  a  rate  through  to  New  York,  when  our  pipe  line  reached 
one  road  and  when  it  reached  a  certain  further  point  there  was  a  lower  rate. 
The  freieht  was  very  lai-ge  and  it  was  the  only  way  we  could  get  oil  through 
to  the  market.     It  was  an  open  rate. 

O.  It  was  a  special  rate  to  your  company?  A.  No.  it  was  an  open  rate. 
It  was  the  same.  They  probably  had  no  other  shipment  of  crude  oil  from 
that  given  point,  but  it  was  in  proportion  to  their  other  shipping  points 
(from  Oil  City,  for  instance)  through. 

Q.  Wasn't  it  less  than  by  competing  lines?    A.  Not  that  I  know  of. 

Q.  Could  it  have  been  without  your  knowledge?     A.     Oh,  yes;   possibly. 


•The  following  appears  as  a  part  cf  Hi;-  rin.-wcr  in  the  nfRcial  rciKirt:  "Yes,  but 
others  preceded  them  in  almost  all  cinintries." 


VICE-CHAIRMAN  THOMAS  W.   PHILLIPS.  289 

Q.  You  could  not  say  from  your  own  knowledge?  A.  I  will  say  that 
there  are  other  witnesses  that  will  come  here  and  give  you  the  facts.  We 
are  perfectly  willing  to  appear  before  this  commission  and  answer  questions. 
I  am,  at  least,  and  the  stockholders  are  perfectly  willing  to  aid  you  and 
show  whatever  there  is  in  the  whole  business.  We  have  nothing  to  conceal 
whatever. 

Q.  Would  you  be  willing  to  give  a  list  of  the  dividends  paid  by  your 
companies?  A.  Yes,  *and  the  surplus  put  away  might  be  given.  I  am 
assuming  that  we  would  be  perfectly  willing  to  have  all  our  companies,  and 
certainly  I  should  be  willing  to  have  anything  that  I  am  in.  open  to  State 
and  governmental  inspection,  and  if  it  was  doing  an  injury,  I  would  not 
object  to  having  it  abolished — either  abolished  or  restricted. 

Q.  You  stated  positively  that  to  your  knowledge  no  rebate  has  been 
received  or  accepted  by  any  of  your  companies  since  the  passage  of  the 
interstate  commerce  law?  A.  Not  to  my  knowledge.  *lf  it  is,  it  is  without 
my  knowledge. 

Q.  Do  you  know  of  any  such  rebate  being  given  to  the  Standard  Oil 
Company?  A.  I  will  qualify  my  former  statement  in  regard  to  the  rebates. 
A  pipe  line  sometimes  sold  for  less  to  these  refiners,  who  were  stockholders 
and  a  part  of  the  system,  and  they  did  it  simply  to  help  them  through. 

Q.  To  that  extent  it  was  a  special  rate  extended  to  the  Pure  Oil  Com- 
pany? A.  No.  it  was  to  the  refiners.  The  Pure  Oil  Company  is  a  marketing 
company.  *lt  was  extended  to  the  refiners  and  it  caused  the  Standard  to 
compete  in  Germany.  We  had  to  sell  cut  cargoes  and  we  did  this  so  we 
might  live  and  not  die. 

Q.  When  you  entered  the  German  market  you  found  the  Standard 
already  there?    A.  Yes. 

Q.  And  you  got  in  and  competed  with  them?  A.  Oh,  yes;  we  went  in 
as  anybody  had  a  right  to. 

*Q.  Certainly  you  had  a  right.  A.  And  we  found  the  competition  a  very 
bitter  one;  at  least  the  refiners  did. 

Q.  Did  you  find  the  Russian  competition  there?  A.  There  is  very  little 
Russian  oil  sold  there  now. 

Q.  In  Germany,  as  far  as  your  knowledge  extends?  A.  There  is  very 
little  Russian  oil  shipped  to  Germany. 

Q.  But  there  was  a  very  large  amount  of  Russian  oil  shipped  to  Ger- 
many before  the  Standard  went  in?  A.  They  were  not  the  pioneers.  My 
own  judgment  is  that  there  would  have  been  a  wider  distribution  of  oil,  bet- 
ter both  for  producers  and  consumers  and  they  would  have  been  more  fairly 
treated  if  there  had  been  competing  companies,  instead  of  this  monopoly. 

Q.  You  do  not  think  the  Standard  Oil  Company  has  been  a  benefit?  A. 
The  Standard  Oil  Company?  I  don't  believe  I  would  be  willing  for  one  rail- 
road to  control  80  per  cent,  of  the  passenger  traffic  and  the  freight  traffic 
of  this  country  and  have  the  absolute  power  to  fix  rates.  *l  do  not  think  the 
existence  of  the  Standard  Oil  Company  has  been  beneficial  to  the  oil  people 
and  to  the  producers  and  consumers  of  the  world.  I  think  we  would  have 
had  a  wider  distribution  of  petroleum  and  the  people  would  have  been  better 
served  and  the  producers  would  have  been  better  remunerated  had  it  not 
existed. 

Q.  (By  Mr.  FARQUHAR.)  Do  you  believe  that  any  of  the  independent 
refiners  or  producers  of  this  country  could  have  ever  reached  the  field  that 
the  Standard  reached  all  over  the  world  unless  they  had  combined?  *A.  1 
may  answer  that  by  asking  another  question.  What  would  you  say  in 
regard  to  the  Vanderbilt  system  of  railroad  and  the  Pennsylvania  system. 
What  could   they    reach?     What   could   they  do?;- 

Q.  The  Vanderbilt  system  is  extending  from  New  York  to  Buffalo  and 
now  goes  clear  to  the  Pacific?  A.  Don't  you  think  the  country  is  better 
served  by  two  or  three  or  four  systems  of  railroad?  And  the  same  logic 
would  show 


*B!ack  faced  type  indicates  matter  omitted,  in  the  course  of  editing,  from  the 
official  report. 

tin  ttie  place  of  this  answer  the  following  is  substituted  in  thie  official  report: 
"Yes,  the  markets  of  the  world  were  'argely  reached  before  the  Standard  com.bina- 
tion." 

19 


290  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

Q.  (By  Mr.  KENNEDY.)  *You  stated  substantially  what  you  believecf 
to  be  the  profit  per  barrel  of  the  oil  to  the  Standard  Oil  Company.  You  must 
know  that  the  members  of  the  commission  will  believe  that  you  know  more 
about  the  affairs  of  your  own  company  or  equally  as  much  as  you  do  about 
those  of  the  Standard  Oil.  Can  you  state  what  profit  the  Pure  Oil  Company 
makes  per  barrel  of  oil?  A.  I  will  have  the  officers  present  that.  I  have  not 
gone  over  it  in  detail.    We  have  no  public  records  of  the  amount. 

Q.  You  have  private  records?  A.  Yes,  but  I  have  not  examined  into  this 
matter.  I  will  present  the  exact  figures. f  It  has  varied  at  different  times. 
We  have  met  with  great  losses  and  sometimes  we  have  made  some  profits. 
I  would  state  that  the  profit  would  be  less  than  10  cents  a  barrel  at  the 
present  time. 

Q.  While  the  Standard  profit  is  more  than  a  dollar  a  barrel?  A.  It 
seems  to  me  that  the  data  given  shows  conclusively  that  the  profit  is  more 
than  a  dollar. 

Q.  And  the  Standard  can  make  a  profit  of  a  dollar  a  barrel  and  you  can 
only  get  a  profit  of  10  cents?  A.  Oh,  we  have  met  this  great  opposition  in 
the  markets.  We  expected  to  make  more  than  that  perhaps  after  a  time, 
but  if  we  could  average  10  cents  a  barrel  and  could  do  one-fourth  of  the 
business  of  the  Standard  Oil  Company  we  would  get  enormously  rich.  My 
dear  sir,  if  a  party  of  capitalists  had  purchased  the  right  from  the  Standard 
in  the  State  of  Pennsylvania,  where  we  could  not  get  any  free  pipe  line  for 
a  long  time,  to  manufacture  and  sell  one-quarter  of  the  oil  that  the  Standard 
did  when  they  were  organized  they  would  have  made  two  or  three  hundred 
million  dollars  very  readily.  It  would  have  been  a  splendid  investment 
to  have  bought  the  right  from  the  Standard  to  do  business  in  this  country 
without  their  opposition. 

Q.  You  have  stated  that  the  Standard  Oil  Company  has  made  more 
profit  from  a  barrel  of  oil  than  the  Pure  Oil  Company.  Is  that  in  any 
measure  due  to  the  fact  that  they  yield  the  by-products?  A.  Oh,  yes,  that 
has  very  considerable  to  do  with  it. 

Q.  (By  Mr.  SMYTH.)  You  wish  us  to  understand  that  your  company 
on  a  profit  of  10  cents  per  barrel  is  worth  200,  while  the  Standard  Oil  Com- 
pany on  a  profit  of  $1  per  barrel  is  only  worth  46.5?  A.  Mr.  Smyth,  I  have 
tried  to  explain  that  before.  I  am  a  producer  of  oil  and  as  a  producer  I 
Avould  not  sell  my  stock  for  twice  the  amount,  and  then  I  do  anticipate  very 
reasonable  and  very  fair  profits  in  the  near  future.  *We  have  just  got  into 
shape — we   are    much    better  off. 

Q.  Do  you  think  the  Standard  Oil  Company  makes  a  thousand  times 
the  profit  you  do?  A.  For  a  long  time  we  made  nothing,  as  has  been  tes- 
tified, and  I  think  some  of  the  witnesses  testifying  in  the  interests  of  the 
Standard  Oil  Company  charged  us  with  using  people's  money  in  some  of 
these  companies  and  not  paying  them  any  returns.  We  do  not  know  how 
much  the  return  has  been  in  the  advanced  price  of  crude  oil. 


CHAPTER  XV. 

MR.  THOMAS  W.  PHILLIPS,  VICE-CHAIRMAN  OF  THE 
INDUSTRIAL  COMMISSION 

Mr.  Thomas  W.  Phillips  is  one  of  the  best  known  men  in  the  oil  region 
of  Pennsylvania.  It  is  not  intended  to  give  here  an  elaborate  history  of  his 
career,  but  merely  to  note  a  few  incidents  of  his  life  which  appear  of 
special  interest  in  connection  with  the  part  he  has  taken  in  the  fight  made 
by  those  interested  in  the  Pure  Oil  Trust  against  their  competitor,  the 
Standard  Oil  Company.  He  was  first  an  oil  producer  and  later  was  con- 
nected with  oil  refining  and  distributing  enterprises. 


•Black  faced  type  Indicates  matter  omitted,  in  the  course  of  editing,  from  the 
official  report. 

tA  fool  note  in  the  official  report  of  the  testimony  states  that  this  information: 
was  filed  with  the  commission,  but  it  was  not  published  in  the  report. 


VICE-CHAIRMAN  THOMAS  W.   PHILLIPS.  291 

Mr.  Phillips  has  amassed  a  very  large  fortune  in  the  oil  business,  this 
fortune  being  commonly  reported  as  being  from  $3,000,000  upwards.  His 
prospective  wealth  at  one  time  was  indeed  fabulous,  as  he  had  energetically- 
tied  up  oil  lease  after  oil  lease  through  a  region  covering  a  great  many 
miles. 

The  most  extensive  operations  of  Mr.  Phillips  in  the  oil  field  were 
commenced  in  1875.  At  that  time  he  began  to  work  out  what  proved  in 
effect  to  be  a  plan  to  monopolize,  or  at  least  to  control,  an  enormous  pro- 
portion of  the  output  of  crude  oil  in  Pennsylvania.  He  not  only  secured 
oil  leases  over  a  vast  stretch  of  country  in  order  to  immediately  sink  wells 
and  take  the  valuable  product  from  the  earth,  but  he  extended  his  opera- 
tions enormously  with  the  effect  that  he  secured  control  of  a  vase  territory 
which  he  could  not  work,  but  which  was  valuable  to  his  oil  interests,  as  he 
prevented  other  people  from  working  and  bringing  more  oil  in  competi- 
tion with  his  product.  Had  Mr.  Phillips  carried  out  this  plan  to  its  logical 
end,  he  would  have  become  the  greatest  oil  magnate  and  dictator  of  prices 
the  world  has  ever  known.  He  would  have  been  made  the  owner  of  the 
great  stores  of  oil  within  the  earth  and  no  one  could  have  raised  it  to  the 
surface  without  his  sanction.  He  could  have  fixed  an  absolute  price  for 
every  barrel  of  oil  he  permitted  to  be  taken  from  the  reservoirs  of  Mother 
Earth.  The  prospect  of  such  a  result  might  well  have  excited  the  cupidity  of 
any  man  eager  to  achieve  wealth. 

Previous  to  1875,  it  was  customary  in  the  oil  region  of  Pennsylvania 
for  the  oil  producer  to  take  a  lease  on  condition  that  he  begin  to  drill  for  oil 
within  two,  or  sometimes  three,  months,  the  owner  of  the  land  receiving  as 
rental  a  share  of  the  oil  taken  from  such  wells  as  might  be  drilled  on  his 
place.     This  practice  had  the  effect  of  stimulating  the  production  of  oil. 

Mr.  Phillips  introduced  a  new  system  which  involved  the  payment  of 
a  small  rhoney  rental  to  the  owner  of  the  land,  which  permitted  him  to  hold, 
without  operating  upon  it,  a  large  stretch  of  territory,  consisting  of  thou- 
sands of  acres  of  valuable  oil  land.  Perhaps  there  has  never  been  ii  better 
example  of  an  operation  "in  restraint  of  trade."  which  is  now  prohibited  by 
the  Sherman  anti-trust  law.  Indeed,  his  acts  at  that  time  appear  to  come 
clearly  within  the  scope  of  action  which  President  McKinley  especially 
condemned  in  his  message  to  Congress  at  the  beginning  of  the  first  session 
of  the  Fifty-sixth  Congress,  in  which  he  said: 

"Combinations  of  capital,  organized  into  trusts  to  control  the  condi- 
tions of  trade  among  our  citizens,  to  stifle  competition,  limit  production 
and  to  determine  the  prices  of  products  used  and  consumed  by  the  people, 
are  justly  provoking  public  discussion,  and  should  early  claim  the  atten- 
tion of  the  Congress." 

But  Mr.  Phillips  was  the  master  of  this  vast  stretch  of  territory  and 
the  oil  it  contained,  so  that  when  the  period  of  suspension  of  opeiations  in 
the  oil  regions,  between  November  1st,  1887,  and  October  1st,  1S8S,  came  it 
was  generally  understood  that  he  v/as  actually  producing  from  one-tenth 
to  one-sixth  of  all  the  crude  oil  produced  in  the  United  States.  From  ap- 
parent bankruptcy  he  had  sprung  into  affluence.  However,  he  was  obliged 
to  modify  his  "great  expectations"  because  of  discoveries  later  than  his 
own,  which  led  to  an  unexpected  and  very  large  production  of  crude  oil  in 
Pennsylvania  and  West  Virginia,  and  later  in  the  Lima  district  of  Ohio. 

Previous  to  this  large  development  by  Mr.  Phillips  in  the  oil  region,  the 
Phillips  brothers  found  it  necessary  to  cease  doing  business  under  their  own 
names  because  of  their  financial  reverses.  These  brothers  were  Thomas  W.. 
John  T..  Isaac  N.  and  Charles  M.  Phillips,  and  they  carried  on  their  opera- 
tions jointly.  These  brothers  formed,  as  early  as  1875,  an  iron-clad  trust,  in 
which  their  wives  figured  as  the  principals.  This  trust  agreement  was  not 
recorded  until  March  8,  1889,  but  it  was  made  seven  years  before  the  Stand- 
ard Oil  Trust  was  formed. 

The  original  trust  agreement,  by  which  E.  I.  Agnew  became  trustee 
for  the  wives  of  Thomas  W..  Charles  M.,  Isaac  N.  and  John  T.  Phillips, 
is  not  of  record.  The  acknowledgment  of  the  trust  executed  by  Mr.  Agnew, 
recorded  in  1889.  indicates  that  there  was  more  than  one  agreement  leading 
up  to  the  trust  relation  which  he  declares  in  that  instrument. 


292  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

The  trust  agreement  of  the  wives  of  the  Phillips  brothers  follows: 

DEED  OF  TRUST. 

Recorded  in  Lawrence  county,  Pennsylvania,  March  15,  1SS9. 

Eniered  in  Deed  Book  No.  5a  at  p.  324. 

This  Indenture,  made  this  11th  day  of  May,  A.  D.  1S85,  between  Agnes  J.  Phillips, 
Charles  M.  Phillips  and  Jane  M.  Phillips,  his  wife,  in  right  of  said  Jane  M.,  and 
Thomas  W.  Phillips  and  Pam  Phillips,  his  wife,  in  right  of  said  Pam,  parties  of  the 
first  part,  and  David  Osborne,  of  New  Castle,  Pa.,  party  of  the  second  part.  Whereas, 
E.  1.  A'gnew  duly  executed  and  delivered  a  certain  deed  of  declaration  or  trust  under 
his  hand  and  seal,  bearing  date  the  27th  day  of  June,  A.  D.  1877,  of  which  the  follow- 
ing is  an  exact  copy: 

Know  all  men  by  these  presents  that  I,  E.  I.  Agnew,  of  New  Castle,  Pa.,  did 
on  the  15th  day  of  March,  A.  D.  1875,  enter  into  a  written  agreement  with  Mrs.  Pam 
Phillips,  wife  of  Thomas  W.  Phillips,  and  Mrs.  Jane  M.  Phillips,  wife  of  Charles  M. 
Phillips,  all  of  New  Castle,  Pa.,  whereby  I  did,  for  the  consideration  in  said  agree- 
ment mentioned,  undertalie  and  agree  to  t-aKe  leases  for  oil  purposes  in  my  own 
name,  but  for  said  Pam  Phillips  and  Jane  M.  Phillips;  and,  whereas,  by  certani 
agreements  made  by  and  between  said  Pam  Phillips  and  Jane  M.  Phillips,  of  one 
part,  and  Mrs.  Agnes  J.  Phillips,  wife  of  Isaac  N.  Phillips,  and  Martha  J.  Phillips, 
wife  of  John  T.  Phillips,  all  of  New  Castle,  Pa.,  said  four  ladies  became  jointly  and 
equally  interested  in  and  entitled  to  all  the  leases,  lands,  oil,  and  the  profits  and  pro- 
ceeds theicof,  which  I  might  obtain,  secure  or  purchase,  under  or  in  pursuance  of  my 
said  agreement;  and  whereas,  I  have  since  the  date  of  my  said  agreement  and 
under  and  in  pursuance  thereof,  and  in  pursuance  and  fulfillment  of  sundry  other 
subsequent  parol  agreements  and  arrangements  made  between  said  ladies  and  my- 
self, as  well  as  with  their  knowledge  and  under  their  directions,  taken,  made  and 
secured  leases  of  lands  for  oil  purposes,  have  taken  and  procured  options  for  the 
purchase  of  oil  lands,  have  purchased  oil  lands  both  by  contracts  therefor  and  by 
obtaining  deeds  in  fee  simple,  said  lands  being  situate  partly  in  each  of  the  counties 
of  Venango,  Clarion,  Butler  and  Lawrence,  in  the  State  of  Pennsylvania,  and  have 
also  procured  some  of  said  lands  to  be  developed  tor  oil  purposes,  and  have  found  in 
many  wells  so  procured  by  me  to  be  bored  or  drilled  on  said  lands,  have  sold  and 
contracted  for  the  sale  of  the  oil  so  obtained,  and  have  received  the  price  thereof  in 
money,  have  entered  into,  made  and  executed  all  manner  of  contracts,  and  trans- 
acted and  done  all  manner  of  business  necessary,  reasonable  or  proper  to  be  made, 
executed,  transacted,  done  or  performed,  in  order  to  secure  oil  lands,  properly  de- 
velop the  same,  and  successfully  operate  oil  wells  and  secure  and  dispose  of  the  oil 
obtained  therefrom;  and  whereas,  I  have  also,  with  the  knowledge  and  consent  and 
under  the  direction  of  the  said  ladies  hereinbefore  named,  purchased  and  procured 
to  be  transferred  and  assigned  to  myself,  certain  judgments,  debts  and  claims  entered 
of  record  in  the  courts  of  said  counties,  the  greater  part,  but  not  all,  of  which  said 
judgments  end  debts  are  against  the  husbands  of  said  ladies,  or  for  which  said  hus- 
bands or  some  of  them,  are  in  some  way  liable,  each  one  and  all  of  which  said 
several  transactions,  matters  and  things  so  as  aforesaid  done,  performed,  made  or 
executed  by  me,  were  so  done,  performed,  n:ade  or  executed  for  the  use  of,  and 
with  means  and  money  belonging  to  said  ladies  hereinbefore  named,  and  at  their 
proper  costs,  charges  and  expense;  and  whereas,  it  is  desired  and  intended  by  the 
said  ladies  that  I  shall  continue  to  manage  and  transact  business  for  them  in  like 
manner  as  I  have  heretofore  done,  in  my  own  name,  but  for  their  use  and  benefit. 

Now  know  ye,  that  I,  the  said  E.  I.  Agnew,  do  hereby  acknowledge  and  declare 
that  all  the  leases  of  lands  for  oil  purposes  which  have  been  made  by  me  or  whicn 
have  by  any  persons  been  assigned,  transferred  or  conveyed  to  me  since  said  March 
15,  1875,  and  all  purchases  of,  or  options  to  purchase  oil  lands,  which  I  may  have 
made,  either  by  deed,  contract  or  otherwise,  since  said  date,  and  all  and  every  the 
titles,  interests,  claims  and  estates  of  every  kind  and  character  which  I  may  have 
acquired  or  may  have  or  hold  by  any  means  whatever  in  or  to  any  of  said  lands  in 
any  of  the  counties  aforesaid,  and  all  the  said  lands  themselves,  are  held,  possessed, 
occupied  and  controlled  by  me  in  trust  for  the  use  of  said  Pam  Phillips,  Jane  M. 
Phillips,  Agnes  J.  Phillips  and  Martha  J.  Phillips,  their  heirs,  executors,  adminis- 
trators and  a.ssigns,  forever,  and  not  otherwise,  and  I  do  hereby  further  acknowl- 
edge and  declare  that  all  the  judgments,  debts,  and  claims  so  as  aforesaid  purchased 
by  or  assigned  to  me,  were  purchased  with  the  proper  money  of  the  four  ladies,  and 
are  held  by  me  inily  in  trust  for  them,  their  executors,  administrators  or  assigns, 
and  not  otherwise. 

And  I  do  hereby  further  acknowledge  and  declare  that  all  the  money  which  I 
have  received  _irom  the  sale  of  oil,  from  sub-letting  land  for  oil  purposes  or  from 
any  other  sources  or  by  any  other  means  whatsoever  connected  with  the  business 
hereinbefore  mentioned,  as  well  as  all  the  pei.-^onal  property  which  I  have  pur- 
chased for  the  purpose  of  developing  any  of  said  lands  or  carrying  on  said  bu.«iness, 
is  the  proper  money  and  property  of  the  said  ladies  and  held  by  me  in  trust  for  them. 

And  I  do  hereby  acknowledge  and  declare  that  all  future  purchases  or  leases  of 
oil  lands  which  1  may  make  or  procure,  and  all  property  and  effects  of  every 
kind   and    character,    whether   real,   personal    or   mixed,    which    1   may   obtain,    secure 


VICE-CHAIRMAN  THOMAS  W.   PHILLIPS.  293 

or  have,  or  of  which  I  may  become  seized  or  possessed  in  prosecuting  or  conducting 
the  said  business,  as  hereinbefore  mentioned,  or  as  I  may  hereafter  be  by  ther.. 
directed  or  authorized  to  prosecute  or  conduct  it,  shall  be  by  me  held  in  trust  for  the 
use  of  said  Pam  Phillips,  Jane  M.  Phillips,  Agnes  J.  Phillips  and  Martha  J.  Phil- 
lips, their  heirs,  executors,  administrators  ani  assigns  forever.  And  that  I,  my 
heirs,  executors,  administrators  or  assigns,  shall  at  any  time  or  times  hereafter,  at 
their  request  and  at  their  charges  convey  by  deed  or  otherwise,  as  may  be  proper, 
to  said  ladies  or  to  such  other  person  or  persons  as  they  may  direct,  all  or  any  part 
of  said  property,  real  or  personal,  which  I  may  have  or  hold  at  the  time  of  the  mak- 
ing such  request,  but  nothing  herein  contained  shall  be  construed  to  interfere  with 
my  transferring,  conveying  or  disposing  of  all  or  any  part  of  said  property,  either 
real  or  personal,  in  my  own  name,  or  as  my  own,  for  the  purpose  of  carrying  on 
the  said  business  as  I  have  heretofore  done,  or  as  I  may  hereafter  be  directed  to  do. 

This  declaration  of  trust  shall  be  as  effectual  to  all  intents  and  purposes  as  it 
would  be  if  each  of  the  several  pieces,  parcels  or  tracts  of  land  mentioned  or  re- 
ferred to  were  specifically  described  herein  by  metes  and  bounds,  and  all  the  said 
personal  property  were  particularly  described,  and  the  amounts  of  said  judgments 
and  debts  and  moneys  were  expressly  mentioned  and  designated. 

In  witness  whereof,  I  have  hereunto  set  my  hand  and  seal  this  27th  day  of  June, 
A.  D.  1877. 

E.  I.  AGNEW     (Seal). 
Attest: 

A.   McMICHAEL, 

W.  M.  BROWN. 

And  whereas,  the  said  E.  I.  Agnew  did  continue  after  the  execution  of  said  deed 
to  transact  said  business,  and  did  acquire  other  property,  leaseholds  and  estates, 
real,  personal,  etc.,  held  by  him  in  trust  for  the  aforesaid  beneficiaries;  and  where- 
as, said  Martha  J.  Phillips  died  on  the  15the  day  of  February,  A.  D.  1878,  testate, 
her  will  being  admitted  to  probate  in  Lawrence  county.  Pa.,  and  letters  testa- 
mentary issued  thereon  to  John  T.  Phillipps,  who  as  such  executor  and  in  his  own 
right  as  residuary  legatee,  afterwards  by  instrument  of  writing  acknowledged  August 
13,  1879,  and  recorded  in  said  Lawrence  county  on  the  same  day  in  Agreement  Book 
No.  !,  at  page  359,  duly  sold,  assigned,  transferred  and  made  over  all  the  interest  of 
said  Martha  J.  Phillips  in  the  aforesaid  property  and  estaie,  etc.,  to  the  said  E.  I. 
Agnew,  to  be  held  by  him  in  trust  for  the  said  Agnes  J.  Phillips,  Jane  M.  Phillips 
and  Pam  Phillips,  and  upon  the  same  trusts  as  held  the  other  three-fourths  of 
same  property  and  estate. 

And  whereas,  afterwards  the  said  E.  I.  Agnew  continued  the  business  aforesaid 
and  acquired  other  property  and  estate  under  said  agreement  held  by  him  in  trust 
for  said  parties  of  the  first  part;  and  whereas,  the  said  E.  I.  Agnew  died  on  the  4th 
day  of  May,  A.  D.  1885. 

And  the  said  parties  of  the  first  part  desire  to  create  and  appoint  a  successor  to 
the  said  E.  L  Agnew  in  said  business  and  property,  who  shall  in  all  respects  suc- 
ceed to  the  property  and  estate  of  every  description  held  by  said  Agnew  under  the 
arrangement  herein  recited,  and  also  to  all  the  right  and  powers  of  said  Agnew 
under  the  aforesaid  agreement; 

Now  this  indenture  witnesseth,  the  parties  then,  in  consideration  of  $1,  proceed 
to  appoint  Da\id  Osborne  trustee  in  i)lace  of  Agnew,  under  the  same  duties  and 
obligations,  and  with  the  same  rights  and  privileges  as  said  Agnew.  Providing  in 
conclusion,  that  this  deed  shall  at  any  Lime  be  rendered  null  and  void  by  any 
instrument  of  writing  to  that  effect,  signed  and  sealed  by  said  three  beneficiaries,  or 
any   two   of   them,    without   their   husbands,  or  either  of  them,  joining  therein. 

In  Deed  Book  No.  108,  of  Lawrence  county,  Pennsylvania,  at  page  80,  is  recordec' 
an  a.ssignment,  dated  March  8,  1889,  from  David  Osborne  to  T.  W.  Phillips,  which 
recited:  Trust  agreement  of  March  15,  1875.  whereby  the  wives  of  T.  W.,  Charles 
M.,  Isaac  N.  and  John  T.  Phillips  become  cestuis  que  trust  and  E.  I.  Agnew  trustee 
for  them  to  purchase  lands,  take  leases,  and  in  general  to  conduct  an  oil  business  in 
Pennsylvania;  the  death  of  Agnew;  the  creation  of  Osborne  trustee  to  succeed  him; 
the  death  of  one  of  the  beneficiaries,  and  the  transfer  of  the  interests  of  the  others  to 
the  trustee,  and  finally  conveys  and  transfers  to  T.  W.  Phillips:  "All  lands  in  fee 
simple,  all  leasehold  estates,  oil  wells,  machinery,  etc.,  in  the  Counties  of  Venango, 
Clarion  and  Butler,  in  which  the  said  trust  has  any  right,  title,  interest  or  claim, 
whether  the  same  be  in  the  name  of  E.  1.  Agnew,  agent,  or  E.  I.  Agnew,  or  in  my 
name  as  above." 

It  will  be  seen  by  the  above  that  this  vast  interest,  at  first  held  in 
trust  for  the  wives  of  the  four  Phillips  brothers,  with  equal  interests, 
eventually  drifted  exclusively  into  the  "hands  of  Mr.  Thomas  W.  Phillips. 
It  is  understood  that  while  Mr.  Phillips  is  a  multi-millionaire,  his  brothers, 
their  wives  and  their  families  were  not  at  all  well  off  at  the  close  of  this 
transaction.     Isaac  N.  Phillips  died  in  1884  and  John  T.  Phillips  died  in  1899. 


294  REVIEW  OP  TESTIMONY— INDUSTRIAL  COMMISSION. 


CHAPTER  XVL 

TESTIMONY  OF  MR.  LEWIS  EMERY,  JR.,  A  STOCK- 
HOLDER IN  THE  PURE  OIL  COMPANY. 

Mr.  Lewis  Emery,  Jr.,  of  Bradford,  McKean  county,  Pennsylvania,  a 
prominent  member  of  the  Pure  Oil  Trust,  appeared  before  the  commission 
on  September  11  and  12,  1899. 

The  testimony  of  Mr.  Emery  related  almost  exclusively  to  past  con- 
ditions and  was  practically  a  mere  repetition  of  what  he  had  testified  to  on 
other  occasions.  He  reviewed  the  career  of  the  South  Improvement  Com- 
pany and  its  contract  with  the  Pennsylvania  Railroad  Company,  these  oc- 
currences being  28  years  in  the  past,  the  methods  pursued  by  the  South 
Improvement  Company  having  been  condemned  by  Standard  Oil  witnesses. 
Much  of  Mr.  Emery's  testimony  consisted  of  complaints  in  regard  to 
petty  annoyances  he  had  encountered  in  competition.  His  testimony  was 
at  times  amusing.  He  complained  because  the  Standard  Oil  Company  had 
cut  prices  of  their  product  when  he  met  its  agents  in  competition,  and  yet 
acknowledged,  when  a  direct  question  was  put  to  him,  that  he  pursued  the 
same  method  himself,  both  when  in  competition  with  the  Standard  Oil  and 
other  companies.  He  said  he  found  that  the  only  way  he  could  sell  his  oil 
to  the  customers  of  the  Standard  Oil  Company  was  to  cut  the  price,  and 
in  justification  of  his  act,  remarked:  "It  is  trade;  it  is  commerce."  Yet 
he  was  greatly  aggrieved  that  his  competitors  did  not  continue  to  offer 
their  oil  at  a  little  higher  price  than  that  at  which  he  was  selling,  which 
doubtless  would  have  been  a  very  clever  thing  for  them  to  have  done,  and 
would  have  made  his  lot  an  exceedingly  happy  one. 

Mr.  Emery  was  evidently  prospering  in  business,  as  he  said  that  if  his 
refinery  could  produce  five  times  the  amount  of  refined  oil  it  was  turning 
out  when  he  testified,  he  could  sell  it  all  "at  good  prices." 

As  will  be  seen,  the  witness  was  very  extreme  in  the  statements  at 
times.     In  one  portion  of  his  testimony  he  declared: 

"You  can't  step  upon  a  train  of  cars  without  hearing  a  man  in  front 
of  or  back  of  you  speaking  of  the  unfair  advantage  the  commercial  in- 
dustries of  this  country  that  hire  men.  take  of  them;  and  using  harsh  and 
rough  language  against  their  government — blaming  it  because  it  don't  give 
them  relief." 

The  valuable  information  that  such  conversation  is  continually  going 
on  in  railroad  cars  does  not  appear  in  the  official  report  of  the  testimony. 

Mr.  Emery  concluded  his  testimony  by  indicating  his  regret  that  he 
would  not  live  long  enough  to  take  part  in  an  appeal  to  arms  against  exist- 
ing conditions,  which  he  feared  might  come  upon  the  country.  He  did  not 
appear  to  be  very  optimistic,  as  he  remarked: 

"You  have  got  to  take  care  of  the  interests  of  the  common  ppople  of 
this  country.  If  you  don't  you  are  going  to  have  trouble,  and  I  am  afraid 
I  will  not  live  long  enough  to  be  in  the  front  ranks  of  that  fight." 

In  the  ofl[icial  report  of  the  testimony  the  words  "and  I  am  afraid  I  will 
not  live  long  enough  to  be  in  the  front  ranks  of  that  fight"  do  not  appear. 
Someone  apparently  thought  that  Mr.  Emery's  fear  that  he  would  not  get  in 
this  scrap  might  as  well  not  go  to  the  public. 

An  example  of  the  way  in  which  it  is  possible  to  patch  up  evidence, 
makinT  an  answer  consist  of  questions  and  answers,  is  here  given.  This 
example  of  patchwork  is  shown,  not  because  of  any  significant  change  the 
testimony  reported  by  this  method  contains,  but  merely  as  an  indication 
of  the  carelessness  that  characterizes  a  large  part  of  the  official  report.  It 
will  be  seen  by  comparing  the  testimony  in  the  stenographic  report  and  as 
shown  in  the  official  report  that  Mr.  Emery's  answer  is  made  up  of  parts 
of  two  questions  by  Mr.  Farquhar  and  a  suggestion  by  Mr.  Phillips,  to- 
gether with   what  the  witness  himself  said.     This  testimony  follows: 


LEWIS  EMERY,  JR. 


295 


STENOGRAPHIC  REPORT. 

Vice-Chairman  PHILLIPS.  You 
liad  better  give  us  the  purport  of  the 
contract.  A.  Well,  I  will  read  it  if 
you  want  to. 

Q.  (By  Vice-chairman  PHILLIPS.) 
State  what  it  is,  or  about  what  it  is. 
A.  I  wish  somebody  would  read  this 
contract. 

Mr.  FARQUHAR.  Without  read- 
ing the  whole  contract  you  will  find 
on  page  715  of  the  Bacon  commit- 
tee's report  an  exact  analysis  of  the 
contract  itself.  A.  Well,  that  is  all 
right,  you  know  what  it  is. 

Q.  First  of  all,  the  provision  in 
respect  to  Mr.  Campbell's  demand  of 
the  United  Pipe  Lines  and  the  Penn- 
sylvania Railroad  Company's  reply. 
The  chairman  spoke  about  having 
the  analysis;  it  is  presented  here  in 
the  report  of  the  Bacon  committee 
A.  Now,  I  will  state  orieny,  Mr. 
Chairman  and  gentlemen,  that  this 
contract  was  presented  to  the  Pro- 
ducers to  accept  the  demand,  and  by 
unanimous  vote  they  rejected  the 
settlement,  and  there  was  a  sort  of 
general  break  up  over  the  action  of 
the  president  of  the  Producers'  Pro- 
tective Association,  or  the  Pro- 
ducers  

Vice-Chairman  PHILLIPS.  Pro- 
ducers' Union,   I  think   it  was. 

The  WITNESS.  Yes,  sir,  the  Pro- 
ducers' Union.  Correct  that,  gentle- 
men, if  you  please. 


OFFICIAL  REPORT  (pp.  662-663.) 
Q.  (By  Mr.  PHILLIPS.)  You  had 
better  give  us  the  substance  of  it. 
A.  You  will  find,  on  page  407  of  the 
Bacon  committee's  report,  the  exact 
language  of  the  contract  itself.  First 
of  all,  the  provisions  in  respect  to  the 
Campbell  admission,  and  the  United 
Pipe  Line,  and  then  the  Pennsylva- 
nia Railroad  Company's  admissions. 
I  would  state  briefly  that  this  con- 
tract was  presented  to  the  producers 
to  accept,  but  almost  by  unanimous 
vote  they  rejected  the  settlement, 
and  there  was  a  sort  of  general 
break-up  over  the  action  of  the  presi- 
dent of  the  Producers'  Union. 


Mr.  Emery's  effort  to  show  the  virtues  of  export  or  110°  oil  in  compari- 
son with  the  higher  grades  of  oil  sold  in  this  country  caused  him  to  resort 
to  various  statements  that  do  not  appear  to  be  harmonious  when  placed  side 
by  side. 

He  declared  that  in  the  United  States  "the  commonest  grade  of  oil  on 
earth"  is  burned,  while  in  Europe,  especially  Germany,  they  burn  "the  best 
oil  that  is  put  upon  the  market."  When  questioned  in  regard  to  this  state- 
ment, he  took  recourse  in  the  plea  that  the  export  oil  "is  not  inferior  in 
quality  under  the  laws  of  Germany,"  as  if  the  declaration  of  a  law  could  add 
to  the  quality  of  the  oil.  This  latter  statement,  however,  is  eliminated  from 
the  official  report  of  the  testimony.  When  closely  questioned,  it  will  be  seen 
that  Mr.  Emery  showed  the  superiority  in  the  illuminating  qualities  of  the 
high  grade  oils,  as  well  as  their  safety  from  danger  of  explosion.  His  testi- 
mony in  this  respect  was  a  mere  jumble  of  inconsistencies. 

If  anyone  wonders  why  the  witness  found  it  incumbent  upon  himself  to 
praise  the  low  grade  oils  burned  in  Europe,  and  belittle  the  character  of  oil 
used  in  this  country,  some  light  may  be  thrown  on  the  subject  by  the  fact 
that  Mr.  Emery  and  the  Pure  Oil  Trust  disposes  of  most  of  its  product  in 
the  foreien  market,  while  the  Standard  Oil  Company  sells  but  a  small  pro- 
portion of  its  putire  output  there. 

A  comparison  of  portions  of  Mr.  Emery's  testimony,  as  reported  steno- 
graphically  and  as  shown  in  the  official  report  of  the  commission  follows: 


296 


REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 


OFFICIAL  REPORT   (p.   629). 

Q.  (By  Mr.  CLARKE.)  Did  you 
ever  reduce  your  price  to  get  busi- 
ness?   A.  Have  to;  have  to  compete. 

Q.  Do  you  have  any  competitors 
besides  tlie  Standard?     A.  Yes. 

Q.  Do  they  follow  you  up?  A.  The 
other  competitors?     No. 

Q.  Never?    A.  Never. 

Q.  Do  you  try  to  follow  up  any- 
body?    A.  Never. 

Q.  Do  you  ever  reduce  your  price 
before  the  price  is  reduced  by  your 
competitor?  A.  Oh,  yes;  I  suppose 
so.  It  is  trade.  I  am  merely  discuss- 
ing the  methods  of  keeping  people 
out  of  business. 


STENOGRAPHIC  REPORT. 

Q.  (By  Mr.  CLARKE.)  Do  you  ever 
reduce  your  price  to  get  business?  A. 
Certainly  we  do;  we  have  to  com- 
pete. 

Q.  Do  you  have  any  competitors 
besides  the  Standard  Oil  Company? 
A.   Yes,  sir. 

Q.  Do  they  follow  you  and  watch 
you?     A.  No,  sir. 

Q.  Did  you  ever  follow  up  any- 
body? A.  No,  we  tried  to  sell  our 
own  goods. 

Q.  Do  you  ever  reduce  your  price 
before  a  price  is  reduced  by  a  com- 
petitor? A.  I  presume  likely.  *We 
have  a  perfect  right  to  meet  them. 
I  presume  so.  It  is  trade;  it  is  com- 
merce. 

Q.  I  do  not  doubt  that.  A.  We  are 
not  infallible,  and  do  not  claim  to  be. 
I  am  only  discussing  the  methods  of 
keeping  people  out  of  the  business. 

STENOGRAPHIC  REPORT. 

Q.  (By  Representative  LIVING- 
STON.) Then  what  do  you  mean  by 
first,  second  and  third  grade  of  oil? 
A.  As  I  have  stated  to  you,  it  is  not 
inferior  in  quality  under  the  laws  of 
Germany. 

Q.  You  have  stated  by  a  similar 
process  to  that  of  flour,  you  get  first, 
second  and  third  grade  oil?  A.  You 
get  three  kinds. 

Q.  Do  you  mean  the  first  grade  oil 
has  less  naphtha  or  more  in  it?  A. 
It  is  supposed  to  be  better  oil.  But  I 
want  to  say  this  to  you:  When  you 
go  to  the  grocer  and  buy  150°  oil  it 
is  supposed  to  be  the  acme  of  oil  in 
this  country,  and  you  fill  a  lamp  with 
It,  and  you  may  get  a  little  brighter 
light  than  you  would  from  110°. 
There  is  not  so  much  naphtha  or  gas 
in  it.  The  gas  has  been  eliminated 
for  the  high  fire  test,  but  the  110° 
oil  will  last  in  a  lamp  a  great  deal 
longer  than  1.50°. 

Q.  Why?  A.  Because  there  is  not 
so  much  body  in  it.  The  110°  will  not 
give  as  brilliant  a  light  as  the  150°. 

The  average  cost  of  boring  oil  wells  was  considered  by  the  commission. 
Mr.  Phillips  stated  that  the  testimony  of  Mr.  Boyle  that  such  drilling  during 
the  last  10  years  had  cost  about  $2,000  per  well  had  an  important  bearing 
on  the  profits  received  by  the  producers  for  their  oil.  Mr.  Emery  testified 
that  the  average  cost  of  a  well  in  the  oil  country,  under  the  present  condi- 
tions  (September  12,  1899),  was  "fully  $4,000." 

Apparently  some  one  took  the  privilege  of  lowering  Mr.  Emery's  figures 
before  they  were  officially  published,  for  in  the  official  report  he  is  quoted 


OFFICIAL  REPORT  (p.  625)). 
Q.  (By  Representative  LIVING- 
STOrJ.)  What  do  you  mean  by  first, 
second  and  third  grade  oil?  Does 
the  first  have  less  naphtha,  or  more? 
A.  It  is  supposed  to  be  better;  150** 
oil  is  supposed  to  be  the  acme  of  oil 
in  this  country.  You  fill  a  lamp  with 
it  and  you  may  get  a  little  brighter 
light  than  you  would  get  from  110°; 
there  is  not  so  much  naphtha,  not  so 
much  gas;  but  the  110°  oil  will  last 
in  your  lamp  a  great  deal  longer 
than  the  150°,  because  there  is  not 
so  much  body  in  it.  The  110°  will 
not  give  so  brilliant  a  light  as  the 
150°;  that  is  one  reason  why  Ger- 
many holds  to  that  oil  test. 


♦Bl.'irk    f-iced   typo   indicate;?   matter  omittLd,  in  the  course  of  editing,  from  the 
official  report. 


LEWIS  EMERY.  JR.  297 

as  saying  that  the  average  cost  of  a  well  in  the  oil  country  under  present 
conditions  was  "nearly  $4,000."  The  difference  between  "fully  $4,000"  and 
"nearly  $4,000"  might  mean  the  lowering  of  Mr.  Emery's  estimate  25  per 
cent,  or  more. 

This  testimony  as  shown  by  the  stenographic  report  and  as  officially 
published  follows: 

STENOGRAPHIC  REPORT.  OFFICIAL  REPORT  (p.  6G1). 
Mr.  EMERY.  I  should  say  this  Mr.  EMERY.  I  should  say  this— 
without  going  into  a  close  calcula-  without  going  into  a  close  calcula- 
tion of  it  and  being  a  question  that  tion  of  it,  the  question  being  sprung 
is  sprung  upon  me  at  this  moment,  upon  me  here  at  this  moment — that 
that  the  average  cost  of  a  well  in  the  the  average  cost  of  a  well  in  the  oil 
oil  country,  under  the  present  condi-  country  under  the  present  condition 
tion  of  things,  is  fully  $4,000;  that  of  things  is  nearly  $4,000,  in  my  judg- 
is  my  judgment  about  it.  ment. 

The  witness  said  that  at  the  high  prices  of  iron  prevailing  when  he 
testified,  wells  could  not  be  drilled  profitably.  This  related  to  a  time  of 
abnormal  prices,  generally  regarded  as  temporary. 

Mr.  Emery  made  statements  at  different  periods  in  his  testimony  that 
were  effective  when  taken  separately.  He  gave  instances  concerning  com- 
petition and  the  profits  made  on  oil,  but  when  his  figures  are  placed  side  by 
side  they  are  contradictory.  He  spoke  of  the  drop  in  the  price  of  oil  at  New 
York  from  eight  to  five  cents  a  gallon  after  the  Pure  Oil  Company  went  into 
that  territory  as  a  competitor  of  the  Standard  Oil  Company.  Mr.  Lee  had 
testified  that  during  this  competition  the  price  in  New  York  City  had  been 
dropped  from  nine  and  one-half  to  five  and  one-half  cents  a  gallon.  That 
discrepancy  in  the  statement  of  facts  is  simply  characteristic  of  many  other 
statements.  All  the  men  who  appeared  before  the  commission,  and  who 
were  connected  with  the  Pure  Oil  Trust  declared  that  there  was  no  profit 
in  oil  sold  by  the  Pure  Oil  Trust  at  this  low  rate.  They  declared  that  they 
had  constantly  lost  money  on  the  oil  they  sold  in  New  York  City,  and  yet 
Mr.  Emery,  during  his  testimony,  said: 

"Now.  I  want  to  answer  you  this:  If  you  had  competition  in  this  country 
you  would  cut  the  oil  at  least — well — I  might  say,  take  it  on  the  average, 
and  you  would  cut  it  50  per  cent,  cheaper.  Would  I  be  wrong  in  that  state- 
ment, oil  men,  about  oil?" 

Mr.  George  Rice,  who  was  listening,  said  "No."  Vice-Chairman  Phillips 
had  nothing  to  say. 

Any  novice  can  see  that  this  statement,  that  if  there  was  "competition 
in  this  country"  oil  could  be  sold  50  per  cent,  cheaper,  does  not  agree  with 
the  statement  that  at  even  five  cents  a  gallon,  oil  has  been  sold  at  a  loss  in 
New  York  City.  Relying  upon  Mr.  Emery's  statement  alone  that  the  price 
was  reduced  from  eight  cents  to  five  cents  a  gallon,  it  is  seen  that  the  latter 
price  was  one  cent  a  gallon  more  than  Mr.  Emery  said  the  oil  could  be  sold 
for  under  competition.  The  suggestion  that  there  is  no  competition  in  the 
oil  industry  sounds  strange  when  the  burden  of  Mr.  Emery's  complaint  was 
the  competition  he  suffered  from  the  Standard  Oil  Company.  It  must  also  be 
remembered  that  the  Pure  Oil  Company  sends  its  oil  through  its  own  pipe 
lines  from  the  Pennsylvania  oil  fields  to  New  Jersey  and  thence  over  the 
New  Jersey  Central  Railroad  at  rates  regarded  as  so  favorable  by  the  Pure 
Oil  Trust  that  they  made  a  contract  for  99  years  with  the  railroad  company 
to  carry  their  oil. 

These  contradictory  statements  were  made  in  different  portions  of  Mr. 
Emery's  testimony  and  while  each  statement  tended  to  sustain  a  claim  that 
was  made,  their  contradictory  character  is  at  once  seen  when  they  are 
brous-ht  side  by  side. 

Mr.  Emery  also  compared  wholesale  prices  of  oil  at  his  refinery  with 
prices  of  small  mantities  of  oil  in  cans  sold  by  retailers  to  consumers  in 
California.     He  said  he  had  paid  20  cents  a  gallon  for  oil  in  California,  when 


298  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

he  would  have  been  glad  to  get  four  and  a  half  cents  for  his  oil  at  his 
refinery.  He  did  not  know  what  the  profit  was  of  the  retail  merchant  who 
sold  the  goods  and  he  was  not  even  questioned  in  order  to  ascertain  how 
many  middlemen  had  handled  this  oil  or  the  peculiar  conditions  under  which 
it  was  transported  and  sold.  He  said  he  had  inquired  within  a  few  days  of 
the  time  he  gave  his  testimony  and  he  thought  that  the  oil  for  which  he 
paid  20  cents  ought  to  have  been  sold  for  10  or  15  cents  a  gallon.  Speaking 
of  the  transportation  of  this  oil,  he  said  "the  charge  on  oil  to-day  from  the 
Atlantic  to  the  Pacific  is  75  cents  a  hundred,"  though  he  did  not  know  what 
the  Standard  Oil  Company  paid.  It  will  readily  be  seen  that  Mr.  Emery 
might  have  himself  put  his  oil  in  competition  with  that  20-cent  oil,  the  price 
of  which  he  seemed  to  regard  as  extortionate,  and  if  he  could  convince  peo- 
ple that  it  was  as  good  as  the  article  they  were  buying  they  would  doubtless 
purchase  it  if  they  could  get  it  cheaper  than  the  price  they  were  paying. 
In  fact,  his  testimony  in  this  regard  was  as  careless  as  if  he  had  undertaken 
to  compare  the  price  of  ice  at  the  north  pole  and  at  the  doors  of  the  residents 
of  New  York  City.  Naturally  the  price  was  made  high  when  the  oil  had 
passed  through  numerous  hands  and  had  been  finally  sold  in  a  small  shop 
in  a  small  quantity  in  some  out-of-the-way  place  in  California. 

Mr.  Emery  appeared,  according  to  his  testimony,  to  have  been  as  unsuc- 
cessful as  a  miller  as  he  claimed  he  was  in  the  oil  business.  He  said  he 
made  500  barrels  of  flour  a  day  and  yet  made  no  money.  The  statement 
that  he  made  no  money  as  a  miller  was  left  out  of  his  testimony  in  the 
official  report.  Why  any  one  should  have  eliminated  this  statement  showing 
that  his  failure  to  make  money  extended  beyond  the  refining  of  oil,  is  a 
matter  for  conjecture.  The  Industrial  Commission  was  not  called  on  to 
investigate  the  milling  industry  by  calling  before  it  all  the  men  who  failed 
to  make  money  at  their  calling,  and  yet  if  Mr.  Emery  was  a  fair  sample  of 
others  in  that  branch  of  business,  there  was  as  much  necessity  for  investi- 
gating it  as  there  was  for  investigating  the  oil  business.  The  vice-chairman 
of  the  Industrial  Commission,  however,  was  not  a  miller.  The  stenographic 
report  and  official  report  relating  to  this  part  of  Mr.  Emery's  testimony 
follows: 

STENOGRAPHIC  REPORT.  OFFICIAL  REPORT   (p.  643). 

Mr.  EMERY.    *    *    *    The  interior  Mr.  EMERY.    *    *    *    The  interior 

mills   of  this  country  are   paralyzed  mills  of  the  country  are  paralyzed  be- 

because    of    this    discrimination.      I  cause  of  this  unjust  discrimination; 

am  a  miller  and  I  make  500  barrels  I  am  a  miller  and  I  make  500  barrels 

of  flour  a  day  *and  I  make  no  money,  of  flour   a   day.     All   these  trusts.   I 

because  of  these  trusts  which,  I  say,  say,  are  built  up  at  the  instance  of 

are  built  up  at  the  instance  of  the  the  railroads, 
railroads. 

Mr.  Emery  insisted  upon  testifying  in  relation  to  the  practice  of  rail- 
roads in  giving  special  or  discriminating  rates,  which  was  very  prevalent 
many  years  ago  in  all  lines  of  industries,  every  rate,  in  fact,  secured  by  a 
shipper  being  a  special  rate  based  largely  upon  the  advantage  the  railroad 
supposed  it  could  get  from  the  customer,  both  in  relation  to  the  freight 
offered  and  prospective  business.  His  attention  was  called  to  the  fact  that 
Mr.  .lohn  D.  Archbold,  who  had  appeared  before  the  commission  three  days 
previously  had  admitted  that,  before  the  interstate  commerce  law  was  put 
into  effect,  it  was  the  common  custom  of  all  shippers  to  get  special  rates 
and  he  was  told  that  the  commission  had  decided,  in  view  of  the  general 
acknowleda:ment  that  such  discriminations  were  almost  universal  before 
1887,  that  it  especially  desired  to  secure  evidence  of  freight  rate  discrimina- 
tion since  the  passage  of  the  interstate  commerce  law.  Mr.  Emery  fre- 
quently asserted  that  he  could  prove  that  discriminations  had  occurred  and 
that  rebates  had  been  given  since  1887,  but  the  evidence  he  offered  was  very 
trifling. 


♦Black  faced  tj'pe  Indicates  matter  omitted,  in  the  course  of  editing,  from  the 
official  report. 


LEWIS  EMERY,  JR.  299 

In  reply  to  a  question,  he  admitted  he  had  received  rebates  "away  back 
in  1870,"  this  being  the  only  time  he  referred  to  that  period  as  being  in  the 
remote  past. 

The  testimony  of  Mr.  Emery  before  the  Industrial  Commission  is  here 
given  in  full  as  follows: 

Mr.  Emery  appeared  before  the  commission  September  11,  1899,  Vice- 
Chairman  Phillips  presiding. 

*Vice-Chairman  PHILLIPS.  I  will  state  to  the  commission  that  Senator 
Emery,  by  invitation  of  the  commission,  is  before  us  this  morning.  Senator 
Emery  has  been  connected  with  both  the  refining  and  producing  industries 
almost  from  their  very  beginning,  and  he  is  largely  connected  with  both 
interests  yet. 

Mr.  EMERY.  Mr.  Chairman  and  Gentlemen  of  the  Commission — In 
advance  I  desire  to  beg  your  indulgence  in  giving 'my  testimony  from  the 
fact  that  1  have  been  absent  from  my  home  in  the  Territory  of  Arizona  and 
the  State  of  California  for  the  past  two  years.  Under  the  extraordinary 
weight  of  business  and  cares  I  broke  down  in  health  and  it  was  on  the  15th 
day  of  August  last  that  I  returned  to  this  part  of  the  country,  and  since  that 
time  I  have  been  very  busy  with  the  many  points  of  business  that  were  left 
for  me  to  decide  and  I  have  not  been  able  to  give  the  questions  that  are  to 
he  propounded  to  me  to-day,  the  full  attention  that  I  should  have  done. 

♦Representative  LIVINGSTON.  Please  state  to  the  commission  what 
your  relations  are  to  this  industry? 

The  WITNESS.  Just  one  minute.  I  do  not  ask  any  one  of  the  commis- 
sion to  refrain  from  firing  at  me,  just  as  hard  as  they  choose,  any  questions 
pertaining  to  the  subject  that  I  am  to  testify  in  behalf  of;  neither  do  I 
complain  that  I  cannot,  with  my  health,  stand  the  fatigue  that  I  undoubtedly 
will  have  to.  I  ask  no  indulgence  on  that  part,  but  on  this  point  I  do  ask 
indulgence,  gentlemen:  If  any  question  should  arise,  that  1  have  the  privi- 
lege, with  the  consent  of  the  commission  to  refer  to  my  memoranda  or  per- 
haps to  some  of  my  colleagues,  who  may  refresh  my  memory,  from  the 
reason  that  I  have  these  questions,  from  the  year  1872  up  to  1898  or  1899, 
in  my  memory,  except  in  my  testimony  in  1888  before  the  Committee  on 
Commerce  in  the  City  of  Washington. 

♦Vice-Chairman  PHILLIPS.  Before  you  proceed  to  make  a  statement 
with  reference  to  your  testimony  I  want  to  ask  you  a  question  or  two  about 
your  residence,   and  so  on. 

The  WITNESS.  As  soon  as  I  get  through.  Therefore  I  desire  members 
of  the  commission  to  ask  me  as  many  questions  as  they  choose  to,  and  of 
whatever  nature  they  choose  to.  I  have  a  little  pamphlet  here,  which  I  do 
not  offer  as  evidence,  but  simply  as  a  guide  to  the  commission,  that  they 
may  get  from  me  such  information  as  appertains  to  the  business  and  the 
question   under  investigation. 

1  desire  to  say  that  I  hold  no  animosity  toward  the  Standard  Oil  Com- 
pany or  any  of  its  associates.  They  were  34  years  ago  my  personal  com- 
panions, and  I  only  meet  them  here  to-day  upon  fair  and  equal  ground.  They 
believed  in  their  method  of  doing  business,  and  I  believed  in  mine.  We 
agreed  to  separate.  I  may  say  that  many  of  the  stockholders  of  the  Stand- 
ard Oil  Company  have  been  associates  of  mine  in  the  ownership  of  property 
all  these  years,  and  own  property  with  me  at  the  present  time.  We  simply 
differ  upon  the  methods  of  transacting  business  under  the  laws  of  this  great 
■country.  Therefore.  I  feel  that  there  is  no  one  here  in  this  room  who  *will 
call  me  a  liar,  or  will  say  that  I  tell  an  untruth  because  I  may  differ  from  him 
in  the  testimony  that  may  be  given  in  answer  to  the  questions  that  you  will 
ask.  *Now,  gentlemen,  I  am  ready  and  willing  if  possible  to  answer  all  the 
questions  that  may  be  propounded. 

Q.  (By  Vice-chairman  PHILLIPS.)  Where  is  your  residence?  A. 
Bradford,  McKean  county.  Pa. 

Q  (By  Vice-chairman  PHILLIPS.)  Your  name  in  full?  A.  Lewis  Em- 
ery. .Jr. 


♦Black  faced   type  indicates   matter  omitted,  in  the  course  of  editing,  from  the 
official  report. 


300  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

Q.  (By  Vice-Chairman  PHILLIPS.)  What  is  your  occupation,  and  what 
has  it  been?  A.  For  the  past  34  years  my  occupation  has  been  in  the  pro- 
duction and  refining  of  oil. 

*Q.  (By  Vice-chairman  PHILLIPS.)  That  is  sufficient,  Senator  Emery. 
You  can  proceed  in  your  own  way.     A.  Yes,  sir. 

Q.  (By  Mr.  KENNEDY.)  I  would  like  to  ask  your  present  connection 
with  the  independent  companies,  the  producing  companies,  the  pipe  line 
company,  and  the  Pure  Oil  Company?     A.  I  am  connected   with  them,  sir. 

Q.  In  an  official  connection?  A.  No,  sir;  I  am  not  an  official  except  that 
I  am  the  trustee  of  some  stock. 

Q.  (By  Representative  LIVINGSTON.)  Will  you  answer  my  question 
now  about  how  you  stand  in  relation  to  those  companies?  You  told  me  you 
would  answer  my  question.     A.  Certainly. 

Q.  How  are  you  related  to  any  and  all  of  these  companies?  A.  I  am  a 
stockholder  in  three  of  them. 

Q.  Which  three?  A.  The  United  States  Pipe  Line  Company,  the  Pure 
Oil  Company  and  the  Producers'  Oil  Company,  Limited. 

Q.  Any  connection  with  the  Standard?     A.  No,  sir. 

*Q.  That  is  all  I  want.  I  wanted  to  know  how  you  stood.  A.  None 
whatever. 

Vice-Chairman  PHILLIPS.  Now.  Senator  Emery,  you  can  proceed  in 
your  own  way  to  make  a  statement  to  the  commission  in  regard  to  the  facts. 

The  WITNESS.  The  discovery  of  oil  was  made  in  1859,  in  Crawford 
county,  in  the  vicinity  of  Titusville.  The  commodity  was  new  and  practi- 
cally unknown  to  the  commercial  and  scientific  world.  *The  drilling  of  wells 
continued  from  the  first  development,  until  it  excited,  or  the  quantity  pro- 
duced excited,  the  commercial  world,  and  we  followed  the  business  through 
its  first  career  and  as  it  extended  in  the  markets  of  the  world.  The  trans- 
portation of  the  oil  from  the  well  or  wells  down  Oil  creek,  beside  of  which 
the  first  well  was  drilled,  was  by  means  of  dumping  the  oil  or  pumping  it 
into  boats — or  rather  at  that  time  it  was  carried  in  buckets  into  flat  boats 
that  were  made  of  inch  lumber.  These  small  boats  ran  down  Oil  creek  to 
Oil  City,  Pa.,  and  from  there  the  oil  was  transferred  into  larger  bulk  boats, 
and  transported  down  the  Allegheny  river  to  the  City  of  Pittsburg,  near  the 
junction  of  the  Allegheny,  the  Ohio  and  the  Monongahela  rivers.  The  first 
refineries  for  putting  this  oil  into  a  merchantable  condition  were  erected  in 
the  City  of  Pittsburg,  the  natural  and  most  economical  place  for  the  manu- 
facture and  distribution  of  the  product  that  ranks  to-day  as  third  among 
the  exports  of  this  great  country.  The  business  was  free  and  untrammeled 
from  18.59  up  to  1872.  The  transportation  by  boat  gave  way  to  the  transporta- 
tion by  pipe  line  in  1865.  *l  do  not  wish  to  worry  you,  because  I  cannot  go 
into  details  to  give  you  the  modus  operandi  by  which  this  was  brought  about. 

The  production  of  oil  in  1865,  at  which  time  I  came  into  the  business, 
was  about  6,000  barrels  a  day.  In  the  meantime  refineries  had  dotted  the 
Oil  Creek  valley  and  the  Allegheny  valley  and  had  reached  as  far  south  as 
Cincinnati  and  Louisville  and  as  far  north  as  Portland.  Me.  In  1872  we  find 
these  refineries  all  in  active  operation  from  the  points  named,  north  and 
south.  From  1859  up  to  1865  the  transportation  of  this  commodity  from  the 
wells  was  in  barrels;  from  the  interior  district,  Pithole,  Cherry  Creek  and 
numerous  other  places  that  I  can  mention,  it  was  transported  by  teams, 
each  team  carrying,  according  to  the  condition  of  the  road,  anywhere  from 
three  to  seven  barrels,  a  barrel  of  oil  weighing  about  450  pounds  at  that 
time.  Then  in  1865  came  the  pipe  lines.  I  desire  the  commission  to  under- 
stand that  this  business  was  free  and  open  to  all  the  railroads  and  to  all 
the  people  and  to  all  the  world  up  to  1872.  If  the  commission  will  refer  to  this 
little  pamphlet,  they  will  see  that  "the  first  successful  effort  to  substitute 
the  transportation  of  oil  from  the  well  to  the  railroad  by  pipe  line,  instead 
of  transporting  it  by  the  oUl  system,  in  barrels  and  by  teams,  was  in  1865. 

"The  idea  of  transportins:  oil  by  a  pipe  to  the  Allesheny  river  originated 
with  Thomas  C.  Bates,  of  Syracuse.  A  company  was  formed  with  a  capital 
of  $100,000.  Joseph  Casey  as  president,  and  Thomas  C.  Bates  as  vice-presi- 


•Rlack    faced   type  Indicates   matter  omitted,  in  the  course  of  editing,   from  the 
official  report. 


LEWIS  EMERY,  JR.  301 

dent.  Colonel  Brackett  and  S.  M.  Spencer  completed  the  arrangements  and 
David  Kirk  was  appointed  superintendent.  The  laying  of  the  pipe  was  com- 
menced in  November,  1865,  and  the  first  oil  was  piped  on  the  10th  of  Decem- 
ber, 1865.  From  that  time  to  January  23,  1866,  the  company  piped  20,000 
barrels  of  oil.  The  pipe  was  six  inches  in  diameter,  extending  from  Pithole 
to  Oleopolis,  a  distance  of  seven  miles,  and  run  entirely  by  gravity.  It  had 
a  fall  of  360  feet,  between  the  field  and  the  river.  This  company  was  known 
as  the  Pennsylvania  Tubing  Transportation  Company. 

"Another  company  was  organized  in  the  spring  of  1865 — the  Rochester 
&  Oleopolis  Petroleum  Company,  with  a  capital  of  $100,000. 

'"The  Miller  Farm  &  Pithole  Pipe  Company  commenced  to  lay  pipe 
August,  1865,  and  completed  its  line  in  October,  1865.  The  length  of  the 
line  was  five  and  one-half  miles.  It  was  a  two-inch  line  and  originally  four 
pumps  were  used,  but  afterwards  only  one  pump  was  found  necessary  to  do 
the  work." 

To  give  you  an  idea  how  crude  men's  ideas  were  at  that  time,  it  was 
thought  necessary  to  place  a  pump  at  the  foot  of  each  hill,  in  order  that  the 
oil  mi:;ht  be  carried  over  that  hill  into  the  next  valley,  and  then  by  placing 
another  pump  at  the  foot  of  the  next  hill  to  carry  it  over  to  the  next  one, 
and  in  a  distance  of  five  miles  there  were  four  distinct  relays  of  pumps.  It 
would  have  been  held  absurd  to  think  that  oil  could  be  pumped  four  miles, 
while  now  we  put  oil  into  a  pipe  and  pump  it  a  distance  of  112  or  115  miles 
with  one  single  stroke  of  the  pump. 

"The  men  who  were  interested  in  this  enterprise  were  M.  E.  Van  Sycle, 
of  Jersey  City;  Henry  C.  Ohlen,  of  New  York;  Charles  Hickox  and  Charles 
W.  Noble,  of  Cleveland,  Ohio. 

"The  Titusville  Pipe  Company  was  organized  by  H.  E.  Pickett  and  G.  J. 
Sherman,  of  Titusville.  They  commenced  laying  pipe  in  January,  1866,  and 
completed  the  line  in  April,  1866.  There  were  two  lines  of  two-inch  pipe 
from  Pithole  to  Titusville,  nine  and  one-quarter  miles.  The  line  cost 
$120,000. 

"Harley  &  Co.  Line,  from  Benninghoff  run  to  Shaffer,  two  miles,  was 
built  in  1865. 

"The  Vandergrift  &  Forman  Pipe  Line,  from  Bredinsburg  to  Oil  City,  in 
1866. 

"A  charter  granted  in  1864  to  the  Western  Transportation  Company, 
from  the  Noble  &  Delemater  well  to  Shaffer. 

"In  1866,  the  whole  of  Van  Sycle's  Line,  from  Miller  Farm  to  Pithole, 
fell  into  the  hands  of  William  H.  Abbott  and  Henry  Harley. 

"The  Avery  &  Hebden  Line,  from  Shamburg  to  the  Miller  farm. 

"In  1867,  Abbott  &  Harley  acquired  control  of  the  Western  Transporta- 
tion Company.  Under  its  charter  they  combined  the  Western  and  their  own 
two  lines  as  the  Allegheny  Transportation  Company.  The  first  board  of 
directors,  in  1869,  were  Henry  Harley.  president;  W.  H.  Abbott,  secretary; 
Jay  Gould.  H.  P.  Harley  and  Joseph  Douglas;  I.  W.  Larsen,  treasurer;  Will- 
iam Warmcastle,  general  superintendent. 

"Harley  effected  a  combination,  reorganized  the  Allegheny  and  Com- 
monwealth, as  the  Pennsylvania  Transportation  Company,  with  a  capital  of 
almost  $2,000,000,  and  500  miles  of  pipe  to  Tidioute,  Triumph,  Irvineton.  Oil 
City,  Shamburg.  Pleasantville  and  Titusville,  centering  at  Miller  Farm. 
Among  the  stockholders  were  Jay  Gould,  Thomas  A.  Scott,  William  H.  Kem- 
ble,  Mrs.  James  Fisk  and  George  K.  Anderson.  This  enterprise  absorbed  a 
swarm  of  small  lines  and  was  considered  the  acme  of  pipe  line  achievement. 

"The  Star  Pipe  Line  was  built  by  Vandergrift  &  Forman  in  1867. 

"In  1871,  the  Commonwealth  Oil  &  Pipe  Line  Company  was  organized 
in  the  interest  of  the  Oil  Creek  Railroad." 

Q.  (By  Mr.  FARQUHAR.)  In  the  detailed  statement  you  have  made  in 
the  organization  of  these  vaj-ious  lines,  I  fail  to  find  among  the  officers  of 
any  of  the  lines  any  of  the  persons  who  became  officers  or  directors  of  the 
Standard  Oil  Company  itself.  A.  Yes.  sir;  but  we  haven't  come  to  that,  Mr. 
Farquhar. 

Q.  Do  you  mean  in  your  evidence  to  state  that  the  initial  one  of  the 
carrier  combinations  started  after  the  United  Pipe  Line  was  formed?  A. 
Oh,  yes,  sir;  that  is  what  I  propose  to  show. 


302  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

Q.  That  was  in  1874?  A.  Oh,  no;  this  is  under  the  act  of  1874;  the 
organization  was  away  baclc  in  1871.  *Vandergrift  &  Forman  organized  the 
United  Pipe  Lines,  into  which  a  number  of  lines  were  merged. 

Q.  Was  not  the  United  Pipe  Line  formed  after  the  Commonwealth  Line? 
A.  No,  sir. 

Q.  Are  you  referring  to  the  old  Bredinsburg  Line  of  Vandergrift  &  For- 
man? Did  they  not  make  the  junction  of  the  whole  line  into  the  United 
Pipe  Line  in  1872?  A.  If  you  will  permit  me,  we  will  come  to  that  question 
in  my  argument.  I  cannot  answer  that  question  until  I  come  to  it,  *and  I 
wish  that  you  would  put  it  down  and  I  will  answer  it. 

*Q.  We  need  not  go  back;  you  can  tell  it  all  at  the  present  time.  A.  I 
will  come  up  to  that  time,  and  show  the  consolidation  of  all  those  lines  under 
the  proper  period. 

"The  charters  for  oil  transportation  companies  granted  by  the  Legisla- 
ture were  few  in  number  and  only  to  a  favorite  few;  the  Legislature  steadily 
refusing  to  enact  a  general  law.  In  1872,  after  the  exposure  of  the  South 
Improvement  scheme,  the  Legislature  was  constrained  by  the  popular  indig- 
nation thus  aroused  to  pass  a  free  pipe  law  covering  the  oil  producing 
counties,  Erie,  Crawford,  Forest,  Warren,  Butler,  Venango,  Clarion  and 
Armstrong.  Under  that  law  18  lines  were  built  from  the  producing  districts 
to  the  railroads,  the  length  varying  from  five  to  30  miles.  After  the  adop- 
tion of  a  new  Constitution " 

I  desire  to  make  a  remark  right  here  that  the  reporters  will  please  take 
down.  In  1872,  when  the  people  of  the  oil  country  were  so  roused  by  the 
report  of  the  South  Improvement  Company's  organization,  they  demanded 
from  the  Legislature  the  repeal  of  the  South  Improvement  Company  charter,, 
and  the  passage  of  a  free  pipe  line  law,  giving  pipe  line  companies  the  right 
of  eminent  domain.  Myself  and  others  went  to  Harrisburg  and  asked  the 
Legislature  to  give  us  such  a  law.  We  met  Mr.  Scott,  of  the  Pennsylvania 
Railroad  Company,  which  was  all  powerful  in  the  legislative  body  at  that 
time,  and  I  don't  think  their  strength  is  in  any  way  lessened  at  the  present. 
We  asked  Mr.  Scott,  the  president  of  the  Pennsylvania  Railroad  Company,^ 
to  permit  this  law  to  become  general.  He  refused  and  said  that  he  would 
permit  us  to  have  a  law  for  the  eight  counties  named,  but  he  would  not  per- 
mit us  to  have  a  law  by  which  we  could  run  our  pipes  to  the  City  of  Pitts- 
burg. Our  object  was  to  get  a  law  by  which  we  could  reach  competing 
lines  of  railroads  and  the  Ohio  river,  so  that  we  could  transport  Our  product 
to  market  by  water.  He  said  that  he  would  permit  a  law  to  pass  for  the 
eight  counties  named,  but  he  would  restrict  in  that  law  that  no  pipe  line 
should  go  within  a  mile  of  the  State  line,  nor  within  a  mile  of  any  other 
railroad  except  the  Pennsylvania.  The  oil  producing  people  would  not 
accept  that  provision  in  the  bill,  and  by  force  of  circumstances,  and  almost 
a  resort  to  arms,  the  demand  was  finally  conceded  that  we  could  have  the 
eight  counties,  but  we  were  not  permitted  to  have  Allegheny  county,  so  that 
we  could  get  to  Pittsburg  for  the  competition  named. 

"After  the  adoption  of  a  new  Constitution,  the  Wallace  Corporation 
act,  carefully  excluding  from  its  provisions  transportation  of  oil,  was  passed 
by  the  Legislature,  and  in  less  than  two  years  the  old  South  Improvement 
Combination,  now  known  as  the  Standard  Oil  Trust,  had  by  a  corrupt  bar- 
gain with  all  the  railroads,  forced  all  but  one  of  these  lines  built  under  the 
act  of  1872,  into  bankruptcy,  and  practically  sale  to  itself. 

"The  old  oil  fields  are  now  entirely  at  the  mercy  of  the  monopoly,  and 
upon  the  development  of  the  new  Bradford  district,  the  monopoly,  through 
its  transportation — the  United  Pipe  Lines  and  the  American  Transfer  Com- 
pany— took  possession  of  that  field  also.  Since  1876  the  whole  oil  dis- 
tricts, covering  nine  counties,  and  with  the  Pennsylvania  railroad,  or  one 
of  its  branches,  within  from  one  to  twenty  miles  of  every  well  in  the  oil 
region,  have  been  under  the  complete  dictation  of  this  trust.  A  brief  state- 
ment of  the  history  of  this  monopoly,  its  methods  and  policy,  its  influence 
upon  the  crude  and  refining  industries  and  upon  the  oil  regions  generally, 
together   with   certain   inferences   to   be   drawn   therefrom,   may   enable   the 


*Black  faced  type  indicates  matter  omitted,  in  the  course  of  editing,  from  the 
official  report. 


LEWIS  EMERY.  JR.  30a 

commission  to  form  some  estimate  of  its  future  and  possibly  to  suggest  some 
relief  from  its  baneful  influence.  Twenty-five  years  ago  the  Standard  Oil 
Company  was  a  corporation  located  at  Cleveland,  Ohio,  with  a  capital  of 
less  than  a  million  dollars.  Soon  after  this  it  was  reorganized,  when  Scott, 
of  the  Pennsylvania  Railroad;  Vanderbilt,  of  the  New  York  Central  Rail- 
road; Jewett,  of  the  Erie  Railroad;  Watson,  of  the  Lake  Shore  Railroad, 
and  other  railroad  managers  became  interested  in  it  as  large  stockholders. 
With  the  influence  thus  gained  it  attempted  the  establishment  of  the  South 
Improvement  Company.  This  attempt  failed.  Soon  after  it  induced  Scott, 
of  the  Pennsylvania  Railroad,  to  surrender  the  oil  traffic,  in  exchange  for 
western  freights,  under  a  general  apportionment  of  freights  between  the 
trunk  lines.  By  this  means  was  diverted  a  greater  part  of  the  refining 
trade  from  Pittsburg  and  from  the  oil  regions  of  Pennsylvania  to  Cleveland, 
Ohio.     It  then  bought  a  controlling  interest  in  the  United  Pipe  Lines." 

That  is  where  these  lines  were  consolidated,  and  legitimately  so,  by  Van- 
dergrift  &  Forman.     But  they  were  forced  in  by  the  monopoly. 

Representative  LIVINGSTON.  Right  there  explain  what  you  mean  by 
a  monopoly. 

Mr.  KENNEDY.     I  would  like  to  know  if  he  thinks  it  advisable 

Representative  LIVINGSTON.  Let  him  explain  what  he  means.  I 
don't  care  whether  it  is  advisable  or  inadvisable. 

The  WITNESS.  It  was  explained  at  that  time;  perhaps  I  might  say 
that  the  word  "monopoly"  there  would  be  a  little  premature,  because  it  had 
not  accomplished  all  its  plans  to  get  absolute  control  of  the  business. 

Q.  (By  Mr.  KENNEDY.)  Has  it  ever  had  absolute  control  of  the  busi- 
ness?    A.  Absolutely. 

Q.  Is  competition  wiped  out  entirely?  A.  Entirely,  sir.  There  was  a 
time  in  our  business  that  I  did  not  know  of  an  independent  refinery,  *which 
I  will  show  before  I  get  through  with  my  testimony. 

Q.  (By  Representative  LIVINGSTON.)  Now  then  the  word  "monopoly" 
means  the  Standard  Oil  Company?    A.  Yes.  sir. 

Q.  I  would  rather  hereafter  that  you  would  just  say  the  Standard  Oil 
Company.     A.  Well,  it  will  not  suit  me,  Mr.   Commissioner,  when  I   get  a 

little  further  along 

Representative  LIVINGSTON.  Well,  all  right.  You  must  pardon  me, 
but  there  are  so  many  monopolies  up  there  that  I  don't  know  which  one 
you  speak  of. 

Q.  (By  Mr.  KENNEDY.)  But  is  there  any  monopoly  now  up  there  at 
the  present  time?  A.  Well,  my  dear  commissioner,  if  you  will  permit  me 
to  go  on  I  will  prove  all  these  things  as  I  come  to  them.t  because  while  I 
do  not  want  to  be  discourteous  or  ungentlemanly,  it  would  be  a  little  pre- 
mature for  me  to  answer  that  question  until  you  have  heard  all  of  my 
statement,  and  all  of  my  argument.  Then  I  think  you  will  be  able  to  ques- 
tion me  more  intelligently  and  I  will  be  able  to  answer  you  better. 

Q.  (By  Mr.  KENNEDY.)  The  question  by  Mr.  Livingston  suggested  that 
there  were  several  monopolies  up  there,  and  I  want  to  know  if  there  were 
any.     However,  I  will  withdraw  that  question. 

Vice-Chairman  PHILLIPS.  Mr.  Kennedy  has  withdrawn  his  question; 
the  Senator  will  proceed. 

The  WITNESS.     Mr.   Kennedy.  I  thank  you.  sir. 

"The  old  oil  fields  are  now  entirely  at  the  mercy  of  the  monopoly" — (the 
witness  re-read  the  above  extract  from  his  pamphlet,  concluding  with  the 
words:     "Twenty-five  years  ago  the  Standard  Oil  Company  was  a  corpora- 
tion located  at  Cleveland,  Ohio"). 
Now,  just  there  I  wish  to  digress. 

I  want  to  show  the  holdings  of  the  Standard  Oil  Company.  I  wish  to 
read  to  the  commission,  Mr.  Chairman,  the  testimony  of  Mr.  H.  M.  Flagler, 
which  I  heard  at  the  time,  and  which  Is  of  record  in  this  book.    The  book  is 


♦Black  faced  type  Indicates  matter  omitted,  in  the  course  of  editing,  from  the 
official  report. 

tit  will  be  Interesting-  for  the  reader  to  carefully  note  throughout  Mr.  Emery's 
testimony  the  number  of  times  he  promiserl  to  furnish  important  proof  and  also  to 
observe  his  many  failures. 


304  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

the  report  of  the  investigation  of  the  Sugar  Trust  and  the  Standard  Oil 
Trust,  by  the  Committee  on  Manufactures,  House  of  Representatives,  1888. 
I  read  from  page  288,  from  the  testimony  of  Henry  M.  Flagler.  Mr.  Gowen 
asked  the  questions.  Mr.  Franklin  B.  Gowen  was  the  attorney  for  the 
commission. 

"Q.  Were  you  a  stockholder  of  the  Standard  Oil  Company  of  Ohio,  as 
well  as  an  officer?    A.  Yes,  sir. 

"Q.  From  what  time;  when  did  you  first  become  such?  A.  From  its 
organization. 

"Q.  In  what  year  was  that?    A.  I  think  early  in  1870. 

"Q.  Were  you  not  connected  in  any  manner  with  the  oil  trade  or  with 
associations  or  corporations-  interested  in,  or  connected  with  the  oil  trade 
prior  to  the  formation  of  the  Standard  Oil  Company  of  Ohio?  A.  I  was  a 
member  of  the  firm  of  Rockefeller,  Andrews  &  Flagler. 

"Q.  Where  was  it  located?     A.  Cleveland.  Ohio. 

"Q.  What  was  their  business?     A.  Refining  oil. 

"Q.  That  was  a  private  partnership,  was  it  not?     A.  Yes,  sir. 

"Q.  Did  it  engage  directly  in  the  business  of  refining?     A.  Yes,  sir. 

"Q.  Did  that  firm  erect  refining  works  or  did  they  buy  them  from  some 
one  else?  A.  They  bought  works  from  two  firms,  one  of  which  I  believe 
was  Rockefeller  &  Co.  and  the  other  Rockefeller  &  Andrews.  They  suc- 
ceeded those  two  firms. 

"Q.  Were  you  interested  in  either  before  you  became  a  member  of  the 
new  firm?     A.  I  was  not. 

"Q.  Were  you  in  business  with  them  or  connected  with  them  in  any 
way?     A.  I  was  not. 

"Q.  When  your  own  firm  came  into  existence  or  after  it  had  gone  into 
business  what  was  the  extent  of  its  refining  capacity?  A.  As  well  as  I  can 
recollect,  600  barrels  a  day  of  crude  oil. 

"Q.  Your  firm  practically,  therefore,  formed  the  Standard  Oil  Com- 
pany of  Ohio,  and  turned  its  works  over  to  that  company?    A.  Yes,  sir. 

"Q.  And  accepted  stock  in  that  company  in  consideration  of  its  there- 
tofore private  ownership  in  the  firm?    A.  Yes,  sir. 

"Q.  What  was  the  capital  of  the  Standard  Oil  Company  of  Ohio?  A.  One 
million  dollars. 

"Q.  How  much  of  that  was  paid  in?    A.  One  million  dollars." 

That  is  as  far  as  I  can  go.  I  want  this  commission  to  bear  in  mind  now 
that  the  Standard  Oil  Company  of  Ohio  owned  in  1870  and  1871,  600  barrels 
refining  capacity.  I  will  call  your  attention  later  on  to  their  ownership  in 
1879,  in  testimony  before  the  Hepburn  committee  which  was  appointed  by  the 
New  York  State  Legislature.  I  leave  that  part  of  the  subject  for  the  present. 

"Twenty-five  years  ago  the  Standard  Oil  Company  was  a  corporation 
located  at  Cleveland,  Ohio,  with  a  capital  less  than  a  million  dollars." 

That  was  the  capital,  and  I  can  go  on  and  show  you  how  much  was 
paid  in  but  I  do  not  care  to  burden  the  testimony. 

"Soon  after  this  it  was  reorganized,  when  Scott,  of  the  Pennsylvania 
Railroad  Company;  Vanderbilt.  of  the  New  York  Central  Railroad;  .Tewett, 
of  the  Erie  Railroad;  Watson,  of  the  Lake  Shore  Railroad,  and  other  rail- 
road managers  became  interested  in  it  as  large  stockholders.  (Please  fol- 
low this  history,  gentlemen.)  With  the  influence  thus  gained  it  attempted 
the  establishment  of  the  South  Improvement  Company.  This  attempt 
failed." 

Just  there  I  desire  to  call  your  attention  on  page  6  of  this  pamphlet  to 
the  incorporation  of  the  South  Improvement  Company. 

"An  Act  to  incorporate  the  South  Improvement  Company.  'Sec.  1.  Be 
it  enacted  by  the  Senate  and  House  of  Representatives  of  the  Common- 
wealth of  Pennsylvania '  "  I  desire  right  here  to  have  this  act  read  because 

I  was  asked  this  morning  by  one  of  the  commissioners  what  powers  they 
had  under  the  South  Improvement  Company  act,  and  I  would  like  to  reply 
to  that  question  before  the  commission  if  I  dared  to,  what  a  very  eminent 
judge  up  in  our  section  of  the  country  said  relative  to  the  powers  of  this 
act,  but  as  it  is  not,  perhaps,  parliamentary,  I  will  tell  the  story  afterward. 
Senator  Lee,  with  the  consent  of  the  chairman  and  commission,  will  read 
this.     I  desire  to  have  the  Senator  read  this  act  of  incorporation. 


LEWIS  EMERY,  JR.  305 

♦Vice-Chairman  PHILLIPS.  Without  objection  Senator  Lee  will  read 
it  for  you. 

The  WITNESS.  *lt  will  give  me  a  little  rest.  I  do  that  because  I  want 
this  commission  to  hear  the  unparalleled  privileges  granted  by  this  charter 
at  that  time,  and  I  desire  to  follow  this  only  by  saying  that  within  a  few 
years  after  this  time,  they  acquired  that  charter  under  another  head. 
Charters  were  for  sale.  They  were  manufactured  by  the  Legislature  of 
Pennsylvania  for  that  purpose.  I  know  that,  because  I  spent  17  years  of  my 
life,  pretty  nearly,  in  that  body.     *l   was  not  in  the  jobs  though. 

Mr.  J.  W.  Lee,  president  of  the  Pure  Oil  Trust,   (reading): 

AN  ACT  TO   INCORPORATE  THE   SOUTH   IMPROVEMENT   COMPANY. 

Sectiun  1.  Be  it  enacted  by  the  Senate  and  House  of  Representatives  of  th«i 
Cnmmonwealth  of  Pennsylvania,  in  General  Assembly  met,  and  it  is  hereby  enacted 
by  the  authority  of  the  same. 

That  S.  S.  Moon,  R.  D.  Barclay,  John  A.  Fowlter,  or  a  majority  of  them,  their 
associates,  successors  and  assigns,  be  and  they  are  hereby  authorized  and  empow- 
ered to  form  and  be  a  body  corporate,  to  be  known  as  the  South  Improvement  Com- 
pany, which  shall  be  and  is  hereby  vested  with  all  the  powers,  privileges,  duties 
and  obligations  conferred  upon  the  act  to  incorporate  the  Pennsyhania  Company,  by 
the  act  of  the  Legislature  of  Pennsylvania,  approved  the  7th  day  of  April,  Anno 
Domini  1870,  and  the  supplement  thereto. 

Sec.  2.  That  the  stockholders  of  said  company,  by  and  with  the  consent  of  the 
holders  of  not  less  than  two-thirds  of  the  shares  of  stock  be  and  they  are  hereby 
authorized  to  change  the  name  and  title  of  said  company,  and  designate  the  loca- 
tion of  its  general  office,  which  changes  shall  be  valid  after  the  filing  of  a  certificate 
in  the  office  of  the  Secretary  of  the  Commonwealth,  signed  by  the  president  and 
attested  by  the  seal  of  the  said  company. 

JAMES  H.  WEBB, 
Speaker  of  the  House  of  Representatives. 

WILLIAM  A.  WALLACE, 

Speaker  of  the  Senate. 

Approved  the  6th  dav  of  Mav,  Aimo  Domini  1S71. 

JOHN  W.  GEARY. 

AN   ACT   TO   INCORPORATE   THE   PENNSYLVANIA   COMPANY. 

Section  1.  Be  it  enacted  by  the  Senate  and  House  of  Representatives  of  the 
Commonwealth  of  Pennsylvania,  in  General  Assembly  met,  and  it  is  hereby  enacted 
by  the  authority  of  the  same. 

That  Andrew  Howard,  J.  S.  Swartz,  G.  B.  Edwards,  J.  D.  Welsto  and  J.  T. 
Matlin.  their  associates,  successors  and  assigns,  or  a  majority  of  them,  be  and  they 
are  hereby  authorized  to  form  and  be  a  body  corporate  to  be  known  as  the  Penn- 
sylvania Company,  and  by  that  name,  style  and  title,  shall  have  perpetual  succes- 
sion, and  all  the  privileges,  franchises  and  immunities  incident  to  a  corporation; 
may  sue  and  be  sued,  implead  and  be  impleaded,  complain  and  defend  in  all  courts 
of  law  and  equity  of  record  and  otherwise;  may  purchase,  receive,  hold  and  enjoy, 
to  them,  their  successors  and  assigns,  all  such  lands,  tenements  and  leasehold, 
estate.s  and  heritaments,  goods  and  chattels,  securities  and  estates,  real,  personal 
and  mixed,  of  what  kind  and  quality  soever  as  may  be  necessary  to  erect  depots, 
engine  houses,  tracks,  shops  and  other  pinposes  of  said  corporation,  as  hereafter 
defined  by  the  second  section  of  this  act,  and  the  same  may  from  time  to  time  sell, 
convey,  mortgage,  encumber,  charge,  pledge,  grant,  lease,  sub-lease,  alien  and  dis- 
pose of  and  also  make  and  have  a  common  seal,  and  the  same  to  alter  and  renew 
at  pleasure,  and  ordain,  establish  and  put  in  execution  such  by-laws  or  ordinances, 
rules  and  regulations  as  may  be  necessary  or  convenient  for  the  government  of  the 
said  corporation,  not  being  contrary  to  the  Constitution  and  laws  of  this  Common- 
wealth, and  generally  may  do  all  and  singular  the  matters  and  things  which  to 
them  shall  appertain  to  do  for  the  well  being  of  the  said  corporation,  and  the  man- 
agement and  ordering  of  the  affairs  and  business  of  the  same;  provided,  that  noth- 
ing herein  contained  shall  be  so  construed  as  lo  give  to  the  said  corporation  any 
banking  privileges  or  franchises,  or  the  privilege  of  issuing  their  obligations  as 
money. 

Sec.  2.  That  the  corporation  hereby  created  shall  have  power  to  contract  with 
any  person  or  persons,  firms,  corporations  or  any  other  party,  howsoever  formed, 
existing,  or  that  may  hereafter  exist,  in  any  way  that  said  parlies  or  any  of  them 
may  have  authority  to  do,  to  build,  construct,  maintain  or  manage  any  work  or 
works,   public   or   private,   which   may   tend  or  be  designed  to  improve,   increase,   or 


♦Black   faced   type  Indicates   matter  omitted,  in  the  course  of  editing,   from  the 
official  report. 

20 


306  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

facilitate  or  develop  trade,  travel  or  the  transportation  and  conveyance  of  freight, 
live  stock,  passengers  or  any  other  traffic,  by  land  or  water,  from  or  to  any  part  of 
the  United  States  or  the  Territories  thereof;  and  the  said  company  shall  also  have 
power  and  authority  to  supply  or  furnish  with  all  needful  material,  labor,  imple- 
ments, instruments  and  fixtures  of  any  and  every  kind  whatsoever,  on  such  terms 
and  conditions  as  may  be  agreed  upon  between  the  parties  respectively,  and  also  to 
purchase,  erect,  construct,  maintain  or  conduct,  in  its  own  name,  and  for  its  owu 
benefit,  or  otherwise,  any  such  work,  public  or  private,  as  they  may  by  law  be 
authorized  to  do  (including  also  herein  lines  for  telegraphic  communication),  and 
to  aid,  co-operate  and  unite  with  any  company,  person  or  firm  in  so  doing. 

Sec.  3.  The  company  hereby  created  shall  also  have  the  power  to  make  pur- 
chases and  sales  of  or  investments  in  the  bonds  and  securities  of  other  companies, 
and  to  make  advances  of  money  and  of  credit  to  other  companies,  and  to  aid  in  like 
manner  contractors  and  manufacturers,  and  to  receive  and  hold,  on  deposit  or  as 
collateral,  or  otherwise,  any  estate  or  property,  real  or  per.sonal,  including  the  notes, 
obligations  and  accounts  of  individuals  and  companies,  and  the  same  to  purchase, 
collect,  adjust  and  settle,  and  also  to  pledge,  sell  and  dispose  thereof,  on  such 
terms  as  may  be  agreed  upon  between  them,  and  parties  contracting  with  them;  and 
also  to  endorse  and  guarantee  the  payment  of  the  bonds  and  the  performance  of  the 
obligations  of  other  corporations,  firms  and  individuals,  and  to  assume,  become 
responsible  for,  execute  and  carry  out  any  contracts,  leases  or  sub-leases  made  by 
any  company  or  companies,  individuals  or  firms  whatsoever. 

Sec.  4.  The  company  hereby  created  shall  also  have  power  to  enter  upon  and 
occupy  the  lands  of  individuals  or  of  companies  on  making  payment  therefor  or 
giving  security  according  to  law,  for  the  purpose  of  erecting,  constructing,  main- 
taining or  managing  any  public  work,  such  as  is  provided  for  or  mentioned  in  the 
second  section  of  this  act,  and  to  construct  and  erect  such  works  thereon,  and  also 
such  buildings,  improvements,  structures,  roads  or  fixtures  as  may  be  necessary  or 
convenient  for  the  purposes  of  said  company,  under  the  powers  herein  granted;  and  to 
purchase,  make,  use  and  maintain  any  works  or  improvements  connecting,  or  in- 
tended to  be  connected  with,  the  works  of  the  said  company;  and  to  merge  or  con- 
solidate or  unite  with  the  said  company  the  improvements,  property  and  franchises 
of  any  other  compary  or  companies,  on  such  terms  and  conditions  as  the  said  com- 
pany may  agree  upon;  and  to  fix  and  regulate  the  tolls  or  charges  to  be  charged  or 
demanded  for  -iny  freight,  property,  or  passengers  traveling  or  passing  over  any  im- 
provement erected,  managed  or  owned  by  the  said  company,  or  on  any  merchandise 
or  property  transported  over  any  road  whatever  by  the  said  company,  and  to  make, 
from  time  to  time,  dividends  from  the  profits  made  by  said  company;  the  several 
lailroads  managed  by  said  company  shall  continue  taxable,  as  heretofore,  in  pro- 
purlion  to  their  length  within  this  State  respectively;  and  the  said  Pennsylvania 
Company  shall  be  taxable  only  on  the  proportion  of  dividends  on  its  capital  stock 
and  upon  net  earnings  or  income,  only  in  proportion  to  the  amount  actually  carried 
by  it  within  the  State  of  Pennsylvania,  and  all  its  earnings  or  income  derived  from 
its  business  beyond  the  limits  of  this  Commonwealth  shall  not  be  liable  for  taxation. 
Sec.  5.  The  capital  stock  of  said  company  sliall  consist  of  2,000  shares,  of  the 
^■allle  of  $50  each,  etc.,  etc. 

The  WITNESS.  I  simply  wanted  the  commission  to  understand  the 
powers  given  to  this  corporation.  I  now  desire  to  call  your  attention  inci- 
dentally to  page  15V^  of  this  circular. 

(Reading.)  "When  popular  excitement  raised  against  the  South  Improve- 
ment Company,  which  resulted  in  the  repeal  of  the  act  to  incorporate  it,  had 
subsided,  the  trust,  for  the  purpose  of  its  transportation  business  in  Penn- 
sylvania, sectired  a  franchise  substantially  as  follows: 

"An  act  to  incorporate  the  Overland  Contract  Company  was  approved 
March  22nd,  1S71.  *Letters  patent  were  granted  them  April  5th,  1871.  On 
May  16th,  1871,  they  changed  their  name  to  the  Southern  Railway  Security 
Company.  They  owed  the  State  of  Pennsylvania  one-quarter  per  cent,  bonus 
on  their  capital  stock.  And  for  this  debt,  after  a  compromise  had  been 
effected,  it  was  sold  by  the  sheriff  of  Dauphin  county,  in  which  Harrisburg, 
the  capital  of  the  State  of  Pennsylvania,  is  located,  to  John  W.  Simonton 
and  Marlin  E.  Olmstead  for  $16,251  on  March  8,  1881,  upon  a  judgment  enter- 
ed September  13,  1881. v  April  13,  1881,  said  John  W.  Simonton  and  Marlin 
E.  Olmstead  sold  it  to  Clement  A.  Griscom,  Thornton  Pike,  Elihu  Roberts, 
W.  H.  Curtis,  William  R.  Williamson,  J.  W.  Simonton  and  M.  E.  Olmstead. 
On  April  14,  1881,  (bear  in  mind)  under  this  charter  the  National  Transit 
Company  was  organized.  That  is  to  transport  the  oil  in  pipe  lines,  etc., 
through  the  State  of  Pennsylvania. 


•Black  faced  type  Indicates  matter  omitted,  in  the  course  of  editing,  from  the 
official  report. 

tThis  date  is  evidently  an  error,  but  it  is  given  exactly  as  read  by  the  witness 
from  his  pamphlet  entitled,   "Lewis   Emery,  Jr..  to  the  Industrial  Commission." 


LEWIS  EMERY,  JR.  307 

"This  franchise  carried  with  it  all  the  power  previously  exercised  by  the 
South  Improvement  Company.  It  was  of  unlimited  capital  and  power  and 
the  purposes  of  the  Southern  Railway  Security  Company  are  the  same  as 
the  Pennsylvania  Company  or  the  South  Improvement  Company,  identically. 
It  is  simply  the  same  act  with  another  head,  that  is  all.  I  can  refer  you.  if 
I  choose  to  take  up  your  time,  to  where  there  are  something  like  12  or  15 
charters  with  the  body  of  the  act  that  has  been  read  and  the  head  of 
another  name." 

Q.  (By  Mr.  KENNEDY.)  Can  you  refer  the  commission  to  the  full 
powers  of  the  act?    A.  I  have  just  read  it. 

*Q.  No,  you  read  it  for  another  company?  A.  I  say  it  is  identical  with 
the  other  one;  the  one  that  I   read. 

Q.   The  one  that  you   read  was  for  the  Pennsylvania   Railroad  Company. 

Mr.  FARQUHAR.     The  Pennsylvania  Company. 

The  WITNESS.  It  was  the  South  Improvement  Company.  The  act  of 
the  South  Improvement  Company  gave  them  the  right  to  change  the  name 
of  the  Pennsylvania  Company — that  second  section,  if  you  remember,  of  the 
act  in  1871.  I  read  that.  I  guess  you  did  not  follow  it.  Now,  then,  the 
Southern  Railroad  Security  Company  heads  a  charter  of  the  same  wording 
as  this,  as  well  as  some  15  other  companies  with  different  names  under  the 
same  law.  What  I  mean  to  say  is  this,  that  this  act,  as  read  by  Senator  Lee, 
is  the  identical  act  under  which  the  National  Transit  Company  of  to-day  is 
organized,  and  from  which  they  get  all  of  their  privileges,  and  there  is  noth- 
ing that  is  not  set  forth  broadly  and  clearly  in  that  act. 

Q.  (By  Mr.  KENNEDY.)  Did  they  get  their  powers  and  privileges  from 
this  old  corporation  without  having  to  go  to  the  Secretary  of  State  for  any 
charter?  A.  *They  bought  this  charter.  The  National  Transit  Company 
people  bought  this  charter,  for  which  they  paid  $16,250,  on  March  8,  1881, 
under  which  the  present  National  Transit  Company  is  organized  and  the 
provisions  of  that  law  are  just  the  same  as  the  provisions  of  the  South 
Improvement  Company  act,  and  the  same  in  every  letter,  word  and  line. 

Q.  (By  Mr.  FARQUHAR.)  How  long  was  the  South  Improvement  Com- 
pany in  existence?     A.  About  three  months. 

Q.  And  immediatel}^  after  that,  this  company  was  formed  with  the  same 
rights  and  privileges,  but  not  with  the  same  title?    A.  No,  sir;  in  1881. 

Q.  How  was  it  that  they  came  to  give  a  franchise  to  a  company  of  that 
kind,  when  they  repealed  the  act  of  the  South  Improvement  Company?  A. 
This  is  another  law. 

Q.  But  at  ihe  same  time  contemporaneous?    A.  No,  sir;  it  is  in  1881. 

Q.  When  was  the  South  Improvement  Company  act  repealed?  A.  Re- 
pealed in  1872;  March  25,  1872. 

Q.  Then,  after  the  repeal  of  that,  how  was  it  possible  for  another  com- 
pany, unless  by  re-enactment,  to  take  up  the  provisions  and  conditions  of  the 
South  Improvement  Company?  *A.  Because  they  were  offered  lots  of  other 
charters. 

Q.  That  seems  to  be  obscure  in  all  of  the  testimony.  That  point  seems 
to  be  obscure  in  all  the  testimony  that  we  have  had  so  far. 

The  WITNESS.  Will  you  please  give  me  the  interrogatory  again?  Will 
you  ask  me  the  question  again? 

Q.  (By  Mr.  FARQUHAR.)  The  point  is  this:  A  part  of  your  testimony 
has  declared  positively  that  the  Standard  Oil  Company  had  nothing  to  do 
with  the  South  Improvement  Company.  We  find  that  the  South  Improve- 
ment Company  only  existed  three  months.     A.   Yes,  sir. 

Q.  We  find,  then,  a  repeal  of  the  South  Improvement  Company  act?  A. 
Yes,  sir. 

Q.  And  on  the  strength  of  that,  in  your  testimony,  apparently  you  are 
making  it  out  that  the  Pennsylvania  Company  was  the  successor  of  the 
South   Improvement  Company.     A.   Now   I   understand  you. 

Q.  Now,  it  could  not  be  the  successor,  but  you  mean  it  was  the  successor 
in  the  getting  of  the  same  conditions  and  privileges  of  legislation?  A.  No, 
I  did  not  mean  to  say  anything  of  the  kind  at  that  time.     I  am  only  showing 

*BIack  faced  type  Indicates  matter  omitted,  In  the  course  of  editing,  from  the 
official  report. 


308  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

you  by  the  reading  of  this  charter.  I  am  going  to  come  to  1881  if  you  will 
give  me  time  to  do  so,  and  I  think  everything  will  be  perfectly  plain.  I  read 
to  you  the  South  Improvement  Company  act.  The  body  of  the  act  of  the 
South  Improvement  Company  is  just  the  same  as  the  body  of  the  act  of  the 
Southern  Railway  Security  Company,  and  I  said  there  were  12  or  15  other 
charters  of  the  same  character,  with  the  same  body.  Now  I  say  this,  that 
from  1872,  of  which  I  have  been  giving  you  a  history,  up  to  the  purchase  of 
this  charter  in  1881,  I  will  endeavor  to  show  you  what  relations,  if  any,  the 
South  Improvement  Company  had  to  the  Standard  Oil  Company,  but  I  have 
now  gotten  simply  to  the  South  Improvement  Company's  charter,  and  I  must 
travel  along  to  1874  before  I  can  give  you  the  connection,  *if  I  can  make  you 
see  that  there  is  a  connection.  Well,  all  right.  I  have  gone  on  further  to 
refer  to  this  power.  Now,  mind,  you  are  speaking  about  the  Standard  Oil 
Company  and  perhaps  *the  Standard  Trust  and  here  I  am  speaking  of  the 
National  Transit  Company,  which  is  one  of  the  allied  companies  of  the 
Standard  Trust.  I  desire  to  have  you  understand  that  this  franchise  carried 
with  it  all  the  powers  previously  exercised  by  the  South  Improvement  Com- 
pany, and  it  was  of  unlimited  capital  and  power. 

Q.  The  question  is,  were  there  any  other  companies  in  Pennsylvania 
that  had  just  as  good  privileges  as  this,  at  that  time?  A.  No.  The  business 
was  in  everybody's  hands  at  that  time — everybody's.  It  was  just  as  free  for 
you  to  go  into  the  oil  business  and  transport  your  oil  down  the  Allegheny 
river  or  over  the  railroads  at  that  time  as  it  was  for  you  to  go  out  here  and 
fish  in  the  Potomac — for  all  of  us.  just  as  free.  You  might  drop  your  money 
into  a  refinery,  or  a  well,  or  a  tank  boat,  or  a  pipe  line,  or  anything  else  that 
you  might  choose  to:  it  was  absolutely  free  and  open  to  anybody.  There 
were  no  encroachments  or  hamperings  at  that  time. 

Q.  Was  there  any  attempt  on  the  part  of  either  refiners  or  producers  at 
that  time  to  get  a  charter  of  equal  franchises  with  this  South  Improvement 
Company?    A.  Not  at  that  time;  no.  sir. 

Q.  From  1872  to  1881?     A.  I  don't  know  about  that. 

Q.  Was  it  not  the  lack  of  taking  advantage  of  combination  at  that  time 
that  handicapped  the  parties  that  did  not  combine,  as  those  parties  did? 
Didn't  you  allow  the  privileges  to  lapse?  A.  Well,  a  man  who  was  at  that 
time,  I  believe,  and  is  unfortunately  at  this,  disposed  to  obey  the  laws  of  his 
country,  would  not  do  it.  Under  the  old  Constitution  of  the  State  of  Penn- 
sylvania, and  I  think  of  every  other  State  of  this  Union,  undue  discrimina- 
tion was  prohibited.  It  was  against  the  law.  and  the  whole  difficulty,  the 
reason  of  this  trouble  to-day  in  this  great  United  States  of  America,  is  due 
to  discriminating  rates.  The  railroads  of  this  country  are  responsible  to-day 
for  the  existence  of  these  trusts.  They  gave  to  the  favorite  shippers,  draw- 
backs and  rebates,  so  that  finally  the  Standard  Oil  Company,  with  its  privi- 
leges, drove  the  entire  oil  industry  into  its  own  hands.  I  do  not  say  for  one 
minute  but  that  these  people  had  a  right  to  do  this  if  they  wanted  to,  but  I 
do  say  that  when  they  did  it  they  were  violators  of  the  common  law.  and 
that  I  would  not  connect  myself  with  them  on  those  grounds.  I  was  one  of 
the  originals.  I  had  my  refineries  and  I  built  my  pipe  line  in  1868  and  1870, 
long  years  before  I  knew  anything  of  these  people,  and  I  did  not  see  fit  to 
place  my  fortunes  in  their  hands.  Dollars  and  cents!  Yes.  It  would  have 
been  millions  to  me  if  I  had.  But  I  did  not  feel  that  I  ou2;ht  to  surrender  my 
principles  under  the  arrangement  or  the  law  set  forth  under  the  South 
Imi)rnvem.ent  Company  act,  but  the  most  damnable  thing  that  followed  was 
the  contract.  Well,  it  has  been  given  in  evidence  upon  this  floor  that  the 
Standard  Oil  Company  is  not  responsible  for  the  acts  of  the  South  Improve- 
ment Company,  but  the  contract  that  followed — that  was  framed  in  Cleve- 
land and  brought  to  the  Pennsylvania  Railroad  and  they  accepted  it,  and 
the  contract  was  signed  by  Thomas  A.  Scott,  president  of  the  road  at  that 
time. 

Q.  Were  not  all  the  railroads  wildcatting  at  that  time,  anyway?  A. 
No,  sir. 


♦Black   faced   type   indicates   matter  omitted,  in  ttic  course  of  editing,  from  the 
official  report. 


LEWIS  EMERY,  JR.  309 

Q.  All  the  roads?     A.  All  the  roads? 

Q.  Wlldcatting?  A.  I  do  not  doubt  but  that  the  railroads  were  giving 
discriminating  rates.  I  have  expressed  myself  firmly  upon  that  question. 
We  knew  that. 

Q.  You  knew  it?  A.  Yes,  as  business  men  we  knew  it,  and  the  rail- 
roads knew  this,  and  they  know  to-day,  and  I  will  show  you  before  I  leave 
this  floor  that  discriminations  have  been  made  up  to  almost  the  present 
time,  *although  it  has  been  denied  here  and  it  has  been  said  that  no  rebates 
have  been  paid.  I  have  got  the  full  sworn  evidence  that  will  show  it.  Now 
that  you  have  called  out  of  me  something  that  I  did  not  say,  I  desire  to  read 
to  you  this  contract.  Now,  I  desire  to  call  your  attention,  and  I  wish  you 
would  give  attention  to  this.  I  desire  to  call  you  attention  to  a  contract 
between  the  South  Improvement  Company  and  the  Pennsylvania  Railroad, 
dated  January  18,  1872,  and  I  propose  to  show  you  before  I  quit  that  this 
contract  went  into  existence  absolutely — was  signed  by  the  president— 
although  it  has  been  denied  upon  the  stand  that  it  ever  went  into  operation. 
I  read  from  page  35. t 

Q.  (By  Representative  LIVINGSTON.)  For  what  purpose?  A.  This  is 
to  show  you  the  contract  that  was  made  between  the  Pennsylvania  Railroad 
and  the  South  Improvement  Company. 

Q.  Is  that  a  verified  statement  you  are  reading  from?  A.  I  will  read 
the  contract  itself,  signed  by  the  Pennsylvania  Railroad. 

Q.  That  is  a  verified  copy  of  that  contract?  A.  It  is  in  the  investigation 
of  1871,  and  in  1888,  in  the  Hepburn  Committee,  and  in  the  Ohio  investiga- 
tion. It  is  in  all  the  investigations  that  have  been  going  on.  It  seems  to 
me  that  the  investigations  don't  amount  to  a  cent,  *because  it  is  all  old 
history.  It  is  printed  and  is  in  all  the  libraries  of  the  United  States;  it  can 
be  had  almost  in  any  of  the  town  libraries — the  history  of  this  very  business 
that  I  am  relating. 

"CONTRACT  BETWEEN  THE   SOUTH  IMPROVEMENT  COMPANY   AND 

THE  PENNSYLVANIA  RAILROAD  COMPANY,   DATED 

JANUARY   18,   1872. 

"Agreement  made  and  entered  into  this  eighteenth  day  of  January,  in 
the  year  eighteen  hundred  and  seventy-two.  by  and  between  the  South  Im- 
provement Company,  a  corporation  organized  and  existing  under  the  laws  of 
the  State  of  Pennsylvania,  party  hereto  of  the  first  part,  and  the  Pennsyl- 
vania Railroad  Company,  on  its  own  behalf  and  on  behalf  of  all  other  rail- 
road companies  whose  roads  are  controlled,  owned  or  leased  by  it,  or  with 
which  it  has  sufficient  running  arrangements,  which  other  roads  are  herein 
described  as  the  connections  of  the  said  Pennsylvania  Railroad  Company, 
party  hereto  of  the  second  part,  witnesseth: 

"Whereas,  the  party  hereto  of  the  first  part  has  been  organized  for  the 
purpose,  among  other  things,  of  increasing,  facilitating  and  developing  the 
trade  in  and  the  conveyance  and  transportation  of  petroleum  and  its  pro- 
ducts, and  for  that  purpose  proposes,  among  other  things,  to  expend  large 
sums  of  money  in  the  purchase,  erection  and  construction  of  and  maintain- 
ing and  conducting  works  for  storage,  distillation  and  refining,  warehousing 
and  transportation,  and  in  various  other  ways,  upon  the  inducement,  among 
other  things,  of  this  contract: 

"And  whereas,  the  magnitude  and  extent  of  the  business  and  operations 
proposed  to  be  carried  on  by  the  party  hereto  of  the  first  part  will  greatly 
promote  the  interest  of  the  party  hereto  of  the  second  part,  and  make  it 
desirable  for  it  by  fixing  certain  rates  of  freight,  drawbacks  and  rebates, 
and  by  the  other  provisions  of  this  agreement,  to  encourage  outlay  proposed 
by  the  party  hereto  of  the  first  part  and  to  facilitate  and  increase  the  trans- 
portation to  be  received  from  it. 


♦Black  faced   type  indicates   matter  omitted,  in  the  course  of  editing,  from  the 
official  report. 

IThe  witness  referred  to  his  pamphlet. 


310  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

"And  whereas,  it  has  been  agreed  by  and  between  the  party  hereto  of 
the  second  part,  for  itself  and  its  connections,  the  Erie  Railroad  Company, 
for  itself  and  its  connections,  and  the  New  York  Central  Railroad  Company 
for  itself  and  its  connections  that  the  business  of  transporting  by  railroad 
crude  petroleum  and  its  products  toward  the  Atlantic  coast  from  the  points 
of  production  and  refining,  on  their  lines  of  road,  shall  be  allotted  by  the 
party  hereto  of  the  first  part  to  the  said  three  companies,  in  the  proportion 
of  45  per  cent,  of  the  whole  to  the  Pennsylvania  Railroad  Company,  for  itself 
and  its  connections,  including  the  Philadelphia  &  Erie  Railroad,  the  North- 
ern Central  Railway,  the  Allegheny  Valley  Railroad,  Camden  &  Amboy 
Railway,  the  Pennsylvania  Company,  and  all  other  railroads  which  are  or 
may  be  controlled,  owned  or  leased  by  it  or  with  which  it  has  or  may  have 
sufficient  running  arrangements;  27 V2  per  cent,  of  the  whole  to  the  Erie 
Railway  Company,  for  itself  and  its  connections,  and  27%  per  cent  of  the 
whole  to  the  New  York  Central  Railroad  Company,  for  itself  and  its  connec- 
tions, and  that  the  transportation  beyond  Cleveland  and  Pittsburg,  over  the 
railroads  of  the  said  companies  and  their  connections  in  other  directions 
than  toward  the  Atlantic  coast,  west  from  said  points  of  production  and 
refining,  shall  be  allotted  by  the  party  hereto  of  the  first  part,  in  the  pro- 
portion of  one-third  thereof  to  the  party  hereto  of  the  second  part,  for  itself 
and  its  western  connections,  and  the  remainder  to  other  railroads." 

That  means  this:  That  all  of  the  oil  going  to  the  Atlantic  coast  shall 
be  divided,  as  set  forth,  27%  per  cent,  to  the  Erie,  27%  per  cent,  to  the  New 
York  Central,  and  4.5  per  cent,  to  the  Pennsylvania,  leaving  a  balance  there 
which  was  apportioned  about  10  per  cent.,  which  was  supposed  to  be  the 
consumption  of  the  western  country,  and  whatever  did  go  to  the  western 
country,  the  rebate  should  be  given  on  that  10  per  cent,  and  it  should  be 
divided  between  the  three  roads.  That  is  to  say.  the  three  roads  should 
pay  it.  Do  you  understand?  Do  you  get  it.  Governor?  That  is  to  say,  the 
10  per  cent,  going  to  the  west  for  the  western  consumption — the  rebate  agreed 
by  the  railroads  to  pay  would  be  upon  the  same  basis,  which  will  follow:  That 
it  should  be  divided  third  and  third;  that  is  in  proportion  to  the  percentage; 
the  Pensylvania  paying  45  per  cent.;  the  New  York  Central,  27%,  and  the 
Erie,  27%,  to  the  South  Improvement  Company.     That  is  the  division. 

"And  now,  therefore,  this  agreement  witnesseth:  That  the  parties 
hereto,  for  themselves  and  their  successors,  in  consideration  of  the  prem- 
ises, of  the  mutual  execution  hereof,  and  the  mutual  advantages  hereby  con- 
ferred, have  covenanted  and  agreed,  and  do  hereby  covenant  and  agree  each 
with  the  other,  as  follows: 

"Article  First. 

"The  party  hereto  of  the  first  part  covenants  and  agrees: 

"1.  To  furnish  to  the  party  hereto  of  the  second  part,  for  transportation, 
such  a  proportion  of  the  crude  petroleum  and  its  products,  owned  or  con- 
trolled by  the  party  hereto  of  the  first  part,  as  shall  give  to  the  party  hereto 
of  the  second  part  45  per  cent,  of  all  the  crude  petroleum  and  its  products 
sent  from  the  points  of  production  and  refining  towards  the  Atlantic  coast 
by  the  said  Pennsylvania  and  Erie  and  the  New  York  Central  Railroads,  and 
their  connections,  and  33%  per  cent,  of  that  which  is  sent  west  of  Pittsburg 
and  Cleveland  by  those  railroads  and  their  connections. 

"2.  To  provide  suitable  tankage  at  the  points  where  petroleum  is  pro- 
duced, on  the  railroads  of  the  party  hereto  of  the  second  part  and  its  con- 
nections, in  which  to  receive  crude  petroleum  preparatory  to  shipment,  with 
the  necessary  pipes,  pumps,  racks  and  other  appliances  for  its  convenient 
transfer  in  bulk  into  railroad  cars. 

"3.  To  deliver  to  the  railroads  of  the  party  hereto  of  the  second  part 
and  its  connections,  at  the  places  of  shipment,  and  to  receive  from  them,  at 
the  places  of  destination,  all  crude  petroleum  and  its  products  transported 
over  their  roads  for  the  party  of  the  first  part. 

"4.  To  provide  at  the  places  of  destination  on  the  seaboard  necessary 
and  suitable  yards,  wharves,  warehouses,  sheds,  tanks,  pipes,  pumps  and 
motive  power  for  the  reception  of  petroleum  and  its  products  and  loading 
vessels  therewith. 


LEWIS  EMERY,  JR.  311 

"5.  To  provide,  maintain  and  operate  the  works  necessary  to  refine 
crude  petroleum  upon  the  largest  scale  practicable,  and  with  such  skill " 

Now,  I  want  you  to  follow  this  because  right  there  I  propose  to  show 
you  that  this  contract,  under  all  circumstances,  has  been  carried  out  to  the 
letter  from  the  day  of  its  inception  to  the  present  time,  although  the  repeal 
of  the  South  Improvement  Company  act  took  place. 

" and  on  such  a  system  of  organization  and  division  of  labor,  as   will 

assure  both  efficiency  and  economy;  and  for  that  purpose  and  for  the  pur- 
pose of  developing  and  increasing  the  petroleum  trade  of  the  country,  to  pro- 
vide and  maintain  all  suitable  and  necessary  means  and  facilities. 

"6.  To  keep  records  of  the  transportation  over  the  railroads  of  the  party 
hereto  of  the  second  part  and  its  connections,  and  so  far  as  it  can  obtain 
the  same  over  the  Erie  and  the  New  York  Central  Railroads  and  their  con- 
nections, of  all  petroleum  and  its  products " 

It  don't  say  all  their  own  that  they  may  ship  under  this  contract — bear 
that  in  mind — but  on  all. 

" of  all  petroleum  and  its  products,  showing  the  number  of  barrels  of  45 

gallons  each  in  bulk,  and  the  number  of  barrels  of  47  gallons  in  barrels,  car- 
ried by  each  road,  with  the  points  of  receiving  and  delivery,  and  the  amount 
of  freight  received  by  each  road  for  such  transportation,  which  records 
shall  at  all  reasonable  times  be  open  to  the  inspection  of  the  duly  consti- 
tuted representatives  of  the  party  hereto  of  the  second  part." 

That  is  to  say  the  railroad  takes  our  product  absolutely  subject  to  the 
inspection  of  this  company,  absolutely;  that  they  had  the  right  to  go  into 
the  railroad  office  at  any  time  and  take  down  from  the  shelves,  or  the  places 
of  deposit  those  books  and  look  over  them  and  examine  that  which  I 
shipped  or  anybody  else  shipped  from  the  region  at  that  time.  *l  think  Mr. 
Farquhar  knows  that  as  well  as  I  do,  because  he  was  a  shipper  of  oil  in  the 
early  days,  as  I   know. 

"Monthly  abstracts  of  all  such  records  shall  be  regularly  sent  to  the 
party  of  the  second  part." 

See  how  complete.  A  transcript  of  these  books  must  be  sent  into  the 
office  of  this  company,  that  they  may  know  the  business  of  Governor  Harris 
and  Mr.  Phillips  or  Mr.  Farquhar,  or  anybody  else;  it  don't  matter  who. 
That  was  the  power  given,  and  I  simply  say  that  if  you  take  the  evidence 
of  the  investigation  of  1871  and  1872,  take  the  investigation  of  1888,  take  the 
investigations  of  the  Hepburn  Committee  and  take  the  investigations  of  the 
State  of  Pennsylvania,  and  every  scintilla  of  evidence  shows  the  fact  that 
this  contract  has  been  carried  out  to  the  letter  even  up  to  the  present  time. 
There  is  no  secrecy  in  my  business  to-day.  My  business  is  known  every  24 
hours,  just  exactly  what  I  do;  carrying  out  the  contract  under  Provision 
No.  6.     I  make  that  assertion  because  I  can  produce  the  evidence. 

Q.  (By  Mr.  FARQUHAR.)  *'Vou  would  not  be  charitable  enough.  Sen- 
ator Emery,  to  suggest  that  possibly  these  parties  that  entered  into  the  con- 
tracts with  the  railroads,  are  a  little  afraid  of  the  railroads  themselves 
cheating.     A.  Well,  it  might  be  possible. 

"7.  To  pay  to  the  party  of  the  second  part  weekly  for  all  transportation 
over  its  roads  and  its  connections,  of  petroleum  and  its  products,  such  gross 
rates  and  half  rates  of  freight  as  are  hereinafter  specified,  less  the  rebates 
and  drawbacks  hereinafter  provided  to  be  retained  by  the  party  hereto  of 
the  first  part  for  its  own  use. 

"Article  Second. 

"The  party  hereto  of  the, second  part  covenants  and  agrees: 
"1.  That  the  party  hereto  of  the  second  part  will  pay  and  allow  to  the 
party  hereto  of  the  first  part,  for  its  own  use,  on  all  petroleum  and  its  pro- 
ducts, transported  over  the  railroads  of  the  party  hereto  of  the  second  part, 
and  its  connections,  for  the  party  hereto  of  the  first  part,  rebates,  and  on  all 
transported  for  others,  drawbacks,  at  the  rates  hereinafter  provided,  except 
in  the  case  specified  in  Article  Third." 


•Black  faced  type  Indicates  matter  omitted,  !n  the  course  of  editing,  from  the 
official  report. 


312  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

Not  only  on  what  they  ship  themselves,  but  on  what  every  individual 
shipped  out  of  the  oil  country  at  that  time. 

"2.  To  deliver  to  the  party  hereto  of  the  first  part  all  petroleum  and  its 
products,  in  packages,  transportation  over  the  railroad  of  the  party  hereto 
of  the  second  part,  and  its  connections,  by  whomsoever  shipped,  and  con- 
signed to  the  party  of  the  first  part,  at  the  warehouses  of  the  party  of  the 
first  part,  at  the  seaboard  and  inland,  at  the  depots  of  the  party  of  the  sec- 
ond part,  at  the  places  of  destination,  and  to  deliver  all  petroleum  and  its 
products,  in  bulk  owned  by  or  consigned  to  the  said  party  of  the  first  part, 
at  any  point  required  on  the  line  of  the  railroads  of  the  party  of  the  second 
part  and  its  connections. 

"3.  To  transport  and  deliver  petroleum  and  its  products  over  the  rail- 
roads of  the  party  of  the  second  part,  and  its  connections,  at  gross  rates, 
which  shall  at  no  time  exceed  the  following  without  the  consent  of  both- 
parties  hereto: 

"From  any  point  on  the  Oil  Creek  &  Allegheny  River  Railroad  to  Oil 
City,  Union,  Corry,  Irvineton,  which  are  herein  designated  as  'common 
points,'  on  each  barrel  of  45  gallons  in  bulk  and  on  each  barrel  of  47  gallons 
in  barrels,  30  cents. 

"On  crude  petroleum: 
From  any  common  point  (for  each  barrel  of  45  gallons)  to— 

Cleveland  $    80 

Pittsburg   SO 

New  York 2  56 

Philadelphia  2  41 

Baltimore  2  41 

Boston    2  71 

"All  other  points  except  those  on  the  Oil  Creek  &  Allegheny  River  Rail- 
way to  the  places  of  destination  last  named,  the  same  rates  as  from  the 
'common  points.' 

"On  refined  oil,  benzine  and  other  products  of  the  manufacture  of  petro- 
leum : 

From  Pittsburg  (for  each  barrel)  to- 
New   York $2  00 

Philadelphia    1  85 

Baltimore  18^ 

From  Cleveland  (for  each  barrel)  to— 

Boston    2  15 

New  Y'ork 2  OO 

Philadelphia    1  85 

Baltimore    1  85 

From  anv  common  point  (for  each  barrel)  to- 
New"  York 2  92 

Philadelphia    2  77 

Baltimore    2  77 

Boston    3  07 

"From  and  to  all  points  intermediate  between  the  points  aforesaid,  such 
reasonable  rates  as  the  party  of  the  second  part  shall  from  time  to  time 
establish  on  both  crude  and  refined. 

"From  Pittsburg,  Cleveland  and  other  points  to  places  west  of  Pittsburg" 
and  Cleveland,  such  reasonable  rates  as  the  party  of  the  second  part  may 
deem  it  expedient  from  time  to  time  to  establish. 

"Rebates  and  Drawbacks. 

"4.  To  pay  and  allow  to  the  party  hereto  of  the  first  part  on  all  petro- 
leum and  its  products  transported  for  it  over  the  railroads  of  the  party  of 
the  second  part  and  its  connections  the  following  rebates,  and  on  all  trans- 
ported for  other  parties  drawbacks  of  like  amounts  as  the  rebates  from  the 
gross  rates,  the  same  to  be  deducted  and  retained  by  the  party  hereto  of 
the  first  part  for  its  own  use  from  the  amounts  of  freights  payable  to  the 
party  of  the  second  part." 

Now,  I  will  turn  right  over  the  leaf  and  I  will  show  you  the  rebate  that 
was  ordered  (on  page  42) : 

"On  the  transportation  of  crude  petroleum: 


LEWIS  EMERY.  JR.  315 

From  the  gross  lates  from  any  common  point  to —  Rebate  per  bbl. 

Cleveland  $0  40 

(Altogether  which  was  to  be  paid  by    three    roads    who    were    in    this 
compact.) 

Pittsburg    40 

New  York 1  0& 

Philadelphia    1  06 

Baltimore    1  06 

Boston    106 

"From  the  gross  rates  from  all  other  points  and  the  six  places  of  desti- 
nation last  named,  rebates  the  same  from  the  common  points. 

"On  the  transportation  of  refined  oil,  benzine  and  other  products  of  the 
manufacture  of  petroleum: 
From  the  gross  rates  from  Pittsburg  to —  Rebate  per  bbl. 

Ntjw   York $2  00 

Philadelphia    50 

Baltimore    50 

From  the  gross  rates  from  Cleveland  to— 

Boston    30 

New    York 50 

Philadelphia    50 

Baltimore    50 

From  the  gross  rates  from  any  common  point  to — 

New  York 1  32 

Philadelphia    1  32 

Baltimore    1  32 

Boston    1  32 

Now  I  refer  to  page  43 : 

"From  the  gross  rates  to  and  from  all  points  intermediate  between  the 
above  points  a  rebate  or  drawback  of  one-third  of  the  gross  rate  shall  be 
paid. 

"From  the  gross  rates  from  Pittsburg,  Cleveland  and  other  points  to 
places  west  of  the  meridians  of  Pittsburg  and  Cleveland  a  rebate  or  draw- 
back of  one-third  of  the  gross  rate  shall  be  paid. 

"5.  To  charge  to  all  other  parties  (excepting  such  as  are  referred  to 
in  Article  3)  for  the  transportation  of  petroleum  and  its  products,  rates 
which  shall  not  be  less  than  the  gross  rates  above  specified,  and  should  at 
any  time  any  less  rate  be  charged,  directly  or  indirectly,  either  by  way  of 
rebate,  commission,  allowances,  or  upon  any  pretext  whatsoever,  the  same 
reduction  per  barrel  shall  be  made  to  the  party  hereto  of  the  first  part,  from 
the  net  rates  provided  for  them,  on  all  transportation  for  them  during  the 
period  for  which  such  reduction  shall  be  made  to  others. 

"C.  To  permit  the  party  hereto  of  the  first  part,  if,  in  its  judgment,  the 
currents  of  trade  should  so  require,  temporarily  to  increase  or  diminish  the 
proportion,  as  herein  provided,  to  the  party  hereto  of  the  second  part,  for 
itself  and  its  connections,  as  the  whole  business  of  transporting  petroleum 
and  its  products,  as  between  the  party  hereto  of  the  second  part,  the  Erie 
Railway  Company  and  the  New  York  Central  Railroad  Company.  The 
party  of  the  second  part  in  such  case  to  receive  from  the  party  hereto  of  the 
first  part,  in  full  payment  or  indemnity  for  the  excess  or  deficiency,  one- 
half  the  net  schedule  rates  on  such  excess  or  deficiency;  the  other  half  to 
be  paid  pro  rata  to  the  said  other  companies,  whose  apportioned  quantity  of 
transportation  shall  thus  be  varied; " 

That  refers  not  only  to  their  own,  but  to  what  everybody  else  shipped. 

"But  such  diversion  of  business  shall  not  at  any  time  exceed  one  week,, 
nor  be  repeated  without  an  interval  of  at  least  sixty   (60)  days. " 

That  provision  became  necessary  in  case  they  wanted  to  crush  out  any 
Individual;  but  it  should  not  be  done  to  exceed  one  week  at  intervals  of 
sixty  (60)   days. 

" unless  with  the  consent  of  the  party  of  the  second  part.       Alsa 

that  whenever,  from  time  to  time,  as  aforesaid,  a  temporary  diversion  of  a 
part  of  the  apportioned  transportation  of  the  party  of  the  second  part,  to 
the  other  railroads  aforesaid,  or  to  either  of  them,  shall  become  necessary, 
cars  of  the  party  of  the  second  part  may  be  loaded  by  the  party  of  the  first 
part  and  sent  away  over  such  railroads,  or  either  of  them,  but  the  cars  so 
sent   away    shall   be   returned    without   unnecessary    delay   and   in    as    good 


314  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

order  as  when  taken,  to  the  railroads  of  the  party  of  the  second  part,  and 
mileage  at  the  usual  rates  paid  for  their  use  while  absent. 

"i.  To  furnish  with  as  much  regularity  as  possible,  at  all  times,  good 
and  sufficient  cars  and  other  means  suitable  and  necessary  for  the  safe  and 
prompt  transportation  of  all  crude  petroleum  and  its  products,  either  bulk  or 
in  barrels  which  the  party  hereto  of  the  first  part  shall  desire  to  send  from 
one  point  to  another  (and  which  shall  be  supplied  with  as  much  regularity 
as  possible)  on  or  over  the  railroads  of  the  party  of  the  second  pait  and 
its  connections. 

"8.  To  make  manifests  or  way-bills  of  all  petroleum  or  its  products 
transported  over  any  portion  of  the  railroads  of  the  party  of  the  second 
part,  or  its  connections,  which  manifests  shall  state  the  name  of  the  con- 
signor, and  place  of  shipment,  the  kind  and  actual  quality  of  the  article 
shipped,  the  name  of  the  consignee  and  the  place  of  destination,  with  the 
rate  and  gross  amount  of  freight  and  charges,  and  to  send  daily  to  the  prin- 
cipal office  of  the  party  of  the  first  part  duplicates  of  all  such  manifests  or 
way-bills." 

Now,  do  you  understand  that?  Sending  for  the  way-bills  and  everything 
else  connected  with  the  shipments.  The  name  of  the  shipper  even  must  be 
in  that  report.  And  just  here  I  want  to  give  you  a  sample.  I  want  to  state 
to  you  from  personal  experience,  the  carrying  out  of  that  contract  within  a 
brief  space  of  time,  and  it  occurred  in  this  way,  Mr.  Chairman  and  gentle- 
men: I  shipped  a  carload  of  oil  over — I  will  not  name  the  road — but  I 
shipped  a  carload  of  lubricating  oil  and  refined  oil — that  is  to  say,  a  mixed 
car — from  Bradford,  Pa.,  where  my  refinery  is  located,  to  Dubois,  which 
was  a  station  down  in  the  coal  country,  in  Elk  county  or  Jefferson  county. 

Q.  (By  Mr.  CLARKE.)  When  was  this?  A.  This  was  a  little  less  than 
a  year  ago.  I  loaded  this  car  and  there  was  a  gentleman  who  owned  a 
saw  mill  in  that  section,  who  had  been  an  old  acquaintance  of  mine  for 
thirty-odd  years;  he  was  an  employe  upon  the  road,  and  is  upon  the  road 
to-day.  He  runs  the  fast  passenger  train  upon  that  road.  He  says:  "I 
want  two  barrels  of  oil  sent  down  to  my  mill."  I  put  those  two  barrels  on 
top  of  a  carload  of  stuff,  and  I  took  the  precaution  not  to  put  the  oil  in  that 
car  until  after  business  hours — or  the  men  did.  The  car  was  sealed  by  the 
officer  of  the  road.  It  was  to  have  left  the  next  day,  but  through  some  mis- 
take it  did  not  leave.  The  engineer  got  off  his  engine,  and,  without  taking 
off  his  overalls,  he  came  up  Main  street  to  my  office,  and  he  came  into  the 
office,  and  he  said:  "Who  in  the  devil  is  giving  away  your  business?"  I 
said:  "What  is  the  matter?"  "Well,"  he  said,  "when  I  got  off  my  engine  at 
Dubois  I  was  approached  by  a  gentleman  *who  was  the  local  agent  of  that 
place  for  the  Standard  Oil  Company,  and  he  said  (calling  the  engineer  by 
name):  "You  have  been  buying  oil  from  Emery;  you  have  bought  two  bar- 
rels of  oil  from  Emery,'  and  he  said:  'I  was  advised  this  morning  by  the 
principal  agent  of  Dubois  that  I  have  been  derelict  in  my  duty  in  not  selling 
you  that  oil,  and  in  permitting  Emery  to  sell  it.'  And  he  said:  'I  am 
threatened  with  discharge.'  "  The  gentleman  turned  around  to  him  and 
said:  "How  the  hell  do  you  know  that  I  bought  any  oil  from  Emery;  and  if 
I  did,  what  business  is  it  of  yours?" 

Now,  I  swear  that  that  oil  was  put  in  that  car  on  top  of  those  barrels 
without  a  single  man  knowing  anything  about  it  excepting  the  men  who  put 
it  in  there  and  my  son,  who  has  charge  of  the  business.  I  say  again  that 
that  is  only  one  instance  of  the  carrying  out  of  this  contract — the  sixth 
section,  which  I  have  read.  *And  I  am  sure,  and  have  no  doubt  in  my  own 
mind,  and  I  know  in  my  own  mind,  that  my  business  is  followed  to  this  day 
under  the  provisions  of  that  section,  the  same  as  it  was  in  1872.  I  speak  not 
for  anyone  else,  except  as  I  speak  of  the  evidence  as  set  forth  in  1871  and 
in  1872,  and  in  1888,  and  before  the  Hepburn  Committee.  These  cases  are 
as  numerous  in  the  testimony  *as  the  men  who  were  connected  with  the 
manufacture  or  sale  of  petroleum.  It  is  not  the  only  instance.  I  could  give 
you  a  hundred  others  if  necessary,  and  if  the  time  permitted  doing  so;  and 
I   say  that  although   the  charter  was   repealed,   and   the  provisions   of  this 


•Black  faced  type  Indicates  matter  omitted,  in  the  course  of  editing,  from  the 
official  report. 


LEWIS  EMERY,  JR.  315 

contract  were  annulled,  they  have  been  and  are,  in  my  opinion,  being  car- 
ried out  at  this  very  moment. 

Now,  I  desire  to  go  over  Article  Third,  and  I  am  getting  to  the  most 
interesting  article  of  all  in  this  contract,  and  I  will  call  your  particular 
attention  to  it  after  I  read  it  and  the  fourth  article. 

"Article  Third. 

"And  it  is  hereby  further  covenanted  and  agreed  by  and  between  the 
parties  hereto  that  the  rebates  hereinbefore  provided  for  the  party  hereto 
of  the  first  part  may  be  made  to  any  other  party  who  shall  furnish  an  equal 
amount  of  transportation,  and  who  shall  possess  and  use  works,  means  and 
facilities  for  carrying  on  and  promoting  the  petroleum  trade  equal  to  those 
possessed  and  used  by  the  party  hereto  of  the  first  part." 

I  desire  to  have  questions  asked  upon  that  subject.  It  has  been  claimed 
that  anybody  else  and  everybody  else  could  enter  the  oil  business.  That  is 
true,  but  they  cannot  enter  it  upon  the  basis  as  set  forth  in  Article  Third, 
page  45,  of  my  pamphlet. 

"That  is  to  say  that  it  is   hereby  covenanted   and   agreed "     I   am 

reading  Article  Fourth.  *and  I  want  you  to  question  me  upon  it  if  you  choose. 
There  is  a  great  deal  of  milk  In  relation  to  that  article,  and  if  you  want  to 
get  it  out  of  me,  you  can. 

Q.  (By  Mr.  KENNEDY.)  Why  not  give  it  without  any  questions?  A. 
No.  sir;  these  questions  have  been  asked  on  the  stand  time  and  again,  and 
they  have  been  denied  time  and  time  again.  *lf  you  will  put  them  to  me 
in  any  way.  I  will  answer  them,  if  it  is  possible  for  me  to  do  so  in  the 
line  of  business. 

Q.  (By  Mr.  FARQUHAR.)  The  statement  is  made  on  the  stand  that 
the  Standard  Oil  Company  enjoyed  no  other  corporate  franchises  than  were 
enjoyed  by  any  other  company.     A.  It  is  true  under  that  section. 

*Q.  Positively  stated?  A.  Yes,  sir.  Now,  here  is  a  contract  that  pro- 
vides for  the  shipment  of  all  the  petroleum,  all  of  it,  at  that  time;  or  rather 
had  the  provisions  of  the  contract  been  carried  out  as  set  forth  in  the 
charter,  as  well  as  in  the  articles  of  agreement,  how  in  the  world  could  any- 
body else  have  that  which  they  possessed  themselves — all  the  oil,  all  the 
rebates  and  all  the  transportation.  Was  it  possible  for  you  to  have  gone 
into  the  business  and  possessed  an  equal  amount  of  oil,  equal  facilities  and 
equal  refineries,  unless  you  had  behind  you  a  railroad  equally  as  strong  as 
the  railroad  combination  itself?  It  was  impossible,  absolutely  impossible, 
for  you  or  for  any  set  of  men  to  have  gone  out  and  to  have  gotten  an  equal 
contract,  because  they  had  all  of  the  roads  then  leading  to  the  Atlantic  coast 
and  to  the  western  country.  There  was  no  chance  whatever  for  a  man 
with  a  single  pipe  line.  I  was  a  manufacturer — had  my  refinery  at  that  time, 
*and  owned  my  own  pipe  line  at  that  time.  I  did  not  have  equal  facilities, 
and  I  couldn't  get  them,  and  I  was  one  of  the  hundreds  that  went  to  the  wall 
under  that  contract,  although  it  is  said  by  the  witnesses  and  everybody  else 
that  it  was  repealed  and  went  out  of  existence.  You  know,  Mr.  Commis- 
sioner, as  well  as  I  when  the  fading  of  the  business  commenced.  It  faded 
from  1872,  and  it  went  out  of  existence  in  1877.  although  the  contract  was 
repealed;  and  I  can  say  right  here,  I  have  shown  you.  Mr.  Chairman  and 
gentlemen,  that  the  Standard  Oil  Company  was  organized  in  Cleveland, 
Ohio,  and  later,  in  1872,  the  Pennsylvania  Railroad,  the  New  York  Central, 
and  the  Erie  became  partners  in  the  arrangement — in  that  contract  itself. 
How  in  the  world  can  I  get  equal  facilities  when  all  the  railroads  are  in  that 
combination.  It  was  a  moral  impossibility;  nobody  had  an  equal  show.  Is 
that  answered? 

Q.  Well,  a  little  further.  Can  you  give  testimony  to  this  commission 
as  to  the  rates  that  you  paid  there  at  that  time?    A.  At  which  time? 

Q.  (By  Mr.  FARQUHAR.)  At  this  time  that  is  mentioned  here.  A.  Oh, 
yes,  sir;  the  open  rate. 


♦Black  faced   type  indicates   matter  omitted,  In  the  course  of  editing,  from  the 
official  report. 


316  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

Q.  How  much  more  did  you  pay,  or  did  you  pay  the  open  rate?  A.  We 
paid  the  open  rate.  We  paid  the  open  rate  to  that  company,  although,  you 
see,  it  hadn't  come  into  existence.  I  can  show  you  the  bills  in  which  I  was 
charged  $2.06  from  my  refinery  upon  this  oil.  I  had  to  do  it.  I  was  in  active 
operation,  and  I  had  to  do  it  so  far  as  the  freight  was  concerned. 

Q.  Have  you  before  any  committee,  at  any  time,  produced  any  of  these 
bills?    A.  No,  sir. 

Q.  Have  they  ever  asked  you  to  produce  them?  A.  No,  sir;  and  I  want 
to  say  this,  that  the  bills  at  that  time — now,  I  am  a  little  bit  too  fast  in  say- 
ing that  I  can  obtain  them;  *this  is  way  back  in  1872.  We  paid  the  usual 
rate  of  freight,  whatever  it  was,  at  the  time.  That  is  what  I  understood, 
and  we  went  out  of  business  in  the  latter  part  of  1873;  we  were  compelled 
to  go  out.  But  what  I  am  dwelling  upon  is  the  fact  that  it  was  laid  open 
to  the  people  of  the  country  at  that  time.  I  went  to  *Mr.  Scott,  or  to  Mr. 
Mr.  Cassatt,  and  made  my  complaint.  I  said:  "I  cannot  do  business."  Mr. 
Cassatt  said  to  me  personally:  "If  you  will  give  us  the  same  amount  of 
freight  that  the  Standard  Oil  Company  does  we  will  transport  your  goods  at 
the  same  price."    *How  in  the  name  of  God  could  I  do  it? 

Q.  Did  they  ever  make  you  an  offer  that  if  you  transported  all  you  had 
over  their  lines  that  they  would  give  you  the  same  rate?  A.  No,  sir;  not 
at  that  time. 

Q.  Did  they  later?  A.  *Yes,  sir.  I  went  into  the  business  the  second 
time  at  the  instance  of  the  Pennsylvania  Railroad,  and  they  drove  me  to  the 
wall  the  second  time. 

Now,  1  will  read  Article  Fourth. 

"And  it  is  hereby  further  covenanted  and  agreed  by  and  between  the 
parties  hereto  that  the  party  hereto  of  the  second  part  shall  at  all  times  co- 
operate, as  far  as  it  legally  may,  with  the  party  hereto  of  the  first  part,  to 
maintain  the  business  of  the  party  hereto  of  the  first  part  against  loss  or 
injury  by  competition " 

Think  of  it!  Guaranteeing  them  against  loss  or  injury  by  competition. 
*l  want  to  read  that  again,  and  I  want  to  impress  it  upon  your  mind. 

"And  it  is  hereby  further  covenanted  and  agreed  by  and  between  the 
parties  hereto  that  the  party  hereto  of  the  second  part  siiall  at  all  times  co- 
operate, as  far  as  it  legally  may,  with  the  party  hereto  of  the  first  part,  to 
maintain  the  business  of  the  party  hereto  of  the  first  part  against  loss  or 
injury    by  competition " 

My  God,  think  of  it!  "By  competition,  to  the  end  that  the  party  hereto 
of  the  first  part  may  keep  up  a  remunerative  and  so  a  full  and  regular 
business " 

They  did  not  care  anything  about  the  other  fellow. 

" and  to  that  end  shall  lower  or  raise  the  gross  rates  of  transpor- 
tation over  its  railroads  and  connections  as  far  as  it  legally  may.  and  for 
such  times  and  to  such  extent  as  may  be  necessary  to  overcome  such  com- 
petition." 

Practically  to  this  day — *do  you  hear  me? — practically  to  this  day  that 
provision  is  being  carried  out,  and  1  desire  you  to  question  me  upon  that 
line,  not  only  upon  this  land  of  ours,  supposed  to  be  a  land  of  liberty  and 
free  trade,  excepting  the  tariff  part  of  it.  It  extends  to  Germany;  it  ex- 
tends to  foreign  countries,  gentlemen,  *and  I  want  to  say  to  this  committee 
that  you  ask  me  upon  that  point,  because  I  spent  three  years  of  my  life  in 
Germany — 1894,  1895  and  1896 — trying  to  re-establish  our  business  out  of 
what  has  been  dominated  here  by  some  as  "the  new  trust." 

Q.  (By  Mr.  KENNEDY.)  Some  of  your  business  associates  have  testi- 
fied before  the  commission  that  at  the  present  time  in  Germany  you  were  on 
an  equal  footing  with  the  Standard  Oil  Company.  Is  that  true?  A.  Thanks 
to  the  government  of  Germany,  we  are,  so  far  as  our  business  goes,  because 
she,  by  law,  prohibits  unfair  trading,  and  she  owns  every  mile 
of  railroad  in  that  great  country,  except  two  in  the  South,  *over  which 
she  has  a  protectorate,  and  no  such  thing  as  discrimination  is  known.  They 
go  further.    They  invite  you  to  come;  they  invite  you  to  come  to  the  Reich- 


•Black   faced   type  indicates  matter  omitted,  in  the  cour.se  of  editing,  from  the 
official  report. 


LEWIS  EMERY,  JR.  317 

stag  and  make  your  complaint,  or  to  its  officers,  and  I  did  in  1895.  Oil  was 
selling  on  the  Rhine  at  IV^  to  2  cents  a  gallon  lower  than  it  was  on  the 
Elbe.  Our  agent,  who  was  afterwards  purchased — *which  I  will  come  to 
later — appraised  us  of  the  grievous  situation.  We  were  put  to  a  loss  here 
by  sending  oil  to  Europe  practically  for  nothing.  We  have  sold  oil  to  take 
care  of  that  trade,  competing  with  the  Standard  Oil  Company  or  the 
Deutsche-Americanische  Company,  as  low  as  a  cent  a  gallon,  losing  twenty- 
five  and  thirty  and  forty  thousand  dollars  on  a  cargo  of  oil,  to  maintain  our 
agent  in  that  country.  Complaint  was  made.  The  German,  Mr.  Poth,  our 
agent,  who  handled  at  that  time  four  to  six  hundred  thousand  barrels, 
traveled  with  me  to  Berlin,  and  we  went  personally  before  the  entire  min- 
istry of  that  country.  In  English  I  presented  the  case,  and  he  interpreted 
my  testimony  to  them.  He  asked  for  help,  and  he  got  it;  *and  great  God, 
we  have  been  praying  here  from  1872  to  this  time,  with  all  the  investiga- 
tions of  1871,  and  of  1888,  and  the  Hepburn  Committee,  in  the  State  of  Ohio, 
and  every  State  In  the  Union  where  *the  aggressions  of  these  people  are 
known,  *and  we  have  got  no  relief.  We  have  sued  for  it  in  Congress,  and 
we  have  sued  for  it  in  every  Legislature  of  the  country.  Texas  has  awaken- 
ed up,  and  she  says:  "Get  out;  we  won't  have  you."  The  Reichstag  of  that 
country  gave  notice  that  there  must  be  no  unfair  trading  in  that  country: 
no  unfair  trading;  it  must  be  on  a  fair  competitive  basis.  If  it  deviated 
from  that,  investigation  would  follow,  *and  the  advances,  where  the  freight 
was  the  same  in  selling  these  goods  in  Germany,  were  stopped;  no  levying 
of  tributes  upon  the  Elbe  citizens,  and  the  advantage  given  to  the  Rhine. 
*lt  was  stopped,  and  where  transportation  was  the  same,  the  prices  have 
been  maintained  from  that  day  to  this. 

Q.  (By  Mr.  CLARKE.)  How  did  they  give  that  notice?  How  did  the 
Reichstag  give  that  notice?     A.  That  I  cannot  tell  you,  *but  it  was  stopped. 

Q.  How  do  you  know  that  it  did  give  the  notice,  *if  you  cannot  tell  how 
it  was?  A.  1  beg  your  pardon:  1  do  not  know  that  it  did.  *except  that  the 
competition  stopped — the  unfair  competition.  That  is  all  I  know;  I  may 
have  exceeded  my  right  by  saying  it,  but  I   know  that  It  was  stopped. 

Q.  You  do  not  know  that  there  was  any  legislation  on  the  subject? 
A.  Oh,  no,  I  do  not  know  that;  but  I  understand,  Mr.  Clarke,  that  there  is  a 
law  in  Germany  prohibiting  unfair  trading.  Now  1  have  never  read  it;  *in 
fact  I  cannot  read  German,  and  I  did  not  know  of  it  except  what  I  learned 
through  our  German  house. 

Q.  Have  you  taken  measures  to  obtain  such  legislation  if  there  is  any 
such?  A.  That  is  all  right.  1  do  not  know  that  there  is.  But  I  do  know 
this,  however,  and  I  read  the  bill — it  was  a  translation  in  English — there 
was  a  bill  introduced  in  the  Reichstag,  which  was  applicable  entirely  to  the 
question  of  petroleum,  and  it  was  considered  by  a  committee,  and  came  out, 
but  it  never  was  passed  to  my  knowledge.  There  may  have  been  some- 
thins;  passed  since  that  time,  however,  but  suffice  it  to  say,  we  had  the 
markets  of  Europe  on  an  even  tenure,  and  we  are  in  competition,  as  Mr. 
Kennedy  said. 

One  other  matter  there,  Mr.  Commissioner.  When  I  went  there  in  1896 
the  Deutsche-Americanische  Company  had  bought  the  last  vestige  of  tank- 
age in  Germany  that  it  could  get  hold  of.  There  was  nothing  left;  nothing 
left  at  all.  And  1  was  sent  over  on  three  days'  notice  by  my  company,  of 
which  I  was  president  at  that  time — the  United  States  Pipe  Line  Com- 
pany— to  look  up  the  situation.  We  were  here  with  our  15  refineries,  with 
our  pipe  line  running  as  far  as  it  could  go  to  the  coast — we  could  not  get 
any  further  because  fhe  Standard  Oil  Company  would  not  allow  it.  *But  I 
will  come  to  that  pretty  soon.  When  1  went  to  Germany  in  1896 — *am  I 
right  about  the  date? — when  I  went  to  Germany  the  last  time  in  1896 — I 
went  there  on  the  report  that  Mr.  Poth.  with  all  of  his  tankage  on  the  Elbe 
and  at  Flushing  and  Rotterdam  and  Amsterdam,  had  been  handed  over  to 
the  Deutsch-Americanische  Company,  of  which  one-half  of  the  stock — I  do 
not  know,  but  the  control  belonged  to  thp  *present  Standard  Oil  Company, 
of  America — or  the  Standard  Oil  Trust.     They  had  purchased  it  from  a  mant 

•Black  faced  type  Indicates  matter  omitted,  in  the  course  of  editing,  fro.m  the 
official  report. 

fThe  official  report  reads  as  follows:    "They  had  purchased  a  man,"  etc. 


318  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

that  we  had  supplied  with  oil  for  four  or  five  consecutive  years  and  on 
whom  we  were  dependent  to  take  care  of  that  product,  that  we  might  have 
the  necessary  money  to  run  our  refineries.  They  had  bought  it — bought  it. 
Nothing  left.  And  where  in  the  world  we  could  place  a  single  cargo  of  oil 
I  did  not  know;  but  fortunately  enough  I  succeeded  in  selling  three  cargoes 
of  oil  to  the  Brennehaven  Petroleum  Company,  which  was  then  a  Russian 
organization.  I  sold  it  to  them,  and  those  three  cargoes  amounted  to  about 
90,000  barrels.  I  immediately  went  to  Holland  and  made  a  contract  with  Mr. 
King_  for  the  construction  of  tanks,  and  the  city  of  Hamburg  welcomed  me 
there.  They  convened  their  Congress  in  extra  session  and  passed  a  law 
by  which  they  would  furnish  me  grounds  to  build  my  tanks;  and  the  con- 
tracts were  let  and  the  tanks  finished  in  October,  thank  God,  and  our  ves- 
sels went  into  that  harbor  with  our  petroleum.  *And  I  may  give  you  a 
little  history  further.  I  went  to  Amsterdam,  and  that  great  city  constructed 
its  tanks  for  us  because  they  wanted  competition  in  the  business.  No  com- 
petition is  shut  out  in  that  country;  no  discriminating  rates  on  the  railroads 
of  Germany;  none  on  the  canals.  *Put  on  your  own  boat,  paddle  your  own 
canoe,  and  do  whatever  you  choose.  I  say  to-day  with  my  years  of  experi- 
ence in  that  country,  that  it  is  one  of  the  best  governments  on  the  face 
of  the  earth,  because  it  looks  out  for  the  individual.  *lt  is  at  peace  with  all 
of  its  agrarian  interests,  and  it  is  at  peace  with  the  commercial  interests, 
because  they  extend  to  you  the  right  hand  of  fellowship.  Do  you  get  it  here 
in  this  country,  *the  land  of  liberty?  Do  you  get  it?  No;  and  I  am  asked 
to  come  here  to-day  to  give  evidence  in  a  business  that  I  have  followed  from 
my  boyhood,  not  derogatory  to  Mr.  Henry  Rogers.  *for  I  like  him  as  a  man, 
or  John  D.  Archbold,  my  friend  for  30  years,  or  many  others  connected 
with  it.  God  knows  I  wouldn't  do  a  single  thing  to  harm  a  hair  of  their 
heads.  But  I  am  telling  you  my  side  of  the  story,  after  30  years  in  the 
business,  following  it  stage  by  stage  up  to  the  present  time,  and  being  con- 
nected, as  I  have,  with  it,  and  being  connected  with  the  politics  in  the  State 
of  Pennsylvania,  which  perhaps  is  a  credit  and  perhaps  not.  *l  think  some- 
times  not  in  the  latter  days  of  politics,  but  nevertheless  I  was  born  to  be  as 
I  am,  and  if  I  do  anything  or  say  anything  here,  it  is  not  from  malice  of 
the  heart;  and  the  mistakes,  if  there  be  such,  are  not  mistakes  of  the  heart, 
but  mistakes  of  the  brain. 

Q.  (By  Mr.  KENNEDY.)  The  reason  I  asked  you  that  question  was 
because  I  thought  you  said  that  this  practice  of  exclusion  was  being  follow- 
ed in  this  country,  in  Germany  and  elsewhere.  A.  No,  I  did  not  say  that; 
it  was  not  in  Germany. 

*Q.  (By  Vice-chairman  PHILLIPS.)  It  was  not?  A.  It  was  not,  cer- 
tainly. It  was  here,  as  I  recited  to  you,  certainly  it  was,  and  we  ask  you  to 
call  these  people  down  by  a  law  that  you  are  asked  to  recommend.  *We  ask 
you,  gentlemen,  on  behalf  of  the  citizens  of  these  United  States  who  are 
complaining,  and  who  I  believe  to  be  honest.  We  are  the  first,  perhaps,  to 
feel  the  iron  heel  of  what  you  term  a  monopoly,  which  the  Standard  is,  and 
I  shall  prove  it  to  be  so  before  I  get  through.  We  are  the  first.  The  Stand- 
ard Oil  Company  is  the  parent  trust  of  America  and  we  have  had  our  ex- 
perience with  them  from  1872  up  to  this  time.  *Right  here  I  want  to  answer 
any  and  everything,  if  I  can,  honestly,  and  to  give  you  the  exact  story  of 
why  we  are  here.  Now,  whose  toes  are  being  pinched?  Not  the  oil  interests 
alone.  *But  we  find  in  the  early  history  of  this  business  that  this  was  the 
first.  Why  many  and  many  a  time,  when  I  have  acted  with  the  best  wisdom 
that  I  had,  it  has  been  said  that  I  was  not  a  true  Republican.  Those  are  my 
principles,  gentlemen.  Not  a  true  Republican  because  I  would  not  stand  up 
for  some  of  the  nominees  of  my  party,  whom  I  knew  to  be  damned  rascals-^ 
excuse  the  expression — cut  that  out.  I  would  not  stand  by  them,  and  yet  I 
was  faithful  to  the  principles  of  Lincoln,  and  I  am  to-day,  I  only  ask  a  gov- 
ernment like  that  of  Lincoln,  because  every  man  on  the  face  of  God's  earth 
could  live  under  it,  with  perfect  freedom  and  perfect  right.  Why  shouldn't 
it   be   made   so  and   why  shouldn't  you   assist?      It   is   a   great  duty  that   de- 

*BIack  faced  type  Indicates  matter  omitted,  in  the  course  of  editing,  from  Ihe 
official  report. 


LEWIS  EMERY,  JR.  319 

volves  upon  you  to-day.  Why  shouldn't  you  listen  honestly  and  fairly  (and 
you  do  unquestionably)  to  these  appeals  to  help  us  out  of  the  situation, 
because  it  is  the  othc  fellow's  toes  that  are  being  pinched.  The  list  of 
trusts  in  this  country  to-day  is  as  long  as  this  paper  that  I  have  in  my  hand, 
printed  with  the  ordinary  type.  Combinations!  They  are  called  trusts,  and 
they  are  under  the  trust  laws;  they  are  trusts.  Not  exactly  trusts  in  the 
meaning  of  the  Sherman  Act,  but  nevertheless  the  tendency  is  to  combina- 
tion. We  must  correct  this;  we  must  stop  it.  It  is  not  the  ignorant  who  are 
complaining.  It  is  not  the  striltes  of  the  coal  man,  or  the  railroad  man,  or 
the  factory  man.  It  has  come  to  the  intelligent  part  of  this  country.  *lt 
has  come  to  you  and  it  has  come  to  me.  I  have  a  fair  intelligence,  and  I 
am  not  satisfied  with  the  situation,  and  I  thank  God  that  my  health  has  been 
restored  that  I  may  continue  in  this  work  if  possible,  and  help  you  in  every 
possible  way  I  can  to  bring  about  a  satisfactory  law  under  which  we  can 
all  live,  and  make  such  a  community  as  we  were  at  one  time.  If  you  do  not, 
the  results  are  going  to  be  serious;   they  are  going  to  be  serious. 

*Q.  (By  Mr.  KENNEDY.)  You  say  this  is  the  parent  trust.  Can  you 
tell  us,  in  your  opinion,  who  was  the  father  or  mother  of  this  trust?  A.  Why, 
there  is  no  question  about  it.  I  don't  care  to  call  personal  names.  I  haven't 
read  the  evidence,  but  in  the  case  of  C.  B.  Matthews,  of  Buffalo — I  don't  know 
whether  it  is  true  or  not,  but  it  is  the  only  way  I  can  answer  it,  as  you  have 
asked  it.  I  understand  that  Mr.  John  D.  Rockefeller  was  asked  in  that  case 
how  he  ever  thought  of  putting  together  such  an  aggregation  of  capital,  etc. 
I  understood  that  he  said:  "Why,  I  had  read  of  the  case  of  the  Great  East 
India  Company  and  the  Dutch  East  India,  and  the  Hudson  Bay  Fur  Company 
and  others,  and,"  he  said  simply:  "I  have  improved  upon  the  three;  that 
is  all." 

Q.  (By  Vice-chairman  PHILLIPS.)  You  state  that  as  a  matter  of  your 
belief?  A.  Oh,  yes,  sir;  that  I  don't  know.  The  gentleman  asked  me  the 
question  and  I  will  say  I   don't  know. 

Q.  (By  Vice-chairman  PHILLIPS.)  Do  you  believe  that  to  be  true? 
A.  I  believe  that  to  be  true.  I  don't  know.  It  is  just  like  a  thousand  other 
statements  going  about.  I  don't  know  that  it  is  in  the  evidence  at  all;  but 
that  would  be  the  natural  conclusion,  if  you  wanted  to  perform  a  good,  sharp 
trick  in  magic,  you  would  study  what  had  been  done  and  see  if  you  could  not 
improve   upon   it. 

Q.  (By  Vice-chairman  PHILLIPS.)  You  do  not  state  that  as  evidence. 
That  is  just  your  opinion?  A.  No,  sir;  nor  my  opinion  even;  only  what  I 
have  heard.  It  is  no  invention  of  my  own,  and  I  would  rather  have  it  cut 
out  entirely. 

Vice-Chairman  PHILLIPS.  The  commission  will  not  consider  that  as 
evidence. 

A.   I   would  rather  have  it  erased  then. 

Q.  (By  Vice-Chairman  PHILLIPS.)  The  form  of  oath  used  here  in  re- 
gard  to  testimony  is,  what  you  state  of  your  own  knowledge  you  know  to  be 
true;  and  the  other  part  that  you  state  upon  your  information  and  belief — 
you  believe  to  be  true.  A.  No,  I  don't  know  anything  about  it.  He  asked  me 
the  question  and   I   wanted  to  answer  it. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Your  statement  would  not  be  under 
the  oath  then?  A.  No,  sir;  he  may  have  said  it.  I  think  it  is  near  the  truth, 
whether  he  ever  said   it  or  not. 

Q.  (By  Vice-chairman  PHILLIPS.)  That  will  be  stricken  out,  and  you 
will  proceed  with  your  narrative.  A.  I  did  not  intend  to  bring  out  these  re- 
marks, but  sometimes  a  man  can't  help  it.  I  do  not  know  that  it  is  neces- 
sary for  me  to  read  the  rest  of  this;t  but  I  desire  to  have  you  turn  to  page  48, 
and  I  will  end  it  up  by  saying  that  this  contract  was  signed.  Look  at  page 
48,  and  you  will  see  the  name  of  P.  H.  Watson. 

Q.  (By  Mr.  FARQUHAR.)  Do  you  intend  that  the  balance  of  Article 
Fourth  and  Article  Fifth,  etc.,  shall  be  left  out  of  your  testimony?  A.  No; 
let  the  contract  go  in  if  you  choose  to  have  it,  or  cut  it  out  if  you  have  a 

*Black  faced  type  Indicates  matter  omitted,  in  the  course  of  editing,  from  the 
official  report. 

tThc  witness  referred  to  his  pamphlet. 


520  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

mind  to.  *You  can  cut  out  all  that  I  say.  I  do  not  care,  except  as  to  the 
vital  points,  but  I  don't  want  to  take  up  your  time  by  reading  the  rest  of  the 
contract.  I  want  to  say  that  this  contract  was  signed  (and  it  is  the  original 
copy  that  has  been  in  evidence)  by  P.  H.  Watson,  president  of  the  South 
Improvement  Company,  and  by  the  Pennsylvania  Railroad,  J.  E.  Thompson, 
president.  *l  said  in  the  first  part  that  this  was  signed  by  Thomas  A.  Scott, 
and  I  want  the  reporters  to  correct  that,  if  they  will,  because  Mr.  Thompson 
was  the  president  of  the  road  instead  of  Mr.  Scott. 

Vice-chairman   PHILLIPS.     The  correction  will   be   made. 

The   WITNESS.     Now,   by   the   way,   I    want  to   prove    right   here 

Q.  (By  Vice-chairman  PHILLIPS.)  Have  you  read  all  the  names  that 
you  desire?     A.  Yes,  sir;    *these  are  the  signatures. 

Q.  (By  Mr.  FARQUHAR.)  There  are  only  two.  A.  Yes,  sir.  I  want 
to  prove  here — I  want  to  show  that  this  contract  was  executed.  Now,  I  un- 
derstand it  has  been  stated  on  the  witness  stand  here  by  some  one  that  this 
contract  was  never  executed,  or  went  into  effect.     *ls  that  true? 

Q.  That  statement  was  made  broadly  here.  A.  Now,  this  is  P.  H.  Wat- 
son's testimony  in  Washington  in  1872,  on  the  5th  day  of  April.  Mr.  Watson 
was  president  of  the  South  Improvement  Company,  as  I  have  shown  in  this 
agreement,  and  in  this  book  of  mine,  and  I  desire  to  read  you  this: 
(Reading)  "Q.  Was  there  a  ratification  by  the  company  of  your  contracts 
with  the  railroad  company?" 

Q.  Will  you  state  what  that  book  is?  A.  Well,  this  is  an  investigation 
in  1870  and  1871  in  this  city. 

Q.  Before   Congress?     A.  Yes,   sir;    a  Congressional   investigation. 
Q.  What  session  and  what  committee?     A.  I  cannot  tell  you  the  session. 
It  is  dated  Washington,  D.  C,  April  5,  1872,  if  anybody  knows  the  Congress 
of  that  date.     I  think  it  is  in  the  archives — I  know  that. 

Q.  Is  it  an  official  document?  A.  Yes,  sir.  And  he  was  being  investi- 
gated as  to  the  South  Improvement  Company  contract  that  was  agreed  upon 
between  the  Pennsylvania  Railroad  and  the  two  northern  roads — the  New 
York  Central  and  the  Erie.  This  is  the  contract  of  which  I  have  read  a 
.portion.  This  book  is  precious.  Nobody  can  buy  it  for  $5,000,  and  therefore 
I  do  not  want  it  to  go  out  of  my  hands,  because  it  is  history  that  is  scarcely 
in  existence  anywhere  else.  (Reading)  "Q.  Was  there  any  ratification  by 
the  company  of  your  contracts  with  the  railroad  company?" 

Now,  that  has  reference  to  the  South  Improvement  Company,  and  I 
would  say  to  the  reporters,  that  this  is  all  Mr.  P.  H.  Watson,  the  president, 
in  a  Congressional  investigation,  on  April  5,  1872.  He  answered:  "Yes.  sir; 
they  were  approved  by  the  board  of  directors  as  appeared  in  the  minutes, 
and  as  I  am  informed,  it  having  been  done  at  a  meeting  at  which  I  was  not 
present." 

That  is  all  I  intend  to  read.  They  were  executed — "having  been  done 
at  a  meeting  at  which  I  was  not  present" — by  the  board  of  directors.  The 
contract  was  executed,  and  when  it  was  executed  it  was  in  force.  It  has 
been  stated  in  testimony  after  testimony  in  1888.  I  did  not  take  occasion  to 
refer  to  this  at  that  time  because  there  are  other  things  of  so  much  import- 
ance, but  I  say  that  the  South  Improvement  Company  contract  was  executed 
by  the  board  of  directors,  as  stated  by  the  evidence  of  Mr.  Watson,  but  he 
was  not  present.  That  is  in  answer  to  the  questions  in  the  testimony.  Now, 
then  who  were  the  officers  or  the  stockholders  of  the  South  Improvement 
Company?  Now,  this  is  the  testimony  of  William  G.  Warden,  in  Washing- 
ton. March  30.  1872;  and  the  question  is:  (Reading)  "Can  you  give  a  list 
of  the  stockholders  of  the  South  Improvement  Company?"  His  answer  was: 
"I  can  give  that  from  the  minutes;  they  are  as  follows:  William  Frew.  10 
shares;  W.  P.  Logan,  10  shares;  John  P.  Logan,  10  shares;  Charles  Lock- 
hart,  10  shares;  Richard  S.  Waring.  10  shares;  W.  G.  Warden,  475  shares; 
O.  F.  Waring,  475  shares;  P.  H.  Watson,  100  shares;  H.  M.  Flagler.  180 
shares;  O.  H.  Payne.  180  shares;  J.  A.  Bostwick.  180  shares;  William  Rocke- 
feller, 180  shares;   .lohn  D.  Rockefeller.  180  shares." 


♦Black   faced   type  indicates   matter  omitted,  in  the  course  of  editing,  from  the 
official  report. 


LEWIS  EMERY.  JR.  321 

Q.  (By  Vice-chairman  PHILLIPS.)  How  many  of  the  list  that  you  have 
read  were  in  the  Standard  Oil  Company  or  became  directors  in  the  company 
afterward?  A.  The  people  who  organized  the  Standard  Oil  Company  were 
as  follows:  H.  M.  Flagler,  O.  H.  Payne,  William  Rockefeller,  Jabez  A.  Bost- 
wick  and  John  D.  Rockefeller.  All  of  these  gentlemen  were  stockholders  of 
the  Standard  Oil  Company  at  the  time  it  went  into  existence,  and  they  were 
the  men  who  formed  the  South  Improvement  Company.  I  say  that  under 
oath.  I  know  the  people.  The  people  who  composed  the  South  Improve- 
ment Company  were  the  people,  or  some  of  them,  who  finally  organized 
and  became  the  officers  of  the  Standard  Oil  Company  of  the  present  day; 
they  are  the  Standard  Oil  Trust,  yes.  sir,  as  distinguished  from  the  com- 
panies. There  are,  I  think,  in  the  United  States  *of  America  some  23  Stand- 
ard Oil  Companies  under  regular  organization.  For  instance,  there  is  the 
Standard  Oil  Company  of  New  York,  the  Standard  Oil  Company  of  Penn- 
sylvania, the  Standard  Oil  Company  of  Ohio,  the  Standard  Oil  Company  of 
Delaware,  of  Maryland,  of  North  Carolina,  South  Carolina.  Texas,  California, 
and  what  not;  the  Standard  Oil  Trust,  as  I  understand,  controlling  the 
whole.  So  distinguish  the  difference  betw^een  the  Standard  Oil  Company, 
when  I  speak  of  that,  and  the  Standard  Trust.  I  have  reference  now  to  the 
Standard  Trust. 

(The  commission  took  a  recess  of  one  hour.) 

AFTER  RECESS. 

Vice-Chairman  PHILLIPS.  The  commission  will  please  be  in  order. 
Senator  Emery's  testimony  will  be  resumed  and  he  will  proceed  to  make 
his  statement  in  his  own  way. 

Mr.  EMERY.  Mr.  Chairman  and  Gentlemen  of  the  Commission.  There 
seems  to  be  some  misunderstanding  relative  to  the  charter  under  which 
the  South  Improvement  Company  was  organized,  and  the  charter  under 
which  the  National  Transit  Company  was  organized,  it  being  one  of  the 
several  companies  of  the  Standard  Trust.  I  desire  to  say  that  all  the  privi- 
leges granted  to  the  South  Improvement  Company  were  also  granted  in  the 
charter  of  the  National  Transit  Company,  both  being  in  the  same  language. 
Each  is  what  is  known  as  the  Pennsylvania  Company  charter.  I  desire  to 
prove  my  assertion.  I  will  first  refer  to  page  15y2  of  the  book  that  you  have 
before   you.t 

*"An  Act  to  incorporate  the  Overland  Contract  Company  was  approved 
March  22,  1871. 

"When  the  popular  excitement  raised  against  the  South  Improvement 
Company,  which  resulted  in  the  repeal  of  the  act  to  incorporate  it,  had  sub- 
sided, the  trust,  for  the  purpose  of  its  transportation  business  in  Philadel- 
phia, procured  a  franchise  substantially  as  follows: 

"An  Act  to  incorporate  the  Overland  Contract  Company  was  approved 
March  22,  1871." 

This  was  just  previous  to  the  incorporation  of  the  South  Improvement 
Company,  and  which  act  or  charter  was  passed  on  the  6th  day  of  May,  1871, 
and  the  Overland  Contract  Company,  under  which  act  the  National  Transit 
Company  is  now  organized  was  passed  on  March  22,  1871,  previous  to  the 
passage  of  the  South  Improvement  Company's  charter.  I  desire  to  get  that 
plainly  before  the  commission.      (Reading): 

"Letters  patent  were  granted  them  April  5,  1871.  On  May  16.  1871, 
they  changed  their  name  to  the  Southern  Railway  Security  Company.  They 
owed  the  State  of  Pennsylvania  one-fourth  per  cent,  bonus  on  their  capital 
stock,  and  for  this  debt,  after  a  compromise  had  been  effected,  it  was  sold 
by  the  sheriiT  of  Dauphin  county  to  John  W.  Simonton  and  Marlin  E.  Olm- 
stead  for  $16,251,  on  March  8,  upon  a  judgment  entered  September  13.  1881."$ 

This  judgment  was  entered  by  the  Commonwealth  of  Pennsylvania. 


•Black  faced   type   indicates   matter  omitted,  in  the  course  of  editing,   f.-'om  the 
official  report. 

tMr.   Emery  referred  to  his  pamphlet. 

JThis  Is  evidently  an  error,  but  is  given  exactly  as  read  b.v  witness. 

21 


322  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

"On  April  13,  1881,  said  John  W.  Simonton  and  Marlin  E.  Olmstead  sold 
it  to  Clement  A.  Griscom,  Thornton  Pike,  Elihu  Roberts,  W.  H.  Curtis, 
William  R.  Williamson,  J.  W.  Simonton  and  M.  E.  Olmstead.  On  April  14, 
1881,  under  this  charter,  the  National  Transit  Company  was  organized." 

I  read  now  from  a  book  in  the  Supreme  Court  of  Pennsylvania,  Eastern 
district,  No.  257,  January  term,  1897:  (Reading)  "The  National  Transit 
Company  and  J.  C.  McDonald,  appellees,  vs.  The  United  States  Pipe  Line 
Company,  appellant.  Appeal  of  the  defendant  from  the  decree  of  the  Court 
of  Common  Pleas  of  McKean  county,  sitting  in  equity,  October  term,  1896. 
Paper  book  of  appellant.  J.  W.  Lee  and  W.  E.  Burdick,  solicitors  for  the 
appellant." 

I  desire  to  read  from  this  book,  and  whatever  I  read  from  it,  so  far  as 
this  charter  is  concerned,  is  a  transcript  of  the  record  of  the  department  of 
Harrisburg.  certified  to  by  the  Secretary  of  State,  so  that  the  evidence  I 
shall  read  is  absolute  and  cannot  be  questioned.  I  first  desire  to  read  from 
page  429  of  this  book: 

"Commonwealth  vs.  The  Southern  Railway  Security  Company.  Reso- 
lution of  company  fixing  the  amount  of  capital  stock.  Southern  Railway 
Security  Company,  in   account  with   the   Commonwealth   of   Pennsylvania." 

Mind  you,  this  charter  lay  for  a  long  time  in  the  archives  of  the  State. 
It  was  discovered  and  it  was  purchased  by  the  parties  I  have  named.  (Read- 
ing): 

"Southern  Railway  Security  Company  in  account  with  the  Common- 
wealth of  Pennsylvania,  debtor,  for  bonus  on  charter,  per  act  of  May  1,  1868. 
Amount  charged  in  settlement  in  May  20,  1873,  $25,000.  Capital  stock. 
$7,788,150  appears  through  certificate  herewith  filed.  Bonus  of  one-quarter 
of  one  per  cent,  on  said  capital  stock,  $18,470.37,  making  a  total  debtor 
charge  of  $43,470.37.  Credit  by  payment  in  the  charter  March  16,  1871,  $125. 
By  settlement  of  May  8,  1873,  hereby  superseded,  $25,000.  Deducting  the 
credits,  $25,125,  from  $43,470.37,  due  the  Commonwealth,  $18,345.37.  At- 
torney-general's office,  Harrisburg,  April  25,  1870.  Settled  and  canceled. 
Harrison  Allen,  attorney-general.  Treasurer's  office,  appoved.  W.  E.  Hitt, 
for  W.  Mackley,  State  treasurer.  B.  F.  Newcombe,  treasurer  Baltimore  and 
Ohio.  Indorsed,  bonus  on  charter,  account  of  the  Southern  Railway  Security 
Company,  resettled  April  5,  1875." 

Now,  I  do  not  think  it  is  necessary  for  me  to  go  further  with  this  than 
to  shov,'  the  sale,  and  1  have  shown  you  already  that  this  identical  charter 
was  bought  from  the  State  by  J.  W.  Simonton  and  Marlin  E.  Olmstead  for 
$16,250.  Now,  I  refer  to  the  copy  of  the  plaintiff's  exhibit  in  this  suit  called 
Exhibit  A.  This  was  offered  by  the  National  Transit  Company.  It  is  the 
National  Transit  Company's  charter.  (Reading)  "An  Act  to  incorporate  the 
Overland  Contract  Company  and  to  define  the  powers  thereof."  It  was 
signed  by  R.  E.  Barclay  and  is  as  follows  (the  witness  re-read  the  act) . 

Mind  you,  the  persons  who  got  the  charter  in  this  case  are  the  same 
as  in  the  other.  The  same  incorporators  that  were  under  the  South  Im- 
provement Company,  as  you  will  note.  "Approved  the  7th  day  of  April,  1870. 
Statements  as  made  herein  were  specially  and  particularly  set  forth." 
It  is  signed:  William  A.  Wallace,  Speaker  of  the  Senate  of  Pennsylvania, 
22nd  of  March,  1871.  Office  of  the  Secretary  of  the  Commonwealth,  Harris- 
burg, February  24th,  1871,  Charles  W.  Stone,  Secretary  of  the  Common- 
wealth. 

Now  follows  the  act,  to  incorporate  the  Pennsylvania  Company  under 
that  head,  which  I  have  shown  you  was  changed  to  the  name  of  the  Southern 
Railway  Security  Company;  and  finally  was  changed  to  the  National 
Transit  Company. 

Please  refer  right  back  in  that  book,  and  you  will  notice  now  that  I  am 
not  making  any  statement  except  from  that  book.  You  can  follow  me  and 
see  if  the  language  is  not  just  exactly  the  same  as  that  of  the  South  Im- 
provement Company.  What  I  desire  to  show  this  committee  is  that  the  fran- 
chises now  exercised  by  the  National  Transit  Company  are  the  same  as  set 
forth  in  the  charter  of  the  South  Improvement  Company,  and  they  are  en- 
joying all  the  privileges  and   immunities  which  were  granted  by  that  law. 

Q.   (By  Mr.   RATCHFORD.)      What  page,   Senator?     A.  Page  70. 


LEWIS  EMERY,  JR.  323 

Q.  (By  Vice-Chairman  PHILLIPS.)  It  will  not  be  necessary  for  you  to 
read  more  than  a  few  lines  to  identify  it.  It  will  not  be  necessary  to  re- 
read it.  A.  If  that  is  the  idea  of  the  commission — of  course  I  do  not  want 
any  mistake.  I  have  made  this  statement  very  broadly.  That  was  the 
identical  charter,  under  which  this  company  was  organized. 

Q.  (By  Vice-Chairman  PHILLIPS.)  You  will  file  this  with  the  com- 
mission, to  show  that  it  was.  A.  I  will  file  this  book  itself  with  the  com- 
mission, and  I  will  read  the  second  section,  if  you  choose.  You  will  please 
follow  me  through  there  now  to  see  that  the  language  is  just  the  same  as 
I  read.     (Reading) : 

"That  the  corporation  hereby  created  shall  have  power  to  contract  with 
any  person  or  persons,  firms,  corporations  or  any  other  party,  howsoever 
formed,  existing,  or  that  may  hereafter  exist  in  any  way  that  said  parties  or 
any  of  them  may  have  authority  to  do.  To  build,  construct,  maintain  or 
manage  any  work  or  works,  public  or  private,  which  may  tend  or  be  de- 
signed to  improve,  increase,  facilitate  or  develop  trade,  travel  or  the  trans- 
portation and  conveyance  of  freight,  live  stock,  passengers  and  any  other 
traffic,  by  land  or  water,  from  or  to  any  part  of  the  United  States  or  the  ter- 
ritories thereof;  and  the  said  company  shall  also  have  power  and  authority 
to  supply  or  furnish  all  needful  material,  labor,  implements,  instruments  and 
fixtures  of  any  and  every  kind  whatsoever,  on  such  terms  and  conditions  as 
may  be  agreed  upon  between  the  parties  respectively,  and  also  to  purchase, 
erect,  construct,  maintain  or  conduct  in  its  own  name  and  for  its  own  benefit 
or  otherwise,  any  such  work,  public  or  private,  as  they  may  by  law  be  au- 
thorized to  do  (including  also  herein  lines  for  telegraphic  communication) 
and  to  aid,  co-operate  and  unite  with  any  company,  person  or  firm  in  so 
doing." 

*ls   that   correct? 

Vice-chairman  PHILLIPS.     Yes,  sir. 

The    WITNESS.      Very   well.      Now,  the   third    section: 

"The  company  hereby  created  shall  also  have  the  power  to  make  pur- 
chases and  sales  of,  or  investments  in  the  bonds  and  securities  of  other  com- 
panies, and  to  make  advances  of  money  and  of  credit  to  other  companies, 
and  to  aid  in  like  manner  contractors  and  manufacturers,  and  to  receive 
and  hold  on  deposit  or  as  collateral,  or  otherwise,  any  estate  or  property, 
real  or  personal,  including  the  notes,  obligations  and  accounts  of  individuals 
and  companies,  and  the  same  to  purchase,  collect,  adjust  and  settle,  and  also 
to  pledge,  sell  and  dispose  thereof,  on  such  terms  as  may  be  agreed  on  be- 
tween them  and  the  parties  contracting  with  them;  and  also  to  indorse  and 
guarantee  the  payment  of  the  bonds  and  the  performance  of  the  obligations 
of  other  corporations,  firms  and  individuals,  and  to  assume,  become  respon- 
sible for,  execute  and  carry  out  any  contracts,  leases  or  sub-leases  made  by 
any  company  or  companies,  individuals  or  firms  whatsoever." 

Now,  please  turn  to  Section  First.  I  wanted  to  get  rid  of  this  by  read- 
ing as  little  as  possible.     I  will  read  the  first  section: 

"Be  it  enacted  by  the  Senate  and  House  of  Representatives  of  the  Com- 
monwealth of  Pennsylvania  in  General  Assembly  met  and  it  is  hereby  en- 
acted by  the  authority  of  the  same: 

"That  Andrew  Howard,  J.  S.  Swartz,  G.  B.  Edwards,  J.  D.  Welsto  and 
J.  T.  Malin,  their  associates,  successors  and  assigns,  or  a  majority  of  them, 
be  and  they  are  hereby  authorized  to  form  and  be  a  body  corporate,  to  be 
known  as  the  Pennsylvania  Company,  and  by  that  name,  style  and  title  shall 
have  perpetual  succession,  and  all  the  privileges,  franchises  and  immunities 
incident  to  a  corporation;  may  sue  and  be  sued,  implead  and  be  impleaded, 
complain  and  defend  in  all  courts  of  law  and  equity,  of  record  and  other- 
wise; may  purchase,  receive,  hold  and  enjoy,  to  them,  their  successors  and 
assigns,  all  such  lands,  tenements  and  leaseholds,  estates  and  hereditaments, 
goods  and  chattels,  securities  and  estates  real,  personal  and  mixed,  of  what- 
soever kind  and  quality,  as  may  be  necessary  to  erect  depots,  engine  houses, 
tracks,  shops  and  other  purposes  of  said  corporation,  as  hereafter  defined 
by  the  second  section  of  this  act,  and  the  same  from  time  to  time  may  sell. 


*BIack  faced   type  indicates   matter  omitted,  in  the  course  of  editing,  from  the 
official  report. 


324  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

convey,  mortgage,  encumber,  change,  pledge,  grant,  lease,  sub-lease,  alien 
and  dispose  of,  and  also  make  and  have  a  common  seal,  and  the  same  to 
alter  and  renew  at  pleasure,  and  ordain,  establish  and  put  in  execution  such 
by-laws  or  ordinances,  rules  and  regulations  as  may  be  necessary  to  or  con-. 
venient  for  the  government  of  the  said  corporation,  not  being  contrary  to 
the  construction  and  laws  of  the  Commonwealth,  and  generally  may  do  all 
and  singular  the  matters  and  things  which  to  them  shall  appertain  to  do 
for  the  well  being  of  the  said  corporation,  and  the  management  and  ordering 
of  the  affairs  and  business  of  the  same;  provided  that  nothing  herein  con- 
tained shall  be  so  construed  as  to  give  to  the  said  corporation  any  banking 
privileges  or  franchises,  or  the  privilege  of  issuing  their  obligations  as 
money." 

Now,  gentlemen,  they  were  afraid  of  repealing  the  Constitution  of  the 
United  States,  or  else  they  would  have  put  in  the  privilege  of  issuing  money. 
They  have  got  in  evei-ything  else. 

Q.  (By  Mr.  CLARKE.)  How  do  you  know  that?  A.  By  the  reading  of 
the  act.  They  have  got  the  right  to  do  everything  else;  they  claim  they 
have;   that  is  what  it  reads,  or  as  far  as  I  can  see  what  it  amounts  to. 

Q.  (By  Mr.  FARQUHAR.)  Is  it  not  the  real  aim  of  the  States  of  the 
Union  to  withhold  the  banking  privileges  from  corporations  which  are  not 
banking  corporations?  A.  It  is  within  the  province  of  the  United  States  to 
authorize  the  issue  of  money. 

Q.  Is  it  not  a  fact  that  all  of  our  State  laws,  in  the  acts  of  incorpora- 
tion, contain  this  clause?     A.  Not  being  a  lawyer,  I  don't  know. 

*Q.  Are  you  aware  that  the  laws  of  New  Jersey  particularly  provide 
that,  under  the  great  trust  laws  they  now  have,  they  can  do  anything,  ex- 
clusive of  banking?     A.   I  think  so;    I  think  so;   yes,  sir. 

Q.  (By  Mr.  KENNEDY.)  What  does  this  mean?  Does  it  mean  any- 
thing more  than  any  other  corporation  might  do?  A.  Oh,  no;  I  only  wanted 
to  show  you.  Commissioner  Kennedy,  that  the  same  law  that  was  repealed, 
known  as  the  South  Improvement  Company  law,  was  identical  with  this. 
It  is  one  and  the  same  thing;  that  the  privileges  that  they  had  under  that 
law  in  1872  they  enjoy  at  the  present  time.  That  is  all;  that  is  what  I 
wanted  to  show.     I  think  I  have  made  it  plain  to  the  commission. 

Q.  (By  Mr.  FARQUHAR.)  Is  the  point  of  that  to  show  that  with  the 
usual  privileges  granted  by  the  State  of  Pennsylvania,  there  are  20  or 
more  organizations  of  the  Standard  Oil  Company  and  the  Standard  Oil  Com- 
pany took  up  these  privileges?  A.  This  law  says  they  can  go  into  any 
other  State  of  the  Union;  it  says  that.  I  don't  know  whether  they  can 
legally  or  not,  but  that  is  what  it  says. 

Q.  You  think  that  possible  in  the  State  of  Ohio?  A.  I  desire  to  say 
this:  The  Pennsylvania  Company  runs  through  a  portion  of  Ohio,  does  it 
not? 

Mr.  A.  L.  HARRIS.  It  is  in  a  separate  organization.  One  is  called  the 
Pittsburg.  Chicago  and  Fort  Wayne. 

The  WITNESS.  I  understand,  Mr.  Chairman  and  commissioners,  that 
the  Pennsylvania  Railroad  enjoys  all  these  franchises,  although  they  may 
be  in  different  States,  under  the  Pennsylvania  charter.  I  submit  that  to  the 
lawyers. 

Q.  (By  Mr.  FARQUHAR.)  The  only  question  is  this:  Whether  the 
Standard  Oil  Company  can,  with  all  these  various  franchises,  enjoy  all  the 
privileges  that  are  contained  in  this  charter  from  the  State  of  Pennsylvania. 
A.  In  other  States? 

Q.  In  what  States?     A.  I  am  not  lawyer  enough  to  answer  that  question. 

Q.  (By  A.  L.  HARRIS.)  Subject  to  the  State  laws  of  the  State?  A.  It 
would  be  subject  to  the  State  laws  of  the  State;  I  suppose  that  that  would 
be  an  appropriate  answer  to  that. 

Vice-Chairman  PHILLIPS.     Senator  Emery  will  please  proceed. 

The  WITNESS.  Now,  gentlemen.  I  have  gone  back  to  correct  this,  and 
I  wanted  to  show  exactly  the  identity  of  these  two  laws,  one  repealed  and 
the  other  in  existence,  because  a  question  was  raised  by  two  or  three  of  the 

*Blark  faced  type  Indicates  matter  omitted,  in  the  course  of  editing,  from  the 
official  report. 


LEWIS  EMERY,  JR.  325 

commissioners,  whether  the  charter  of  the  one  was  like  the  other.  I  think 
I  have  proved  that  to  their  satisfaction  by  reading  from  this  book,  and  I 
will  leave  that  book  with  the  commission  when  I  go  away. 

*Now,  if  there  is  any  general  question  that  any  gentleman,  member  of 
the  commission,  would  like  to  ask  me  before  I  proceed  on  a  new  subject,  I 
would  be  very  glad  to  answer  it  if  I  can. 

Vice-chairman  PHILLIPS.  Perhaps  you  may  state  the  subject  you  are 
going  to  proceed  upon,  and  perhaps  that  may  do  away  with  asking  questions. 

The  WITNESS.  I  shall  come  to  the  history  of  the  oil  country  from  1872 
to  1877;   I  am  going  to  try  to  get  through  to-day,  if  I  can. 

Q.  (By  Mr.  FARQUHAR.)  Will  you  furnish  the  commission  chrono- 
logically with  the  dates  of  these  various  charters,  commencing  with  the  date 
of  the  franchise?     A.  And  the  origin  of  them? 

Q.  And  the  origin  of  them.     A.  And  the  change  of  name? 

Q.  And  the  year  or  month  possibly,  if  you  can.  A.  I  can  give  you  all 
of  that. 

Q.  So  that  we  will  see  the  connection  and  the  interest  which  follows 
from  the  beginning  clear  down  to  the  end.    A.  I  will  bring  them  all  to  you. 

Q.  (By  Vice-Chairman  PHILLIPS.)  You  will  leave  them  with  the  com- 
mission before  you  go  away,  or  send  them  to  us.  please. 

Q.  (By  Mr.  FARQUHAR.)  I  wish  you  would  furnish  them  to  the  com- 
mission, because  I  find  the  dates  running  through  in  these  places.  A.  I  will 
tell  you  that  this  book  contains  a  vast  amount  of  knowledge  and  contains 
everything  that  you  have  asked  for,  in  regular  form,  and  with  the  affidavit 
of  the  Secretary  of  the  Commonwealth  as  to  its  correctness,  so  that  you  need 
not  be  misled  or  misunderstand  anything  that  we  have  offered  before  you. 
*Now,  if  there  is  anything  else  that  I  know  of,  that  you  desire  to  ask  about, 
I  will   be  glad  to  answer,  because   I   would   like  to  clean  up  as  we  go  along. 

Q.  If  you  intend  to  return  to  the  sale  of  the  independents  in  Europe  at 
another  part  of  your  testimony  I  do  not  want  to  ask  the  question  I  have  in 
mind.  But  if  you  do  not  I  should  like  to  ask  one  question  to  clear  it  up.  A. 
I  do  not  know  that  I  shall  go  back  to  that  unless  I  am  so  requested. 

Q.  You  spoke  of  the  opposition  and  interference  of  the  German  govern- 
ment. Can  you  give  the  commission  an  approximate  statement  of  the  pro- 
portion of  oil  sold  in  Germany  at  that  time  by  the  Standard  Oil  Company 
by  all  the  Russian  companies  and  by  the  independent?  A.  Yes,  sir,  I  can 
give  the  statistics. 

Q.  That  probably  was  in  your  mind?  A.  I  cannot  give  it  to  you  here, 
but  I  can  give  you  statistics,  however,  of  the  sales  in  the  German  Empire. 
I  know  roughly  what  they  are  now;  I  know  how  much  the  German  Empire 
consumes  of  the  American  production;  at  the  present  time  it  is  between 
6,000.000  and  7.000,000  barrels  a  year. 

Q.  How  much  is  furnished  by  the  Standard  Oil  Company  and  how 
much  by  the  company  you  represent?  A.  *What  I  meant  to  say — and  per- 
haps I  may  ask  to  correct  that,  if  there  be  no  objection  on  the  part  of  the 
committee — 1  knew  that  statistics  two  years  ago.  It  was  about  6,000,000 
barrels  of  the  American  product  that  was  consumed  by  Germany;  and  Great 
Britain  was  using  3,000,000  barrels;  France,  3.000.000  barrels;  Norway  and 
Sweden  were  consuming  about  1,200.000  barrels;  Denmark,  600,000;  Holland 
and  Belgium — I  forgot.  *AII  this  was  in  my  mind,  but  as  I  said  before,  two 
years  absence  have  wiped  it  out  a  good  deal. 

Q.  At  this  time  proportionately  what  were  the  sales  of  the  Standard, 
the  Russian  and  all  the  independents  in  1895  and  1896?  A.  The  Standard 
Oil  Company  sold  all  of  the  American  oil  sold  in  those  markets,  with  the 
exception  of  what  was  taken  in  by  our  independent  companies.  I  think  the 
largest  exportation  that  we  ever  made — in  fact,  in  1894,  I  think  we  sold 
over  there,  about  400,000  barrels,  and  up  to  the  time  that  Mr.  Poth  was  pur- 
chased by  the  Deutsche-Americanische  Company,  I  think  cur  sales  were 
about  700.000  barrels. 


*B!ack   faced   type  indicates   matter  omitted.  In  the  course  of  editing,  from  the 
official  report. 


326  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

Q.  You  spoke  of  the  regulations  made  by  the  German  government  over 
there.  Do  those  cover  the  regulations  in  competition  between  the  Standard 
and  the  Russian?     A.  In  what  respect? 

Q.  This  unfair  competition;  you  discussed  the  idea  of  fair  competition. 
A.  The  Russians  were  in  just  as  bad  and  crippled  condition  as  we  were, 
as  the  independents  were  at  that  time. 

Q.  Do  you  care  to  state  then  that  the  Standard  had  the  market  of  both 
the  independents  and  the  Russians?  And  were  they  desirous  of  having  this 
free  competition?     A.  I  don't  understand  you. 

Q.  That  is,  are  we  to  understand  that  the  Russians  were  first  in  com- 
plaining to  the  German  government  of  the  unfair  competition  then;  and  that 
the  independents  were  against  the  Standard?  A.  I  don't  know  what  the 
Russian  government  did;  I  know  while  I  was  in  Europe.  I  went  to  a  session 
of  the  Reichstag,  and  had  a  conversation  with  Mr.  Nobel,  and  also  with  the 
prime  minister,  in  reference  to  the  situation  that  the  petroleum  industry  was 
in,  and  their  views  upon  the  situation  were  just  the  same  as  ours — that  we 
had  met  with  unfair  competition  and  they  would  like  to  see  it  righted.  I 
went  there  to  see  if  something  could  not  be  done,  and  used  every  effort  to 
bring  it  before  the  Reichstag,  and  the  whole  question  was  laid  before  the 
prime  minister  by  ourselves  and  by  the  Nobels,  *who  controlled  two-thirds 
of  the  refined  output  of  Russia.    The  conditions  in  trade  were  the  same  to  all. 

Q.  (By  Mr.  KENNEDY.)  Did  you  have  to  get  a  charter  in  Germany 
from  the  Imperial  government?  A.  No,  sir;  we  are  required  to  file  our  or- 
ganization or  charter.  We  only  got  a  license  to  become  merchants;  that  is  all. 

Q.  Were  your  business  affairs  then  subject  to  the  supervision  of  the 
German  ofllcers?     A.  Oh,  yes,  sir. 

Q.  The  inspection  of  your  books?  A.  Yes,  sir;  whatever  the  law  is.  we 
were  to  conform  to  it.  I  don't  know  whether  that  is  the  law,  whether  they 
can  go  through  the  books  or  not. 

Q.  *Professor  Jenks  informs  us  that  that  is  the  law.  A.  Well,  what- 
ever the  law  is,  that  is  the  situation  under  which  we  are  placed.  We  are 
very  glad  to  have  them  examine  our  affairs,  and  so  with  our  affairs  in  this 
country.  I  wish  something  of  that  kind  could  be  established  by  means  of 
a  law  in  this  country — that  all  of  these  books  of  these  corporations  of  any 
kind  could  be  examined. 

Q.  Would  you  favor  having  corporations  doing  business  in  this  country 
under  a  National  corporation  act?  A.  I  heard  that  question  brought  forth  in 
the  evidence  of  Henry  Rogers,  and  I  am  not  prepared  to  say.  I  haven't 
studied  the  question.  I  do  not  know  enough  about  the  English  law  con- 
trolling corporations,  and  about  the  capitalization  there.  I  am  ignorant  of 
the  conditions  of  business  in  England,  except  to  a  limited  extent. 

Q.  What  is  the  quality  of  the  oil  exported  from  this  country  to  Ger- 
many and  other  countries?     A.  It  is  what  we  call  73°  Abel,  or  110°  fire  test. 

Q.  What  is  the  quality  of  oil  generally  consumed  in  this  country?  A. 
120°  to  150°. 

Q.  Is  it  an  inferior  grade  of  oil  that  is  sent  abroad?  A.  No.  sir;  it  is 
often  very  much  better  oil  than  we  get  here  at  150°. 

*Q.  (By  Vice-Chairman  PHILLIPS.)  Give  the  reason  for  that?  A.  Let 
me  explain.  *l  am  very  glad  you  brought  that  out,  and  I  want  to  state  here 
briefly,  Mr.  Chairman  and  gentlemen  of  this  commission,  and  I  want  you 
to  understand  my  statement  as  that  of  a  manufacturer  of  oil  from  1S67  to 
1899,  *(and  you  can  verify  it)  that  from  my  own  personal  experience  and 
knowledge  of  the  refining  and  producing  of  crude  oil,  that  the  Standard  Oil 
Com|)any  are  not  I)enofactors,  and  never  were  benefactors.  If  the  business 
had  been  open  to  the  community,  or  to  the  people  engaged  in  it  with  their 
brains  and  ability  the  development  that  has  come  forth  up  to  this  pi-esent 
time.  I  claim,  could  have  been  made  twice  as  quick  as  they  have  made  it. 
Why  do  I  say  so?  Because  in  the  year  1872  our  company,  known  as  the 
Octave  Oil  Company,  was  the  owner  of  one  of  the  best  refineries  on  the 
creek — what  we  call  Oil  creek — right  opposite  that  of  Porter.  Moullnard  & 
Co.,  the  company  being  .John  D.  Archbold,  who  was  upon  this  stand. 


♦Black   faced   type  Indicates  matter  omitted,  in   the  course  of  editing,   from  the 
official  report. 


LEWIS  EMERY,  JR.  327 

♦Vice-chairman  PHILLIPS.     And  others. 

The  WITNESS.  And  others,  yes,  sir.  We  had  the  devices  at  that  time 
lor  making  illuminating  oil  of  good  quality,  that  we  have  to-day.  We  had 
stills  that  held  from  100  to  3,000  barrels  each,  Mr.  Archbold  having  the 
largest  still  that  ever  fire  was  put  under,  holding  3,000  barrels  of  crude  oil, 
and  to  explain  how  to  distill  oil  is  not  difficult.  It  simply  means  that  if  you 
build  a  fire  under  that  glass  (indicating  with  a  tumbler),  supposing  it  was 
metal,  and  you  enclosed  the  top,  and  the  steam  goes  out — the  vapor — that  is 
all  we  do  in  making  oil.  We  put  it  in  these  great  cylinders  or  stills  and 
those  of  1870  and  1868  and  1865  and  1860  were  the  same  as  the  cylinder  still 
of  to-day.  There  was  an  improvement,  what  was  known  as  the  cheese  box, 
which  was  a  still  that  stood  upright  like  a  cheese  box,  and  that  was  filled. 
It  had  a  corrugated  bottom  and  fire  was  put  under  it.  But  we  have  gone 
"back  to  the  old  system,  leaving  to  them  the  modern  system  that  they  claim 
to  have  put  into  it.  We  are  right  back  to  where  we  were  in  1859,  using  the 
cylinder  still  with  the  fire  under  it.  It  gives  first  the  very  light  quality  of 
oil.  the  cymogene  as  we  used  to  call  it,  the  very  lightest,  like  carbonic  acid 
gas — it  is  scarcely  a  liquid.  The  moment  it  goes  to  the  air  it  is  gone.  Then 
we  come  next  to  the  next  lightest  particles — gasoline.  Then  we  come  to 
naphtha,  and  then  we  come  down,  if  you  choose,  to  heavy  benzine.  The 
lighter  particles  go  off  first  from  which  are  made  the  various  light  products 
that  are  in  the  market,  stich  as  you  use  in  yotir  gasoline  engines,  and  stich 
as  you  use  in  the  kitchen  to  cook  with,  and  such  as  are  used  by  the  chemist, 
the  druggist  and  the  commercial  trade  at  large.  And  then  you  come  to  the 
Illuminating  oil.  Suppose  yoti  have  that  mtich  (indicating)  out  of  the  glass, 
you  are  still  within  a  foot  of  the  top.  The  next  quantity  to  come  off  is  the 
next  lightest,  which  is  the  illuminating  oil,  for  instance,  or  what  we  term  the 
110°  oil.  Yoti  may  recollect  that  in  this  way:  The  general  law  of  the  States 
requires  110°  fire  test  mostly;  that  is  to  say,  it  will  take  110°  degrees  of 
heat  before  it  will  burn.  It  may  flash  at  85°,  btit  would  go  out.  You  get  it 
up  to  110°  and  then  it  burns — that  is  the  burning  test,  the  flash  test  being 
^elow,  we  will  say,  at  85°.  Now  that  is  the  way  oil  is  tested.  It  went  on 
for  years  and  years  until  the  advent  of  this  South  Improvement  Company 
and  the  Standard  Oil  Company.  That  remained  a  law  of  all  the  States  and 
the  oil  was  good;  there  was  no  adulteration  of  it.  Btit  you  will  say:  How 
do  you  adulterate  oil?  Perhaps  that  is  not  the  term;  it  is  not  adulterated, 
"but  it  is  not  properly  reflned.  It  is  not  broken  up  by  heat;  the  paraffine  is 
not  ejected  from  it.  The  oil  may  contain  a  vast  amount  of  paraffine.  and  it 
will  not  burn  if  it  is  put  at  110°  of  heat;  its  burning  qualities  are  not  good. 
But  oil  properly  refined  under  the  110°  system.  I  claim  to-day.  is  the  best 
oil  you  can  put  in  your  lamps.  Mr.  Chairman  and  commissioners,  the  Ger- 
man government — the  entire  German  Empire — the  kingdom  of  Norway  and 
Sweden.  Denmark,  all  those  countries,  require  no  other  than  110°  or  73° 
Abel.  That  is  what  we  send  over  to  Europe.  *Our  commissioner  friend, 
Mr.  Kennedy,  asked  if  it  was  not  an  inferior  quality.  No,  gentlemen,  neither 
the  German  government,  nor  any  other  government  on  that  side  of  the 
water  would  permit  you  to  send  in  there  an  inferior  article.  There  is  an 
educated  chemist  at  every  distributing  depot  in  that  country,  who  takes  that 
oil.  weighs  it  and  gives  it  the  proper  fire  test,  and  it  must  pass,  according 
to  the  requirements  of  the  law.  That  is  one  reason  why  the  Ohio  produc- 
tion has  l)een  practically  ruled  out  of  Germany — because  of  its  quality.  The 
great  German  Empire  and  other  countries  are  dependent  to-day  for  their 
oils  on  the  American  production,  because  Pennsylvania  and  a  portion  of 
Eastern  Ohio,  and  Southern  New  York,  and  West  Virginia  produce  the  best 
oil  in  the  world. 

Q.  (By  Mr.  KENNEDY.)  The  Standard  Oil  people  who  were  on  the 
stand  claim  that  they  have  processes  now  for  eliminating  sulphur  and  other 
impurities  from  the  oil,  which  makes  it  equal  to  Pennsylvania  oil.  Is  that 
so?  Is  that  true?  A.  I  say  here,  as  a  refiner,  and  a  man  who  has  in  his 
employ  as  good  a  chemist  as  there  is  in  the  business,  that  they  cannot  do 
it  and  they  do  not  do  it.     You  cannot  eliminate  the  sulphur.     It  will  come 


"Black   faced   type  Indicates   matter  omitted,  in  the  course  of  editing,  from  tiie 
official  report. 


328  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

iDack  in  some  form  *in  the  burning  in  your  lamp.  Canada  has  been  working 
on  it  for  the  last  30  years,  and  she  has  spent  a  good  many  millions,  and 
she  has  never  been  able  to  accomplish  it  entirely.  It  baffles  all  science 
to  eradicate  that  from  the  oil.  These  tests  have  been  conducted  in  Europe 
by  government  chemists,  and  it  cannot  be  used  unless  it  may  be.  perhaps, 
mixed  in  with  Pennsylvania  oil.  That  has  been  done,  and  unquestionably 
is  done;  but  I  want  to  say  to  you  that  the  higher  grade  oils,  or  the  higher 
grade  of  petroleum  oils,  are  used  to  supply  the  European  countries.  As  to 
what  goes  to  India  or  what  goes  to  China  I  am  not  posted;  but  I  do  know 
what  goes  to  the  other  countries,  and  they  expect  to  get  an  absolutely  pure 
Pennsylvania  oil.  The  consumption  of  Ohio  oil  is  confined  to  the  United 
States  and  to  Mexico,  and  perhaps  to  some  of  the  southern  countries.  I  don't 
know  about  that,  but  the  market  is  not  in  Germany  or  in  England  to  any 
great  extent. 

Q.  (By  Mr.  CLARKE.)  How  is  the  grade  of  the  oil  determined,  if  not 
by  the  fire  test?     A.  What  do  you  mean;   the  smell? 

Q.  Yes,  sir;  whether  it  is  a  high-grade  oil  or  a  low-grade  oil.  A.  "Well, 
I  think  its  grade  is  determined  by  the  fire  test;  for  instance,  110°  oil  is  what 
we  term  the  ordinary  export  oil,  112°  test.  If  it  is  120°  it  is  supposed  to  be 
a  little  bit  better  in  quality.  If  it  is  150°,  which  is  the  common  oil  used  in 
this  country,  it  is  a  little  bit  better  in  quality. 

Now  let  me  explain  about  the  making  of  150°  oil.  It  is  just  exactly 
like  making  what  they  call  patent  flour.  It  is  the  head  of  the  bolt.  I  am  a 
miller  by  trade,  and  am  acquainted  with  the  making  of  flour  in  the  modern 
way  and  the  old  way.  If  you  want  to  get  a  patent  flour  you  have  to  take 
the  head  of  the  bolt,  and  the  best  of  the  wheat,  as  it  is  termed,  and  you  get 
what  you  call  the  patent  flour,  by  passing  it  through  the  rolls  and  by  means 
of  the  several  processes.  It  is  so  with  oil.  You  can  get  a  certain  quantity 
of  patent  flour  out  of  a  hundred  pounds  of  wheat;  and  you  can  get  a  certain 
amount  of  150°  or  175°  oil  out  of  a  certain  amount  of  crude 
oil.  In  this  country  I  say  we  take  off  what  we  term  the  high- 
grade  oil,  and  the  balance  is  sent  to  Germany  and  other  countries,  being 
what  is  termed  "export  oil;"  but  in  order  to  get  these  oils  up  to  what  they 
should  be  we  make  the  others  not  as  good  as  if  we  had  mixed  or  distilled 
the  whole  thing  together.  Just  so  with  the  flour.  If  you  do  not  mix  the 
better  part  of  that  wheat  in,  your  next  grade  is  not  so  good,  although  it 
passes  as  good  family  flour,  and  is  a  common  flour;  and  this  oil  passes  as 
"export  oil."  *which  we  call  the  lower  grade  of  oil.  In  answer  to  Commis- 
sioner Kennedy,  the  standard  has  not  been  changed  in  Germany,  and  yet 
they  have  the  finest  lamps  in  the  world  there.  They  are  the  greatest  in- 
ventors in  illuminants,  and  they  have  continued  to  hold  that  grade  the  same 
as  it  was  25  or  30  years  ago.  Now  we  have  to  condemn  this  class  of  oil  in 
this  country,  but  they  are  satisfied  with  it:  first,  because  it  comes  within 
the  range  of  the  man  who  wears  wooden  shoes,  *and  the  man  that  lives  in 
the  palace;  it  is  no  different.  It  is  a  commodity  they  all  buy.  and  it  is  lower 
In  price  than  the  higher  grade. 

Q.  (By  Mr.  KENNEDY.)  It  is  a  fact  that  the  oil  exported  to  Germany 
is  inferior  to  the  oil  used  in  this  country?  This  is  the  statement  that  was 
made  before  you  went  on  the  stand.  A.  I  say  to  you  that  sometimes  there 
may  be  such  instances,  but  I  want  to  say  to  you  that  in  the  United  States 
of  America  we  burn  the  commonest  grade  of  oil  on  earth,  and  they  burn  the 
best,  and  the  whole  of  it  is  put  upon  the  market.  In  California — I  have 
spent  two  years  there  up  in  the  mountains.  I  have  a  little  place  there,  and 
I  go  down  and  buy  a  case  of  oil.  I  buy  as  Pratt's  Astral,  a  high  grade  of  oil. 
It  used  to  be  the  highest  grade  in  the  market.  I  may  say  incidentally  that 
during  my  early  experience  in  the  refining  business,  from  1867  to  1872,  we 
manufactured  and  sold  thousands  and  thousands  of  barrels  of  oil  to  Charles 
Pratt  for  exportation  to  Europe,  and  we  were  obliged  to  leave  the  head 
blank.  When  we  got  an  unusual  quality  of  oil  "Pratt's  Astral  Oil"  was  put 
on  it.  *You  know  Pratt's  Astral  was  the  highest  grade  in  the  land,  and  our 
oil  went  there  as  Mr.  Pratt's  high-grade  oil.  Was  the  quality  inferior?  Mr. 
Pratt  became  one  of  the   managers,  in  the  early  history  of  the  company,  of 


•Black   faced    type  indicates   matter   omitted,  in   the  course  of  editing,   from  the 
•ofRcial  report. 


LEWIS  EMERY,  JR.  329 

the  Standard  Oil  Company,  and  yet  up  to  its  very  inception  he  bought  oil 
from  the  Octave  Oil  Company,  of  which  I  was  one  of  the  largest  owners,  and 
my  oil  was  taken  by  him  and  sent  to  Europe,  *being  satisfactory  to  him  in 
its  quality.     Now  let  me  give  credit  to  the  Standard  Oil  Company. 

Q.  (By  Representative  LIVINGSTON.)  Don't  they  require  an  oil  in- 
spection in  Europe  and  in  many  States  in  this  country,  and  compel  you  to 
come  up  to  a  certain  grade  before  you  can  sell?  A.  *That  is  what  I  have 
explained.  In  every  little  borough,  wherever  oil  is  sold  or  distributed 
throughout  the  German  Empire,  there  is  a  man  that  examines  the  oil,  and 
it  is  passed  upon  by  the  government  inspector. 

Q.  Then  what  do  you  mean  by  first,  second  and  third  grade  of  oil? 
*A.  As  I  have  stated  to  you,  it  is  not  inferior  in  quality  under  the  laws  of 
Germany. 

Q.  You  have  stated  that,  by  a  similar  process  to  that  of  flour,  you  get 
first,  second  and  third-grade  oil?     A.  You  get  three  kinds. 

Q.  Do  you  mean  the  first  grade  oil  has  less  naphtha  or  more  in  it?  A. 
It  is  supposed  to  be  better  oil.  But  I  want  to  say  this  to  you:  When  you 
go  to  the  grocer  and  buy  150°  oil  it  is  supposed  to  be  the  acme  of  oil  in 
this  country  and  you  fill  a  lamp  with  it,  and  you  may  get  a  little  brighter 
light  than  you  would  from  110°.  There  is  not  so  much  naphtha  or  gas 
in  it.  The  gas  has  been  eliminated  for  the  high  fire  test,  but  the  110°  oil 
will  last  in  a  lamp  a  great  deal  longer  than  150°. 

Q.  Why?  A.  Because  there  is  not  so  much  body  in  it.  The  110°  will 
not  give  you  as  brilliant  a  light  as  the  150°. 

Q.  Is  it  not  more  subject  to  combustion  than  the  150°?  A.  Oh,  yes;  I 
will  tell  you  why;   it  requires  110°  of  heat  to  burn  110°  oil. 

*  (By  Vice-chairman  PHILLIPS.)  Then  does  it  require  150°  to  burn 
150°  oil?  A.  It  requires  150°  of  heat  to  burn  150°  oil.  That  is  to  say,  the 
lamp  must  be  heated  to  150°  at  its  top  before  it  will  create  gas  in  the  body 
of  the  lamp.  When  you  do  create  that  gas  in  the  body  of  the  lamp  it  is  more 
than  the  glass  can  stand;  then  it  has  to  expand  and  you  have  an  explosion. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Suppose  the  ether  comes  in  contact 
with  the  flame,  will  the  one  burn  as  quickly  as  the  other?  A.  No,  sir;  the 
150°  will  not  burn  nearly  as  quick  as  the  110°;  oil  is  nothing  but  gas.  Take 
a  pail  of  crude  oil  of  48°  or  50°  gravity  and  put  it  out  in  the  sun  and  in  all 
probability  by  night  you  will  have  lost  10  per  cent,  of  it.  It  has  gone.  Some 
scientists  claim  that  oil  is  nothing  but  gas — condensed  gas.  Others  claim 
that  gas  is  an  overflow  arising  from  the  oil  and  that  it  reaches  out  and  per- 
meates the  rock;  *of  course  these  are  scientific  questions  that  nobody  can 
decide. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Your  testimony  is  not  clear  in  re- 
gard to  the  150°  burning  test?  A.  110°  oil  burns  at  110°  of  heat;  150°  oil  burns 
at  150°  of  heat.  That  is  the  burning  test.  The  higher  the  test  the  safer  the 
oil,  so  far  as  explosion  is  concerned.     *Do  you  understand? 

Q.  (By  Vice-Chairman  PHILLIPS.)  But  which  will  burn  up  quicker  in 
the  lamp?  A.  That  don't  make  a  bit  of  difference.  The  wick  is  saturated 
and  it  burns  all  the  time;  the  blaze,  or  the  flame,  from  110°  is  not  as  brilliant 
as  that  from  150°. 

Q.  (By  Mr.  KENNEDY.)  Then  the  German  does  not  get  as  good  a  light 
from  110°  as  he  would  from  120°,  and  so  on?     A.  That  is  true,  sir. 

Q.  They  get  what  they  want,  and  they  are  satisfied  with  that?  A.  Yes, 
sir;  because  a  good  110°  oil  is  a  good  oil;  it  is  the  cheapest  for  all  the  in- 
habitants of  this  country,  and  it  is  good  enough  and  safe  enough  because 
they  burned  it  for  years  and  years,  and  there  was  no  change  that  I  know 
of.  There  was  no  change  of  the  laws,  in  any  of  the  States  until  after  1872. 
Pennsylvania  retains  still  the  110°  test;  North  Carolina  the  110°  test;  Texas 
the  110°  test  and  a  great  many  of  the  Southern  States  the  110°  test.  In 
some  it  has  been  changed.  I  think  the  State  of  Michigan,  if  I  remember 
right,  has  175°. 


•Black   faced    type   Indicates   matter   omitted,  in   the  course  of  editing,   from  the 
official  report. 


330  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

*Q.  (By  Vice-chairman  PHILLIPS.)  Quite  right;  or  very  near  to  it. 
How  widely  had  oil  been  introduced  in  the  world  before  the  advent  of  the 
Standard  Oil  Company? 

Q.  (By  Mr.  KENNEDY.)  Do  you  come  in  competition  in  Germany  with 
Russian   oil?     A.     Yes,   sir. 

Q.  Do  they  have  to  meet  that  test  of  110°  in  Germany  the  same  as  you 
do?    A.  Yes,  sir. 

Q.  What  is  the  quality  of  that  oil?  How  does  it  compare  with  the  oil 
of  America?  A.  Not  so  good  as  the  American;  not  so  good  even  as  the  110°. 
The  Russian  oil  is  of  an  asphalt  basis,  whereas  ours  is  paraffine.  Pennsyl- 
vania and  New  York  oils  are  paraffine;  in  fact  the  Ohio  oil  also  is  of  a 
paraffine  basis.  The  California  oils  have  the  asphalt  basis,  and  the  Russian 
oil  is  of  an  asphalt  basis.  The  American  oil  will  produce  an  illuminant  of 
75  per  cent.;  for  instance,  100  gallons  of  the  crude  oil  of  America,  of  what 
we  call  the  Pennsylvania,  West  Virginia,  New  York  and  Eastern  Ohio,  will 
produce  75  per  cent,  of  illuminating  oils  of  different  grades.  If  you  run  them 
all  straight  through  and  don't  cut  them  out  you  would  probably  get  78  per 
cent.,  or  perhaps  79  per  cent.;  but  now,  speaking  as  it  runs,  you  get,  maybe, 
75  gallons  of  illuminating  oil  from  100  gallons  of  crude  oil,  *of  the  average 
quality,  such  as  is  produced  by  the  States  I  have  named.  The  gravity  of 
the  oil  1  am  speaking  of  will  run  from  40  to  52.  *Some  low  country  oil  52, 
is  it  not,  Mr.  Boyle?  The  Russian  oil  runs  from  18  to  30;  its  basis  being 
asphalt,  and  they  can  only  get  from  that  of  the  ordinary  export  oil,  such 
as  we  have,  110°  in  Germany,  about  25  per  cent. 

Q.  Will  their  110°  oil  sell  for  the  same  money  as  ours  In  Germany? 
A.  No.  sir,  it  does  not  sell  for  the  same  money  as  our  110°,  because  it  hasn't 
got  as  good  a  smell  as  ours;  it  contains  a  little  of  the  sulphur,  the  same  as 
the  Ohio,  which  is  not  marketable,  as  our  common  oils  are. 

Q.  Russian  competition  then  is  not  serious  on  that  account?  A.  It  is, 
because  they  sell  their  oil  at  a  less  price  and  we  have  to  meet  it;  but  we 
have  the  advantage  of  quality. 

Q.  (By  Vice-chairman  PHILLIPS.)  Now,  I  would  like  Senator  Emery 
to  state  how  widely  petroleum  was  introduced  into  the  world  before  the 
advent  of  the  Standard  Oil  Company  into  the  markets,  because  he  has  a 
knowledge  of  it.  A.  I  want  to  say  in  answer  to  that  question  (I  started  to 
make  the  remark  before)  that  in  1871  or  1872  we  were  engaged  in  the  busi- 
ness when  we  were  young  and  enterprising.  We  went  to  the  city  of  Phila- 
delphia and  secured  a  sailing  vessel.  It  was  our  determination  to  load  that 
vessel  with  all  the  different  inventions  for  burning  oil — lamps,  oil  stoves 
and  so  forth — and  also  to  put  into  the  ships  our  oils,  in  cases  or  in  barrels, 
as  much  as  we  could  carry;  and  we  had  arranged  with  one  Captain  Dilling- 
ham, *whom  Mr.  Boyle  knows,  as  well  as  others  in  this  room,  to  sail  that 
vessel  to  the  Amazon,  and  go  up  the  Amazon  and  introduce  this  product  of 
oil,  which  was  a  new  commercial  commodity  practically,  and  the  result  was 
we  didn't  do  it.  We  did  not  go.  Now  I  will  read  to  you  why  we  did  not  go, 
*and  why  everything  was  active  at  that  time. 

Q.  (By  Vice-chairman  PHILLIPS.)  Can  you  state  how  far  it  had  been 
introduced  in  the  world  prior  to  that  time?  A.  I  will  say  in  answer  to  that, 
Mr.  Chairman,  that  the  production  of  oil  in  1872  was  16,000  barrels  of  oil 
per  day;  *between  14,000  and  16,000.  I  will  say  that  away  back  in  1870  it 
was  15,000  barrels  of  oil  a  day.  and  that  great  quantity  of  oil  from  1860  up 
to  1872  was  marketable  throughout  the  world,  as  we  knew  the  world  at  that 
time.  It  is  a  good  while  ago,  of  course.  There  were  in  the  field  at  that  time 
upwards  of  150  refineries,  and,  as  I  said  before,  with  all  the  modern  im- 
provements that  exist  to-day,  so  far  as  the  making  of  illuminant  was  con- 
cerned. Now,  I  want  to  give  credit  to  the  Standard  Oil  Company  for  this 
fact,  that,  owning  the  business  practically,  it  was  dependent  upon  them  to 
bring  out  all  of  the  by-products  from  the  residuum,  and  they  have  met  with 
a  wonderful  success  in  it.  Do  you  suppose.  Mr.  Chairman  and  gentlpmen 
of  the  commission,  that  I.  or  any  other  active  btisiness  man  with  brains  and 
capacity,  could  not  have  done  the  same  thing  if  we  had  had  the  opportunity 

•Black  faced  type  Indicates  matter  omitted,  In  the  course  of  editing,  from  the 
ofFirial  report. 


LEWIS  EMERY,  JR.  331 

and  had  been  left  to  ourselves  to  manage  our  business?  Is  not  the  iron 
business  done  all  over  the  world,  and  is  not  the  Sieman's  furnace  and  every 
other  class  of  furnace  and  everything  ever  improved  upon  been  brought 
about  by  the  general  trade  connected  with  it?  Not  one  man  in  that  business 
claimed  that  he  was  the  only  brain  in  it.  No,  nor  is  it  so  to-day  with  the 
Standard  Oil  Company,  because  I  say  broadly  they  have  invented  nothing — ■ 
nor  even  did  they,  as  somebody  has  often  said,  invent  the  rebate.  They 
were  dependent  upon  the  brain  of  the  average  man,  the  same  as  any  other 
commercial  industry  in  this  world.  They  have  done  nothing,  *good  God 
Almighty,  that  *you,  Governor  Harris,  or  you,  Mr.  Kennedy,  or  any  member 
of  this  commission  could  not  have  done,  if  you  had  had  the  opportunity  to 
do  it,  and  to  get  your  pi'oducts  to  market  over  the  transportation  lines  of 
the  country.  *l  come  again  to  answer  this  question;  I  say  to  you  right  here, 
gentlemen  of  this  commission,  that  the  v\/hole  disturbing  influence  in  the 
United  States  grew  out  of  the  discriminating  rates  to  the  favorite  shipper. 
Under  Commissioner  Fink's  decision  many  years  ago  (he  was  one  of  the  best 
freight  men  in  the  United  States),  he  said:  "It  is  better  for  a  railroad  to 
have  ten  manufactories  on  its  line  of  road  owned  by  ten  men  than  to  have 
ten  factories  upon  that  road  owned  by  one  man."  It  is  better  that  you 
should  have  a  dozen  refineries  owned  by  different  men  than  to  have  one 
single  man  owning  the  whole  business.  I  say  in  this  country  to  the  man 
with  brains,  that  if  he  can  beat  me  in  commercial  pursuits  he  is  entitled  to 
the  persimmon  at  the  top  of  the  tree.  That  is  his  privilege.  If  I  cannot  hold 
myself  in  commercial  pursuits  with  him  then  I  should  be  his  hired  man — 
his  servant;  but  there  is  no  law  in  this  country  that  should  be  so  drawn 
as  to  discriminate  against  the  advancement  of  the   individual  operator. 

Q.  (By  Representative  LIVINGSTON.)  You  never  gave  special  privi- 
leges to  anybody,  did  you?     A.  Yes,  sir,  indeed   I   have. 

0.  (By  Mr.  KENNEDY.)  You  have  just  given  the  Standard  Oil  Com- 
pany credit  for  the  wonderful  development  of  the  by-products  of  petroleum? 
A.  Yes.  sir.  because  I  had  to. 

Q.  Do  you  manufacture  any  of  these  by-products,  such  as  vaseline?  A. 
I  make  the  crude  stock. 

Q.  And  sell  that  to  the  Standard  Oil  Company?  A.  No,  sir,  not  en- 
tirely; I  presume  they  buy  some  of  it.  I  don't  know.  I  make  all  of  these  prod- 
ucts. I  manufacture  from  30.000  to  35,000  barrels  per  month.  I  have  one 
of  the  largest  refineries  in  existence,  outside  of  the  Standard  Oil  Company. 

Q.  Do  you  meet  any  restriction  or  any  opposition  in  the  manufacture  of 
these  by-products?  Can  you  make  them  just  as  well  as  the  Standard  Oil 
Company  and  put  them  on  the  market?  A.  If  we  were  in  the  position  that 
we  could,  we  could;  but  you  must  understand  that  the  by-products  are  manu- 
factured not  only  by  the  Standard  Oil  Company,  but  by  the  others.  For 
instance,  the  druggists  manufacture  their  own  and  they  come  to  me  and 
buy  the  stock:  *they  are  not  obliged  to  go  to  the  Cheeseborough  Company 
and  get  them.  But  the  Standard  Oil  Company  was  the  first  to  take  advantage 
of  somebody's  else  brain — not  their  own — to  establish  these  factories.  T  will 
say  to  you  that  this  product  of  petroleum  is  most  wonderful.  There  is  very 
little  commercially  known  about  it  even  to  this  day,  and  I  am  sorry  to  say 
that  even  our  colleges  have  scarcely  taken  up  the  analysis  of  petroleum.  We 
are  depending  upon  EuroDe,  *and  especially  France,  for  the  knowledge  that 
we  have  of  these  by-products. 

Q.  (Pv  T^'^r.  CTvARKE.)  1  cannot  see  why  you  cannot  produce  these  by- 
products *just  as  well  as  they  can.  A.  True,  we  can;  I  am  not  complaining 
about  that. 

*Q.  (By  Representative  LIVINGSTON.)  The  question  is.  can  you  make 
them?     A.  Yes,  sir. 

Q.  (By  Mr.  FARQUHAR.)  Don't  you  sell  the  residuum  of  petroleum?t 
A.  Yes.  sir,  certainly. 


*Black  faced  typo  Indicates  matter  omitted,  in  the  course  of  editing,  from  the 
official  report. 

tin  the  official  report  Mr.  Farquhar's  question  is  given  as  follows:  "Do  you  not 
sell  the  by-products  to  anybody?" 


33.2  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

Q.  All  refiners  do,  don't  they?  A.  Yes,  sir,  *certainly;  there  is  no  restric- 
tion on  that.     Yes,  sir;   didn't  I  make  that  claim? 

Q.  You  mean  that  the  Standard  Company  has  established  these  different 
plants  to  produce  the  different  by-products?  A.  Having  control  of  the  busi- 
ness from  1872  to  1879  they  had  to  take  care  of  that;  there  was  nobody  else 
in  the  business  that  could  take  care  of  that. 

*Q.  (By  Representative  LIVINGSTON.)  Anybody  could  sell  by-products? 
A.  Yes,   sir. 

Q.  What  is  the  chief  by-product?     Is  it  illuminatingt  oil?    A.  No. 

Q.  Well,  what  is  it?  A.  Well,  my  dear  Mr.  Commissioner,  in  the  by- 
products of  petroleum  alone  there  are  known  in  the  materia  medica  about 
200  remedies. 

Q.  You  spoke  about  the  extract  of  coal  tar  and  so  forth.  A.  And  in 
addition  to  that  they  produce  from  the  coal  tar  you  speak  of  those  beautiful 
aniline  colors. 

*Q.  (By  Mr.  FARQUHAR.)  The  finest  in  the  world?  A.  Yes,  sir;  they 
produce  a  thousand  and  one  things.  Just  as  the  time  was  when  you  couldn't 
make  a  piece  of  sheet  steel. 

Q.  How  about  lubricating  oil?  Isn't  that  a  very  large  by-product?  A. 
No.  sir;  that  would  not  be  termed  a  by-product,  because  there  is  any  quantity 
of  lubricating  oil  produced  from  the  crude  and  sold  to  the  railroads  that 
doesn't  ever  see  fire  at  all.  Some  of  the  richest  *of  West  Virginia  oil  don't 
require  any  fire. 

Q.  (By  Mr.  KENNEDY.)  How  about  paraffine  wax?  A.  That  is  one  of 
the  products  that  is  also  not  strictly  called  a  by-product.  The  by-products, 
as  a  rule,  arise  from  that  which  remains  in  the  still  and  the  top  which  rises, 
ranging  not  less  than  from  6  to  12  per  cent.  From  that  is  made  the  paraffine 
lubricating  oils,  red  oils,  yellow  oils,  the  miners'  oils  that  you  see  in  the 
mining  business.  The  petroleum  wax  comes  at  a  certain  point  in  distillation 
when  you  get  it  out;  you  take  it  out  when  wax  is  dear,  but  you  perhaps  leave 
it  in  when  wax  is  cheap,  which  ever  is  the  best  and  cheapest  to  work.  You 
so  handle  your  business  that  you  can  take  out  the  wax  whenever  you  want 
it,  or  you  can  break  it  up,  and  that  is  what  we  call  destructive  distillation; 
you  can  break  your  wax  up  and  put  it  into  illuminating  oil. 

Q.  State  if  you  can,  in  dollars,  what  your  income  is  from  the  by-products 
of  oil  or  petroleum,  compared  to  your  income  from  illuminating  oils  that  you 
sell?     A.  I  cannot  answer  that. 

Q.  You  cannot  approximate  it?  A.  No;  in  the  first  place,  because  I  do 
not  make  any  paraflfine  oil  I  cannot  answer  the  question.  I  make  wax  and 
sometimes  I  make  petrolatum,  or  what  you  know  as  cosmoline  or  petroline. 
all  the  same  thing;  it  don't  make  any  difference.  All  these  oils  are  one  and 
the  same  thing. 

Q.  I  think  the  Standard  Oil  people  have  testified  that  one-half  of  their 
business  is  composed  of  the  by-products.  Would  that  be  so  in  your  busi- 
ness? A.  No;  of  course  I  have  no  reason  to  contradict  their  statement;  but 
I  would  not  put  down  the  by-products  or  the  residuums  as  being  one-half  of 
the  business,  not  by  any  means;  because  you  see  from  what  I  have  said  you 
get  75  per  cent,  of  illuminating  oil,  and  you  will  get  10  or  12  per  cent,  of 
benzine  or  gasoline. 

Q.  (By  Mr.  FARQUHAR.)  The  way  the  testimony  was  given  on  be- 
half  of  the  Standard  Oil  Company  was  that  the  by-products  amounted  to 
nearly  half  in  value?     *A.  That  may  be  possible. 

Q.  On  account  of  the  high  prices  received  for  selling  certain  by-products 
(I  mean  which  would  yield  a  good  profit  to  the  Standard  or  yourself)  used 
by  and  manufactured  for  chemists  and  others,  instead  of  sellins'  the  resi- 
duum for  others  to  manufacture.  A.  I  cannot  confirm,  neither  can  I  deny 
that  statement. 

Q.  (By  Mr.  KENNEDY.)  Have  the  Standard  people  a  great  advantage 
over  you  in  the  development  they  have  made  from  the  by-products  of  pe- 


*Black   faced    typv   indic-itps   matter   nmittrd.   in   the  cnurse  of  editing,   from  the 
ofticial  report. 

fLubrlcatlng  oil"   in   tlie  official   report. 


LEWIS  EMERY,  JR.  "  333 

troleum?  A.  No,  because  there  is  no  development  to-day  that  any  man 
could  not  enjoy  if  he  wants  to,  *that  I  know  of. 

Q.  You  give  them  the  credit  of  developing  it?  A.  I  do  because  there 
was  nobody  else  to  bring  it  about.  I  am  trying  to  make  you  understand, 
gentlemen,  that  this  business  has  been  in  their  hands  practically  from  the 
start  up  to  the  present  time;   *and  is  to-day. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Your  understanding  is  that  the  by- 
products were  not  so  valuable,  and  not  so  much  counted  on  before  their 
advent.  Is  that  so?  A.  I  mean  to  say  they  were  not  developed;  and  they 
are  not  developed  to-day. 

Q.  (By  Vice-chairman  PHILLIPS.)  I  would  like  you  to  go  back  and 
state   briefly   how  widely  they   have  gone   into   use. 

Q.  (By  Mr.  RATCHFORD.)  It  has  been  stated,  Senator,  that  as  the  by- 
products in  the  refining  of  oil  are  comparatively  a  new  thing,  that  in  many 
cases  it  has  cost  more  to  market  them  than  was  derived  from  their  sale. 
What  is  your  experience  in  that?     A.  I  don't  think  it  is  true. 

*Q.   How  about  the  case  of  paraffine  wax?     A.   Paraffine  wax? 

Q.  Yes,  sir.  That  has  been  applied  recently  to  many  purposes,  has  it 
not?     A.  Oh,  to  everything;   even  to  making   lard. 

Q.  To  everything?     A.  Yes,  sir. 

Q.  Within  very  recent  years  it  has,  for  instance,  been  applied  to  illumi- 
nating purposes  in  the  mines;  at  least  a  market  has  been  sought  for  it  there. 
A.   In   what  way? 

Q.  To  take  the   place  of  miners'  oil.     A.   By   burning   as  a   candle? 

Q.   No,  they  burn   it  in   lamps.     A.  Then  it  must  be  a   liquid. 

Q.  No,  it  is  not  a  liquid.  A.  Well,  that  is  all  right;  I  don't  know  any- 
thing about  it;   there  are  lots  of  things  that  I  don't  know  about. 

Q.  But  if  you  will  allow  me  to  explain,  the  lamp  is  so  constructed  as  to 
be  able  to  hide  the  material  within  the  lamp.  A.  Oh,  yes,  sir;  making  it 
strictly   safe. 

Q.  A  market  has  been  sought  for  that  purpose?     A.  Yes,  sir. 

Q.  And  you  have  never  heard  it;  you  never  heard  that  the  effort  had 
been  made  to  market  it  for  that  purpose?  A.  Well,  it  is  quite  a  new  thing 
to  me,  yes,  sir;   there  are  thousands  of  other  things,  that  are   experimental. 

Q.  Now,  if  your  general  statement  be  true,  I  want  to  know  whether  in 
your  judgment  the  price  of  the  main  product  should  not  be  reduced  to  the 
people,  as  the  value  of  the  by-products  increase?  A.  Well,  now,  I  can  state 
to  you  this.    Until  these  gentlemen  rose  in  the  business  by  what  you  term 

*Mr.   RATCHFORD.     Power? 

The  WITNESS.     power,  yes,  sir;    wax   bore   no  price;    did  not  bear 

a  high  price.  I  have  sold  wax  as  low  as  a  cent  and  a  quarter  within  the  last 
three  years.  We  had  to  take  what  we  could  get  for  it;  Germany  was  full 
and  France  was  full;  the  factories  were  shut  down  and  the  people  didn't 
want  any  goods,  and  there  was  no  market  for  it.  We  make  about  4,000  to 
6,000  pounds  a  day,  which  is  two  or  three  tons  of  nice,  bleached  white  wax, 
and  it  is  worth  to-day — we  got,  I  think,  by  the  last  sale  that  was  made,  nearly 
3%  or  4  cents  a  pound.  *Perhaps  Mr.  Farquhar  knows  as  much  about  the 
price  as  I  do,  doesn't  he?  Really  I  don't  see  how  you  can  reduce  the  price 
of  that  commodity  very  much. 

Q.  The  main  use  to  which  that  wax  is  put  is  in  the  making  of  candles, 
is  it  not?  A.  No,  sir,  oh  no;  it  is  astonishing  what  it  enters  into.  In  the 
first  place  you  cannot  make  any  giant  powder  without  the  use  of  paraffine 
wax;  you  cannot  string  a  telephone  line  over  this  country  without  the  use 
of  paraflJine  wax,  or  scarcely  a  telephone  line. 

*Q.  Is  that  all?  A.  It  is  used  in  everything  *in  connection  with  elec- 
tricity, where  protection  is  required,  because  it  is  a  non-conductor.  It  enters 
into  everything  appertaining  to  electricity;  it  does  not  enter  so  largely  into 
candles,  except  in  connection  with  stearin. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Now,  will  you  recur  again  to  the 
question  as  to  how  widely  it  had  been  introduced  and  how  much  benefit  the 
Standard  Oil  Company  has  been,  in  introducing  this  product  to  the  world? 


•Black  faced  type  Indicates  matter  omitted,  In  the  course  of  editing,  from  the 
official  report. 


334  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

A.  I  want  to  .say  in  answer  to  that,  Mr.  Chairman  and  gentlemen  of  the  com- 
mission, that  every  civilized  country  and  half-civilized  country,  where  oil  is 
used,  had  its  representative  either  in  New  York,  Philadelphia,  Pittsburg,  on 
the  Creek,  in  Berlin,  Bremen,  Hamburg,  Paris,  London  and  Liverpool,  and 
we  were  working  with  these  goods.  It  was  pretty  much  all  over  the  world 
before  the  Standard  Oil  Company  was  taken  up,  and  they  retarded  the  dis- 
tribution of  this  commodity  because  I  was  willing  to  go  to  the  ends  of  the- 
earth  to  make  a  market.  Other  manufacturers  were  willing  to  make  a 
market,  but  in  the  first  history  of  this  business  the  Standard  Oil  Company 
compelled  these  men  to  step  over  the  threshold  of  their  offices  to  get  this 
commodity.  That  was  the  condition;  and  yet  you  say  they  are  benefactors; 
benefactors  of  the  people  by  reducing  the  price  of  the  commodity.  Why,  sir,. 
I  have  known  a  single  gallon  of  oil  to  sell  within  the  territory  of  the  United 
States  within  one  and  a  half  times  the  cost  of  a  barrel  of  petroleum  that  I 
sold  to  make  it;  and  you  cannot  to-day  *deliver  from  these  refineries  that 
are  independent,  to  these  railroads,  oil  that  will  come  in  competition  with 
those  people.  The  moment  that  you  enter  the  market  of  Elmira  or  Hor- 
nellsville,  or  Washington,  New  Jersey,  or  Wilkesbarre,  if  you  choose — if  you 
go  in  there  with  your  stations  and  your  offices,  down  goes  the  price,  and  this- 
contest  is  going  on  at  the  present  time.  Not  four  weeks  ago  when  I  sent 
some  oil  to  market  in  a  certain  city  the  oil  was  reduced  one  cent  a  gallon 
because  I  came  there.  What  for?  Because  it  has  been  well  said:  "This 
business  belongs  to  us;  and  you  get  out."  *l  don't  want  to  go  into  that. 
Read  this  book;  that  is  all  you  have  got  to  do;  you  just  take  up  that  volume; 
it  gives  the  history  of  everything — The  Commonwealth  vs.  The  Pennsyl- 
vania Railroad.  I  want  to  say  in  finishing  that  answer,  that  the  Standard 
Oil  Company  is  not  entitled  to  the  credit  of  being  a  benefactor  and  of  cheap- 
ening this  product;  not  at  all.  Wails  come  up  from  every  State  in  this 
Union;  they  are  coming  up  from  New  Mexico  at  the  present  time,  and  from 
Nebraska  and  Texas  and  the  other  States,  on  account  of  the  exorbitant 
prices  and  the  poor  quality  of  petroleum.  You  have  read  them — all  of  you. 
*You  have  read  to-day  how  the  attorney-general  of  Nebraska  has  complained 
to  the  courts,  and  is  having  these  people  appear.  And  look  at  the  condition 
of  things.  Laws  are  passed  by  the  several  States  of  this  Union  against  the 
encroachments  on  the  rights  of  the  people,  and  when  it  comes  to  appropriate- 
money  for  carrying  out  those  laws  there  is  some  way  in  which  they  are 
hindered,  and  they  say  to  the  farmer  (these  third  house  men,  these  lobby- 
ists) :  "If  you  have  any  appropriation  that  will  put  this  law  into  effect  all 
right;  but  you  are  going  to  increase  your  taxes  by  doing  that."  The  result 
is  that  it  is  struck  from  the  appropriation  lists — that  which  should  enable 
the  attorney-generals  of  the  several  States  to  enforce  these  laws,  and  an 
attorney-general  said  in  an  article  just  a  short  time  ago:  "I  have  to 
put  my  hand  in  iny  own  pocket  *in  Nebraska  to  pay  the  necessary  fees  to- 
bring  this  suit."  No  appropriation.  Whenever  legislation  cannot  be  stopped 
against  these  people,  they  go  to  the  next  resort  and  stop  the  appropriation; 
*so  that  when  the  law  does  go  upon  the  statute  books  it  cannot  be  carried 
out  because  of  lack  of  appropriation.  I  do  not  say  who  does  it,  but  I  say  it 
is  a  fact;  I  say  it  is  the  case. 

Vice-Chairman  PHILLIPS.  Now,  will  you  proceed  in  your  own  way 
generally  to  give  us  what  you  think  is  most  important.  Has  any  gentleman 
of  the  commission  any  question  to  ask  before  the  Senator  enters  upon  any 
other  branch  of  his  testimony? 

Q.  (By  Mr.  RATCHFORD.)  You  made  the  statement.  Senator,  that 
after  you  moved  your  company's  stations  and  tanks — to  Wilkesbarre,  for 
example — the  Standard  Oil  Company  reduced  the  price  of  oil?  A.  Oh,  yes, 
sir;  that  is  common. 

Q.  Can  you  furnish  this  commission  with  the  specific  instances  in  which 
that  has  been  done?    A.  Oh,  yes,  sir. 

*Q.  Well,  they  deny  it.  A.  Oh,  I  can  furnish  you  a  hundred  of  them 
*under  oath.     Take  it  in  Philadelphia;   I  lost  .$54,0001  in  one  station  myself 


•Black  faced  type  indicates  matter  omitted,  in  the  course  of  editing,  from  the- 
ofRcial  report. 

tin  official:  "$150,000." 


LEWIS  EMERY,  JR.  335 

by  the  lowering  of  the  price  from  time  to  time.  My  wagon  was  there  with 
my  man  upon  it,  and  their  wagon  would  go  in  ahead  of  me,  and  would  go  to 
my  customer  up  there  and  reduce  the  price.  I  would  come  along  and  he 
would  say  that  they  would  sell  him  oil  cheaper,  and  they  would  have  fellows 
hanging  behind  me  to  see  where  I  would  go. 

Q.  When  did  this  occur?  Please  give  some  dates?  A.  This  occurred 
during  the  years  of  1891,  1892,  1893  and  1894.  When  did  you  take  that 
station? 

*Mr.   LEE.     In  1896. 

The  WITNESS.  Well,  up  to  that  time,  in  1896;  it  occurred  right  along 
until  I  got  tired;  *l  could  furnish  you  instances  of  that  kind  enough  to  fill  a 
book  almost. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Has  it  occurred  since  you  departed 
from  that  station,  *or  do  you  know?  A.  Do  I  know!  Yes,  sir;  I  say  it  has 
occurred  within  the  last  six  weeks — the  reducing  of  the  price. 

Q.  (By  Vice-chairman  PHILLIPS.)  How  about  New  York  City?  Has 
there  been  any  reduction  there  that  you  know  of?  A.  I  have  known  New 
York  City  to  be  selling  oil  at  eightt  cents  a  gallon,  and  when  the  Columbia 
Oil  Company  put  on  their  wagon  it  was  down  to  five  cents  a  gallon  within 
ten  days;   *l  can  produce  that  evidence  if  necessary. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Has  that  continued  up  to  the  pres- 
ent time?  A.  I  don't  know  about  that;  I  have  been  away  for  two  years; 
*l   don't  know  what  has  happened  since   I   have  been  away. 

Q.  (By  Mr.  CLARKE.)  Do  you  ever  reduce  your  price  to  get  business? 
A.  Certainly  we  do;    we  have  to  compete. 

Q.  Do  you  have  any  competitors  besides  the  Standard  Oil  Company? 
A.  Yes,  sir. 

Q.  Do  they  follow  you,  *and  watch  you?     A.  No,  sir. 

Q.  Did  you  ever  follow  up  anybody?  A.  No;  *we  tried  to  sell  our  own 
goods. 

Q.  Do  you  ever  reduce  your  price  before  a  price  is  reduced  by  a  com- 
petitor? A.  I  presume  likely.  *We  have  a  perfect  right  to  meet  them.  I 
presume  so.     It  is  trade;    *it  is  commerce. 

Q.  I  do  not  doubt  that.  A.  We  are  not  infallible,  and  do  not  claim  to  be. 
I  am  only  discussing  the  methods  of  keeping  people  out  of  the  business. 

Q.  (By  Mr.  KENNEDY.)  The  Standard  people  say  the  cutting  is  gen- 
erally commenced  by  the  independent  people.  Could  you  give  the  commis- 
sion any  information  on  that?     A.  Mr.  Kennedy,  they  know  better. 

*Q.  They  do   know  better?     A.  Oh,  yes,  sir;    they  do   know   better. 

Q.  (By  Mr.  RATCHFORD.)  That  is  the  reason  I  asked  the  question; 
I  believe  they  made  the  broad  statement  that  they  never  cut  except  to  meet 
a  cut.  A.  Oh,  they  know  better;  they  know  better.  Whenever  they  know 
that  oil  is  on  the  way  to  a  particular  market  where  they  are,  and  you  are 
going  into  a  new  place,  they  will  cut  the  price  before  you  get  there.  I  have 
shipped  oil  to  places,  starting  unknown  to  them,  I  thought  (I  gave  you  an 
instance  this  morning  of  my  two  barrels  of  oil),  and  they  knew  what  I  was 
going  to  do  before  I  did  it  and  they  went  ahead  and  reduced  their  price  be- 
fore my  oil  got  lo  that  point. 

*Q.  (By  Mr.  CLARKE.)  I  suppose  you  will  tell  us  before  you  get 
through,  in  that  place,  how  to  prevent  this  kind  of  competition.  A.  I  don't 
know. 

Q.  Or  unfair  dealing?  A.  I  don't  know.  I  will  give  you  my  opinion  in 
the  wind  up;   it  may  be  harsh,  but  nevertheless  I  think  I  will. 

Q.  (By  Vice-Chairman  PHILLIPS.)  That  Is  a  question,  I  would  remark, 
that  we  have  always  been  putting  at  the  close  of  the  examination — if  you 
have  any  remedial  legislation  to  suggest  or  any  grievance.  A.  I  have  no 
grievance;    I  am  just  giving  facts. 

Q.  (By  Vice-Chairman  PHILLIPS.)  It  is  very  desirable  that  we  get 
through  with  the  testimony  of  Mr.   Emery  to-day,   if  it  is  possible. 

•Black  faced  type  indicates  matter  omitted,  in  the  course  of  editing,  from  the 
oflicial  report. 

tin  official,  "six." 


336  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

*Mr.  KENNEDY.  Is  it  necessary  to  get  through  with  him  to-day,  if  he 
desires  to   keep  the   stand? 

Vice-Chairman  PHILLIPS.  No,  the  only  point  was  that  we  had  dis- 
cussed about  having  a  business  meeting  to-morrow,  but  we  can  hear  him 
for  a  time  in  the  morning  before  we  go  into  that  business,  I  presume. 

Mr.  RATCHFORD.  The  witness  has  a  right  to  his  own  time  while  he  is 
on  the  witness  stand. 

The  WITNESS.  I  don't  want  to  bore  you,  because  I  desire  to  make  this 
thing  plain.  I  am  not  here  to  treat  anybody  harshly,  but  simply  to  differ 
with  them   as  to   the   method   of  doing   business. 

Vice-chairman  PHILLIPS.  We  wish  the  commission  to  have  the  fullest 
information  on  any  and  every  question,  and  Senator  Emery  can  take  his 
own  time,  and  after  you  are  through  with  any  point,  we  would  be  glad  for 
any  member  of  the  commission  to  ask  you  any  question  that  is  possible. 
Mr.   Emery  will    proceed,   if  there   are   no  further  questions. 

The  WITNESS.  I  will  read  a  little  here,  which  may  bring  some  ques- 
tions to  the  minds  of  the  commission — -it  is  on  the  17th  page.f    (Reading) : 

"Soon  after,  it  induced  Scott,  of  the  Pennsylvania  Railroad,  to  surrender 
the  oil  traffic  in  exchange  for  western  freights,  under  a  general  apportion- 
ment of  freights  between  the  trunk  lines.  By  this  means  was  diverted  a 
greater  part  of  the  refining  trade  from  Pittsburg  and  from  the  oil  regions  of 
Pennsylvania  to  Cleveland,  Ohio.  It  then  bought  a  controlling  interest  in 
the  United  Pipe  Lines.  The  United  Pipe  Lines  Association  moved  forward 
steadily." 

That  answers  Major  Farquhar's  question.  At  this  time  they  came  in 
and  purchased  from  the  Vandergrift  people,  who  formed  the  United  Pipe 
Lines;  they  purchased  from  them,  as  you  will  see  by  this  history,  a  portion 
of  their  line. 

"It  then  bought  a  controlling  interest  in  the  United  Pipe  Lines.  The 
United  Pipe  Lines  Association  moved  forward  steadily.  It  bought  or  com- 
bined the  Oil  City,  Antwerp,  Union,  Karns,  Grant,  Conduit,  Relief,  Pennsyl- 
vania, Clarion  and  McKean  divisions  of  the  American  Transfer,  Prentice, 
Clean,  Union  Oil  Companies  at  Clarendon,  McCalmont  at  Cherry  Grove  and 
smaller  lines  covering  the  oil  region  from  Allegheny  to  Butler." 

*They  took   up  everything. 

"Then  followed  at  different  intervals  an  association  with  the  other  pipe 
lines,  the  purchase  of  the  Columbia  Conduit  Company,  of  Pittsburg;  the  pur- 
chase of  all  the  Titusville  independent  refiners,  who  were  forced  to  sell;  the 
Titusville  Daily  Herald,  Bradford  Daily  Era  and  the  Oil  City  Derrick; S  which 
were  subsidized  and  then  purchased;  the  purchase  of  the  Union  Oil  Company's 
pipe  lines,  in  the  Stoneham  field;  *the  securing  of  the  control  of  the  Tide- 
water Pipe   Line." 

I  may  say  right  here  that  the  Standard  Oil  Company  is  not  entitled  to 
credit  for  building  these  lines;  the  leading  lines  were  built  before  they  came 
in;  they  were  simply  absorbers,  *or  people  who  took  up  that  which  some- 
body else  had  built  or  made.  The  securing  of  the  control  of  the  Tidewater 
Pipe  Line  and  of  its  dependent  refineries,  and  of  its  associated  Western  Trans- 
portation Line  and  the  purchase  of  the  Pittsburg  Pipe  Line  and  its  independ- 
ent refineries 

Q.  (By  Vice-chairman  PHILLIPS.)  *lt  was  not  built  by  the  Standard 
Oil  Company.  It  was  built  to  the  seaboard.  A.  *No,  sir;  it  was  not  built  for 
the  Standard  Oil  Company.  It  has  the  credit  of  building  the  first  seaboard 
line  which  was  outside  of  the  Standard  Oil  Company.  *They  bought  up 
everything.    Now,  following  that  history,  turn  to  page  57. 

"It  was  some  time  during  the  progress  of  these  purchases  the  reorgani- 
zation on  the  trust  basis  formerly  referred  to  was  effected.  The  sum  of  all 
these  purchases  amounted  to  millions  of  dollars.     All,  or  nearly  all,  of  them 


•Black  faced  type  indicates  matter  omitted,  in  the  course  of  editing,  from  the 
official  report. 

tThe  witness  referred  to  his  pamphlet. 

JMr.  Boyle,  in  his  testimony  given  September  6,  1S99,  showed  that  he  was  the 
proprietor  of  the  Oil  City  Derrick  and  that  since  he  had  been  connected  with  it  the 
Standard  Oil  Company  had  never  owned  a  share  of  the  stock  and  he  did  not  believe  it 
had  ever  owned  any  interest  in  it. 


LEWIS  EMERY,  JR.  337 

Avere  made  at  prices  grossly  in  excess  of  the  reasonable  value  of  the  material 
and  business  sold,  the  chief  consideration  being  the  absorption  and  accumu- 
lation of  power  which  the  monopoly  was  thereby  acquiring.  From  time  to 
time  new  persons  were  taken  into  this  association.  As  Mr.  Dodd,  solicitor 
ior  the  Standard  Oil  Trust,  said  in  his  argument  in  1888,  or  rather  in  the  his- 
tory of  the  Standard  Oil  Trust:  'Whenever  and  wherever  a  man  showed  him- 
.self  skillful  and  useful  in  any  branch  of  the  business  he  was  sought  after.' 
it  has  paid  salaries,  fees,  and  bonuses  with  imperial  prodigality;  some  for 
{services,  some  for  servitude,  some  for  keeping  out  of  competition  and  some 
for  keeping  still.  Its  methods  of  business  are  in  fine  harmony  with  its  growth. 
It  has  divided  the  whole  United  States  into  'oil  consuming  districts.'  It  goes 
to  a  distributing  railroad  company  in  the  West  and  says:  'If  you  will  receive 
and  carry  oil  exclusively  for  me,  I  will  furnish  your  whole  distributing  area, 
but  if  you  receive  and  carry  oil  for  any  other  refiner  or  shipper,  I  shall  have 
to  create  in  your  district  such  a  destructive  competition  as  will  ruin  your 
rates.'  " 

That  has  been  done  and  can  be  proven  by  a  dozen  witnesses. 

"Where  there  are  competing  roads,  it  gets  their  managers  together  and 
shows  them  how  it  can  supply  them  with  all  the  oil  they  can  distribute,  so 
apportioned  between  them  as  to  maintain  to  each  rates  on  a  non-competitive 
basis.  It  never  breaks  a  promise  when  that  promise  conveys  a  threat.  If, 
therefore,  it  fails  to  make  such  exclusive  arrangement  in  any  district,  and  an 
independent  refiner  is  admitted  therein  as  a  shipper  on  equal  terms,  it  forth- 
with ignores  all  freight  rates  and  all  values  and  puts  the  price  of  oil  to  the 
(•onsumer  below  the  original  cost  and  keeps  it  there  until  it  drives  the  inde- 
pendent refiner  out  of  the  district." 

Q.  (By  Mr.  KENNEDY.)  Would  it  interfere  with  you  to  interrupt  you 
right  there?    A.  No,  sir. 

Q.  When  Mr.  Archbold  was  on  the  stand  the  other  day.  he  submitted  to 
the  commission  letters  from  a  large  number  of  the  railroad  managers  of  the 
United  States  stating  that  they  gave  no  favors  to  the  Standard  Oil  Company 
and  that  the  Standard  Oil  Company  asked  for  none.  Now,  that  is  the  evidence 
that  they  put  in.  and  you  make  this  statement  here.  Can  you  give  the  com- 
mission any  evidence,  aside  from  your  word,  to  prove  that  that  is  done?  A.  I 
am  prepared  to  answer  it  in  full  with  documents  to  prove  my  assertion. 

*Q.    (By  Mr.  FARQUHAR.)     On  what  date;  since  1887? 

Q.  (By  Mr.  KENNEDY.)  These  letters  refer  to  the  period  since  the  pass- 
age of  the  interstate  commerce  law?  A.  *l  don't  care  anything  about  that; 
rebates  have  been  paid  right  straight  along. 

Q.  Since  the  passage  of  the  interstate  commerce  law?  A.  Yes,  sir:  and 
I  will  prove  it  to  you  that  they  were  paid  up  to  last  January  *to  the  Standard 
Oil   Company. 

Q.   Let  us  have  it  then?    A.   I  say  rebates  are  paid. 

Q.  Their  testimony  relates  to  their  own  business?  A.  Well,  they  are  the 
only  shippers  of  oil.  These  rebates  are  not  upon  oil  but  upon  everything  else. 
*0f  course,  if  you  want  to  take  that  question  up  all  right,  but  it  breaks  in 
right  here. 

Q.  (By  Vice-Chairman  PHILLIPS.)  It  is  a  very  important  question.  A. 
Well,  I  have  got  to  get  in  part  of  my  testimony  now,  and  I  will  take  that  up 
later. 

Mr.  KENNEDY.     Well,  I  withdraw  it  for  the  present. 

Vice-Chairman  PHILLIPS.  Then,  if  Mr.  Kennedy  withdraws  the  ques- 
tion you  can  proceed  in  your  own  way. 

The  WITNESS.  *Well,  I  have  got  all  these  things  here.  I  have  the  con- 
tracts and  evidence.     (Reading.) 

"It  then  dictates  its  terms  to  the  railroad.  Where  it  thus  secures  exclu- 
sion it  establishes  and  maintains  a  price  to  the  consumer  without  the  least 
regard  for  general  market  values"  (that  I  can  prove)  "as  high  as  the  condi- 
tions will  warrant:  and  where  such  exclusion  is  not  established,  as  low  as 
will  be  necessary  to  exterminate  the  competitor.  There  are  exclusive  dis- 
tricts where  refined  oil  is  sold  at  more  than  $40  per  barrel,  and  there  are 
contested  districts  where  it  has  been  sold  as  low  as  $1.25  per  barrel.     As  all 


»Black  faced  type  indicates  matter  omitted,  in  the  course  of  editing,  from  the 
official  report. 

22 


338  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

the  export  oil  must  be  sold  in  Europe  in  competition  with  the  Russian  pro- 
duction, the  profits  are  normal.  The  revenues  of  the  Standard  are,  therefore, 
chiefly  made  between  the  American  producer  and  the  American  consumer. 
*lf  a  business  man  were  disposed  to  enter  into  the  refining  of  oil,  if  Ine  were 
equifped  with  all  the  skill  of  the  trade,  possessed  of  a  capital  of  a  million 
dollais  to  invest  in  his  enterprise  and  located  at  the  most  favorable  point  for 
manufacture  and  shipment,  the  dullest  man  in  the  oil  region  would  be  able 
to  forecast  his  unhappy  fate." 

Q.  (By  Mr.  KENNEDY.)  Right  here  I  should  like  to  ask  Mr.  Emery  a 
question.  I  think  it  was  given  in  evidence  by  some  gentleman  representing 
jour  side  of  this  question  that  your  business  was  not  profitable  until  you 
secured  the  European  field — the  German  and  English  fields — and  that  seems 
to  be  a  little  at  variance  with  your  statement.  A.  It  is  the  only  field  that  we 
have  never  been  shut  out  of;  *they  cannot  lock  up  the  Atlantic  oce'an.  That 
is  a  mistake,  whoever  gave  that  testimony;  they  cannot  lock  up  the  Atlantic 
ocean  as  they  can  the  waterways  of  this  country. 

Q.  Could  you  refine  oil  here  without  selling  the  export  oil  that  is  not  used 
here?  A.  Yes,  sir;  I  have  shown  to  you  the  quality  of  oil  that  is  used  in 
Europe. 

Q.  Do  you  then  say  the  Standard  Oil  Company  makes  its  profits  chiefly 
from  the  Amei'ican  people?  If  you  have  a  profit  and  you  sell  in  competition 
with  the  Standard  Oil  Company,  they  must  have  a  profit  in  Europe,  too.  A. 
Ceriainly,  they  have.  I  have  said,  since  the  German  government  says  there 
niusi  be  no  unfair  trading,  there  has  been  no  particular  cutting  in  prices.  It 
is  sold  at  a  very  low  margin. 

Q.  (By  Vice-chairman  PHILLIPS.)  But  you  state  that  they  are  in  the 
position  to  make  much  more  out  of  the  American  trade  than  the  independents 
are,  *on  account  of  the  rebates,  etc.?  A.  *l  know  they  are.  I  say 
it  is  impossible  for  me  to  ship  oil  even  on  the  Mississippi  river, 
on  even  terms  with  the  Standard  Oil  Company.  I  cannot  go  to 
the  coasts  at  all,  and  there  are  a  hundred  and  one  questions  that  I  can 
call  to  prove  my  assertion.  *lf  you  keep  me  here,  I  can  stay  with  you  a  month 
ard  talk  upon  this  question.  I  mean  to  say  that  I  cannot  even  go  to  Elmira 
and  sell  in  competition  with  the  Standard  Oil  Company,  a  distance  of  143 
miles  Irom  my  factory,  and  I  do  not  sell  there,  nor  do  I  sell  to  the  nearest 
towns  even. 

Q.  (By  Vice-chairman  PHILLIPS.)  Why  do  you  not?  A.  Because  that 
is  where  they  cut  down  the  price. 

Q.  (By  Mr.  FARQUHAR.)  Competition  starts  in?  A.  Yes.  sir;  compe- 
tition sets  in  and  prices  are  cut  down. 

*Q.  (By  Mr.  KENNEDY.)  Can  you  show  how?  A.  Well,  it  goes  on  just 
as  it  did  in  Philadelphia,  away  below  the  cost  of  the  *production  of  the  com- 
modity. There  I  lost  $54,000  and  sold  out  to  the  Pure  Oil  Company;  it  is  there 
yet — all  my  horses  and  wagons  and  everything  else.  It  has  all  gone;  I 
couldn't  do  business  and  that  is  all  there  is  about  it;  70  per  cent,  of  my  prod- 
uct goes  to  Europe  now.  I  make,  very  largely,  lubricating  oil  of  all  kinds. 
The  Bradford  oil,  as  you  know,  is  an  oil  that  does  not  yield  very  heavily  in 
v.'ater  whites;  therefore  I  am  pressed  into  the  position  that  I  have  to  send 
my  commodities  to  Europe;  and  70  per  cent,  of  this  production  of  mine  goes 
to  Europe. 

*Q.  When  you  get  out  of  the  field  of  competition,  what  becomes  of  the 
price?     A.    (The  witness  indicated  by  pointing  upwards  with  his  hands.) 

Q.  (By  Mr.  FARQUHAR.)  Now,  coming  into  a  field  in  competition  do 
you  start  below  the  Standard  rate?    A.  Do  we? 

Q.  Or  attempt  to  sell  under  the  Standard  rates?  A.  No,  sir;  we  attempt 
to  maintain  rates. 

Q.  The  cut  sometimes  comes  from  the  Standard  and  sometimes  on  your 
part?  A.  Certainly  it  does,  because  we  go  into  the  market  and  the  astute 
merchant  will  say;  "I  am  not  going  to  buy  of  you;  I  am  going  to  buy  of  the 
Standard  Oil  Company."  What  do  you  do?  You  reduce  the  price,  but  we 
don't  go  into  the  market.     We  only  handle,  out  of  this  enormous  production 


*B!ack    faced    t>pe   indicates   matter   omilliu,   in   tl-ie  course  of  editing,   from   tiie 
official  report. 


LEWIS  EMERY,  JR.  339 

of  oil,  about  3.000,000  barrels  a  year,  all  told;  that  is  all.  Out  of  23,000,000 
barrels  produced,  there  is  only  about  3.000,000  barrels  that  is  not  handled  by 
the  Standard  Oil  Company.    *We  are  not  even  a  fly  on  the  griddle. 

Q.  (By  Mr.  A.  L.  HARRIS.)  If  the  competition  does  not  exceed  10  per 
cent,  of  the  trade  at  any  point,  do  they  pay  any  attention  to  you?  A.  Oh.  yes, 
sir;  if  we  go  in  with  a  carload  of  oil  it  is  quite  sufficient  to  create  a  flurry. 

Q.  (By  Mr.  FARQUHAR.)  Now,  Senator,  oil  for  oil,  and  quality  for  qual- 
ity, does  the  European  consumer  get  his  oil  cheaper  than  the  American  con- 
sumer?   A.  Yes,  sir. 

Q.  How  much  cheaper?  A.  I  cannot  give  you  the  percentage.  I  can  say 
to  you  this:  In  many  instances,  I  should  say  that  oil  of  this  quality  is  25  per 
cent,  cheaper  in  Europe  to-day  than  the  same  quality  sold  on  the  average  in 
this  country. 

Q.  Now.  does  that  arise  from  the  competition  of  the  Russian  crude  with 
the  American  product?  A.  It  arises  from  the  fact  that  they  are  in  these  mar- 
kets as  competitors,  and  the  Russians  are  there  as  competitors  and  the  com- 
petition unquestionably  brings  that  product  down. 

Q.  The  independents  and  the  Standard  Oil  Company  sell  at  about  the 
same  rates  in  Europe?    A.  Yes,  sir. 

Q.  And  you  have  got  to  meet  the  Russian  competition?  *A.  No,  sir;  you 
are  not  obliged  to  meet  it;  the  Russian  people  sell  very  little  oil  compared 
wi;h  the  Americans:  they  would  rather  have  the  American  at  a  half  a  cent 
advance  than  the  Russian.  It  goes  farther  and  there  is  no  smell  about  it; 
it  is  a  first-rate  oil,  *but  they  are  not  in  it  as  far  as  that  is  concerned.  Bur 
ihey  cannot  get  in.  and  *^he  distribution  of  the  Russian  oil  is  very  smaii.  indeed 
— very  small.  *!  don't  know  how  it  has  grown  in  the  past  few  years;  I  kept 
track  of  the  statistics  before  that  time.  You  must  excuse  me  for  not  being 
posted  on  these  things,  because  for  the  last  ten  days  I  have  been  in  bed  with 
gastritis  and  have  not  been  able  to  look  them  up  as  I  wisied. 

Q.  (By  Mr.  KENNEDY.)  There  is  one  point  I  want  to  knovv'  about.  I 
don"t  know  whether  it  was  Senator  Lee  or  Mr.  Lockwood  who  testified  that 
this  business  was  not  profitable  until  you  secured  the  German  market.  Now, 
you  testify  that  the  oil  is  cheaper  to  the  Germans  than  it  is  to  the  people  in 
this  country  by  25  per  cent?  A.  I  do  say  that;  it  has  been  a  good  deal  more 
than  that  at  times. 

Q.  (By  Mr.  A.  L.  HARRIS.)  Now,  following  that  up.  Senator,  why  is  that? 
Is  it  because  the  German  government  does  not  permit  cut  rates  to  the  extent 
of  destruction?  A.  No.  I  don't  know  that  that  is  it;  but,  understand  me,  until 
we  got  firmly  established  in  the  business  over  in  Europe,  there  was  a  deter- 
mination that  we  shouldn't  go  there,  and  they  commenced  the  same  tactics 
in  that  country  that  they  did  in  this:  selling  oil,  for  instance,  on  the  Rhine, 
at  one  cent  or  two  cents,  or  half  a  cent  a  gallon  cheaper  than  they  did  at  the 
next  point  where  we  were  not  present.  In  other  words,  in  the  adjoining  dis- 
trict it  would  be  higher  than  in  the  district  where  we  were — they  would  not 
cut  the  prices  where  we  were  not.  Then,  again,  where  we  were  we  were 
obliged  to  cut  the  price  perhaps  below  its  cost,  on  the  Rhine,  and  they  levied 
a  tribute  on  the  people  of  the  Elbe  to  make  up  what  they  might  have  lost 
there.  When  I  sold  oil  in  Philadelphia  as  low  as  three  cents  a  gallon,  it  was 
selling  at  eight  cents  in  New  York,  a  distance  of  a  hundred  miles  away. 

*Q.  (By  Mr.  FARQUHAR.)  Wasn't  it  a  good  business  proposition  on  the 
part  of  the  Standard  Oil  Company,  if  they  had  to  sell  it  for  25  per  cent,  less 
than  they  were  selling  it  in  the  American  market  to  try  to  get  the  advantage, 
back  at  places  over  in  Germany  where  there  was  no  competition?  Wouldn't 
you  have  done  the  same  thing?  A.  I  don't  understand  that  question,  Mr.  Far- 
quhar. 

Q.  Wasn't  it  good  business  policy  on  the  part  of  the  Standard  Oil  Com- 
pany, where  they  had  no  competition  in  Germany,  and  they  knew  that  they 
could  sell  at  25  per  cent,  more  than  they  could  in  the  American  market,  to 
hold  these  places  where  there  was  no  competition  and  keep  up  the  prices? 
Isn't  that  good  in  any  business?  A.  That  was  not  the  case  until  that  com- 
petition came  in. 


*Black   faced   type   indicates   matter  omitted,  in  the  course  of  editing-,   from  the 
official  report. 


340  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

Q.  But  where  you  had  no  competition,  would  you,  if  you  could  get  25  per 
cent,  more,  try  to  hold  that  market  and  take  it  at  the  better  rate  than  where 
you  had  competition?  A.  Certainly,  I  would  hold  the  price  as  long  as  I  could, 
certainly;  but  I  would  not  put  it  up  unreasonably.  Now,  I  want  to  answer  you 
this:  If  you  had  competition  in  this  country,  you  would  cut  the  oil,  at  least — 
well,  I  might  say,  take  it  on  the  average,  and  you  would  cut  it  50  per  cent, 
cheaper,  *would  I  be  wrong  in  that  statement,  oil  men,  about  oil? 

Mr.  George  RICE.     No. 

The  WITNESS.  (Resuming.)  In  the  State  of  California,  where  I  have 
bought  oil  as  I  started  to  say  to  you  before,  I  have  gone  to  the  markets  and 
paid  20  cents  a  gallon,  *in  cans,  and  the  same  oil  I  was  selling  out  of  my  fac- 
tory and  glad  to  get  four  and  one-half  cents;  glad  to  get  four  and  one-half 
cents. 

Q.  (By  Mr.  CLARKE.)  Put  up  in  the  same  way?  A.  Put  up  in  the  same 
way.  I  have  gone  to  Valley  Springs  in  California  and  bought  gasoline  ihat 
was  marked  on  the  head  "Double  deodorized  gasoline."  and  paid  25  cei.':-  a 
gallon  for  it,  and  when  I  paid  that  I  was  selling  those  goods,  hundreds  of  bar- 
rels of  them,  at  my  factory,  at  four  cents  a  gallon. 

*Q.  (By  Mr.  FARQUHAR.)  And  what  was  the  distribution?  A.  I  don't 
know.  The  charge  on  oil  to-day,  from  the  Atlantic  to  the  Pacific  is  75  cents  a 
hundred.  Who  knows  anything  about  what  the  Standard  Oil  Company  pays? 
I  do  not.    They  may  pay  $L25  or  50  cents  or  25  cents. 

Q.  Do  they  pay  the  same  as  the  independent  freight  would  pay?  A.  I 
don't  know,  sir.  Suppose  the  goods  were  worth  four  or  five  cents.  That 
would  be  five  and  three-quarters,  including  the  fi'eight,  if  freight  is  75  cents. 
*l  have  had  occasion  to  inquire  into  that  within  the  last  few  days,  the 
freight,  and  I  say  that  goods  could  be  laid  down  there,  for  instance,  at  a 
cost  of  five  and  three-quarter  cents,  call  it,  if  you  choose,  six  and  one-half 
cents,  with  the  probable  leakage,  and  it  should  be  sold  on  that  coast  to-day, 
and  make  a  good,  round  profit — it  should  be  sold  at  10  or  12  cents  a  gallon. 

*Q.    (By   Mr.  CLARKE.)      Retail?     A.   If  you   choose. 

Q.  (By  Mr.  FARQUHAR.)  If  the  goods  were  sold  at  retail?  A.  Well, 
if  the  goods  were  sold  at  retail,  that  would  be  the  outside  figure. t 

Q.  (By  Vice-Chairman  PHILLIPS.)  How  much  did  you  pay  for  it?  A. 
At  retail  I  paid  20  cents. 

Q.  (By  Mr.  FARQUHAR.)  Do  you  know  what  profit  the  retailer  got  out 
of  that — independent  or  Standard?  A.  No,  I  don't  know  what  the  price  was 
to  him. 

*Q.  These  are  special  cases,  though?  A.  But  I  do  know  that  I  paid  25  cents 
for  gasoline,  double  deodorized,  and  when  I  opened  it,  it  was  made  from 
Lima  benzine,  *and  stunk  like  a  dog  coming  out  of  a  tanyard.  Now.  double 
deodorized  gasoline  is  like  ether,  and  you  can  take  it  and  smell  of  it.  and 
it  will  make  you  drunk  in  ten  minutes;  but  one  snuff  of  that  would  knock 
you  down. 

Q.  You  cannot  tell  us  what  the  middle  man  makes  on  this?  A.  The 
quality  of  the  goods  for  America  is  not  like  it  is  in  Germany,  because  the 
inspector  of  this  oil  does  not  do  his  duty.  *!  am  not  going  to  go  into  this. 
While  I  might  be  very  radical  upon  these  questions,  Mr.  Chairman,  and 
gentlemen  of  the  commission,  because  I  know  the  inside  of  it — the  whole  of 
it — I   will   not  go   into   it.      I  might  make  charges  here    that    1    could    prove, 

*Black  faced  type  indicates  matter  omitttfl,  in  the  course  of  editing-,  from  tlie 
official  report. 

ilt  will  be  seen  that  Mr.  Emery,  according  to  the  stenographic  report,  referred 
to  the  retail  price  of  a  single  can  of  oil,  wlK-rca.s,  by  the  testimony  as  recorded  in 
the  official  report  (p.  6.3,T),  he  is  made  to  appear  as  giving  the  price  per  case,  or  what 
might  be  reg.arded  as  a  wholesale  price,  or  at  least  the  price  of  a  considerable 
ouartity  of  oil.  Mr.  Clarke's  question  and  its  answer  do  not  appear  in  the  official 
report,    and    Mr.    Farquhar's    question    and  its  answer  are  given  as  follows: 

"Q.   (By  Mr.  FARQUHAR.)    By  tlw  case  or  ;it  retail'' 

"A.  Tiy  the  case.     I  have  given  the  outside  limit." 

According  to  Mr.  Emery's  statement  of  the  price  of  oil  in  California  and  the 
freight  he  would  have  to  pay  to  place  his  own  product  there,  there  appears  to  be  no 
reason  why  he  should  not  h.ave  reaped  a  handsome    profit    by    enterirg    that    market. 


LEWIS  EMERY,  JR.  341 

that  would  make  your  hair  stand,  but  I  am  not  going  to  do  it.  It  is  not  within 
your  province,  I  suppose,  to  know  anything  of  that  kind;  it  is  not  testimony. 

*Q.  (By  Vice-chairman  PHILLIPS.)  We  want  to  know  anything  in  re- 
gard  to  discrimination.     A.  Well,  that   is  what  it   is   not. 

Q.  (By  Mr.  A.  L.  HARRIS.)  Do  I  understand  then  that  it  is  the  ques- 
tion of  transportation  that  prevents  you  from  competing  in  this  country 
with  the  Standard  as  you  compete  in  foreign  countries?  A.  That  is  just 
exactly  it,  and  that  is  all  there  is  to  it.  If  this  government  can  know,  and 
will  know,  what  the  manifest  is  upon  a  railroad,  and  its  charge  attached 
thereto  for  freight,  and  will  see  that  there  is  fair  competition  in  the  market — 
*l  cannot  buck  against  five  hundred  thousand  million,  but  if  it  is  fair  trading 
I  ask  no  odds  of  the  Standard  Oil  Company.  I  ask  no  odds  of  them.  I  can 
manufacture  goods  just  as  cheaply  as  they  can,  in  spite  of  all  their  asser- 
tions— just  as  cheaply  as  they  can. 

Q.  (By  Vice-Chairman  PHILLIPS.)  And  as  good?  A.  And  as  good 
as  they  can.  They  have  got  nothing  better  in  any  of  their  works  than  I  have 
got  in  mine,  *or  any  of  the  other  works  of  the  independent  refiners;  except 
it  be.  perhaps,  all  their  fine  laboratories  for  manufacturing  residuums,  or 
the  by-products,  which  we  raise  no  question  about.  The  whole  question, 
Mr.  President  and  gentlemen  of  the  commission,  is  the  question  of  transpor- 
tation. If  you  will  force  the  railroads  of  this  country  to  obey  the  law,  you 
will  have  cured  this  evil. 

Q.  (By  Mr.  FARQUHAR.)  A  simple  question  there:  That  brings  the 
commission  face  to  face  with  this  matter.  You  make  assertions  here,  and  so 
have  others,  as  to  the  rebates.  Here  the  Standard  Oil  Company  comes  for- 
ward with  the  letters  of  20  great  railroad  managers,  and  we  can  neither 
verify  your  statement  nor  discredit  the  statements  of  these  managers.  A. 
Well,  I  will  put  you  so  you  have  got  to  say  one  way  or  the  other. 

Q.  That  is  why  I  put  this  thing  plainly  to  you,  because  the  commission 
has  both  of  these  stories,  and  we  do  not  know  exactly  which  way  to  turn. 
A.  Mr.  Chairman  and  gentlemen,  my  secretary  has  not  brought  up  the  im- 
portant documents  that  I  ought  to  have  here  in  this  case.  But  I  trust  that 
you  will  rely  implicitly  on  my  statements  relative  to  what  I  am  going  to 
say,  because  this  case  that  I  am  going  to  bring  before  this  committee,  on 
the  question  of  discrimination,  I  have  the  documents  for.  Here  is  an  ab- 
stract from  the  records  of  McKean  county,  from  the  appellants'  docket  No. 
130,  December  term,  18S7.  It  was  the  case  of  A.  H.  Logan,  Lewis  Emery, 
Jr.,  and  W.  R.  Weaver,  partners  under  the  firm  name  of  Logan,  Emery  & 
Weaver,  vs.  the  Pennsylvania  Railroad  Company. 

Q.  (By  Mr.  CLARKE.)  Let  me  inquire,  Mr.  Chairman,  if  that  case  oc- 
curred from  alleged  discrimination  before  the  passage  of  the  interstate  com- 
erce  law?     A.  Yes,  sir,  it  did. 

*Q.   Before?     A.  Yes,  sir. 

Q.  Well,  we  want  something  since.  A.  And  leads  up  to  the  adoption  of 
the  law,  and  a  suit  was  brought  for  rebates  or  differences  in  freight  up  to 
1888.  In  the  settlement  of  the  case  it  was  agreed  between  the  Pennsylvania 
Railroad  and  ourselves  that  no  further  suits  would  be  brought  because  they 
paid  a  certain  sum  of  money  to  me  to  settle  the  case.  The  rebates  existed 
for  1887,  and  I  have  the  testimony  to  produce,  if  necessary,  to  that  effect. 

*Q.  (By  Mr.  CLARKE.)  That  is  what  we  want.  A.  But  I  will  produce 
the  testimony  here  and  prove  it  in  the  same  case,  showing  that  rebates  were 
paid  up  to   1887,   in  the  same  suit. 

Q.  What  time  of  the  year  was  the  law  passed?  A.  In  1887  the  inter- 
state commerce  act  wenc  into  effect. 

Q.  (By  Mr.  FARQUHAR.)  There  has  never  been  a  question  before  this 
commission  about  rebates  and  discriminations  in  freights  before  the  passage 
of  the  interstate  commerce  law.  *There  is  no  question  of  it  at  all.  The 
Interstate  Commerce  Commission  had  formulated  or  extended  their  own 
jurisdiction  for  possibly  two  years,  until  about  the  spring  of  1889.  It  has 
been  a  very  difficult  thing,  I  know,  with  them  to  make  up  many  of  the  cases 
of  rebate  themselves;  but,  as  I  stated  before,  these  railroad  men  have  written 


*Black  faced  type  indicates  matter  omitted,  in  the  course  of  editing,  from  the 
oflicial  report. 


342  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

letters  to  this  commission  of  conditions  after  1889,  or  rather  they  were 
produced  by  the  Standard  Oil  Company.  You  must  concede,  as  all  of  us  will 
concede  here,  that  out  of  the  dozen  or  sixteen  men  probably  half  of  them 
have  arisen  from  quite  obscure  places  on  these  roads  by  their  own  energy 
and  their  own  honesty;  men  of  as  fine  character  as  we  have  in  this  country, 
or  as  fair  as  any  person's  character  could  be,  so  that  they  stand  with  the 
commission,  just  where  they  are.  We  concede,  or  acknowledge,  that  the 
wildcat  system  of  making  freights  existed  up  to  1889,  two  years  succeeding 
the  passage  of  the  act.  There  are  plenty  of  cases  on  file  now  showing  that 
rebates  have  been  issued?  A.  Yes,  sir;  and  there  is  a  case  in  which  I  am 
interested  at  the  present  time  before  the  Interstate  Commerce  Commission, 
in  which  we  have  proven  rebates  to  1893. 

*Q.  Well,  that  is  the  kind  of  case  we  want  now  to  make  it  a  matter  of 
record,     is  that  evidence?    That  is  just  where  we  want  it.     A.  Yes,  sir. 

iVIr.  A.  L.  HARRIS.  Don't  understand  that  all  the  commission  concede 
the  statement  that  you  made. 

Mr.  FARQUHAR.  I  made  no  statement  on  behalf  of  the  commission, 
but  stated  the  evidence  that  had   been   brought. 

Mr.  A.  L  HARRIS.  In  regard  to  the  standing  of  the  railroad  men,  don't 
commit  all  the  commission. 

Mr.  FARQUHAR.  I  merely  said  it  was  generally  well  known,  the  his- 
tory of  most  of  these  men.  Mr.  Knott,  of  the  Louisville  &  Nashville — we 
know  where  they  came  from, 

Vice-Chairman  PHILLIPS.  It  is  not  competent  for  a  commissioner  to 
make  that  kind  of  statement. 

Mr.  FARQUHAR.     That  is  the  view  that  I  take. 

Vice-Chairman  PHILLIPS.  That  is  the  view  that  is  generally  taken  of 
all  of  these  railroad  people,  that  they  are  of  the  highest  character  and 
standing. 

Mr.  FARQUHAR.  There  is  not  any  need  of  showing  this  fact;  there  is 
the  need  of  saying  here,  however,  that  until  these  men  stand  fairly  repudiated 
by  the  testimony,  their  statement  shall  stand.  It  is  testimony  against  testi- 
mony. 

Mr.  A.  L.  HARRIS.  As  I  understand,  it  is  simply  a  statement  against 
testimony — a  simple  writing  of  the  railroad  officials  denying  the  charges  that 
have  been  made.  Now,  of  course,  it  goes  for  what  it  is  worth.  That  is  all 
I   have  to  say. 

Mr.  FARQUHAR.     That  is  right. 

Mr.  KENNEDY.  The  officers  of  the  Standard  Oil  Company  swore  that 
they  had  neither  received  nor  asked  rebates  since  the  passage  of  the  inter- 
state commerce  law,  and  then  in  another  part  of  their  testimony  they  bring 
these  letters  from  the  agents  of  the  railroad  companies. 

Mr.  A.  L.  HARRIS.  That  may  be  true  in  the  manner  of  giving  rebates, 
but  we  know  that  the  ways  that  are  dark  and  the  tricks  that  are  vain  are 
sometimes  practiced  by  the  great  high   officials. 

The  WITNESS.  I  desire  to  present  to  this  commission  a  document  filed 
with  the  court  in  McKean  county  February  17,  1890;  and  also  an  order  from 
the  court,  a  rule  to  take  testimony.  I  would  be  glad  to  have  you  examine 
this  document,  showing  that  it  is  filed  with  the  court,  because  there  is  very 
important  testimony  in  it  appertaining  to  the  transportation  of  oil,  and  that 
you  may  be  able  to  identify  it  in  the  future. 

*Now,  I  desire  to  say  in  answer  to  Mr.  Commissioner  Kennedy  and  Mr. 
Commissioner  Farquhar  and  others,  as  well  as  my  friend,  the  chairman,  that 
in  tills  suit  of  which  I  have  a  transcript  here  from  the  dockets,  which  is 
subscribed  to  by  the  county  clerk  or  the  prothonotary,  George  W.  Mitchell, 
we  called  to  the  stand  George  B.  Roberts,  president  of  the  Pennsylvania 
Railroad,  and  the  question'  was  asked  him  if  his  road  paid  rebates  on  the 
transportation  of  oil. 

Q.  (By  Vice-Chairman  PHILLIPS.)  At  what  time?  A.  In  1890;  that 
is  when  the  suit  was  tried.  The  rebates  that  we  claimed  were  up  to  Janu- 
ary 1,  1888,  I  think.     He  replied:     "No  rebates  are  paid  by  our  railroad  on 


•Black  faced  type  Indicates  matter  omitted,  In  the  course  of  editing,  from  the 
official  report. 


LEWIS  EMERY,  JR.  343 

the  transportation  of  oil."  He  was  asked  the  question  in  various  ways,  and 
he  said  he  knew  nothing  of  any  rebates;  that  it  was  against  the  policy  of  the 
road. 

John  S.  Wilson,  the  general  freight  agent  of  the  road,  was  put  on  the 
stand.  Many  in  this  room  may  know  Mr.  Wilson.  He  said  positively  that 
no  rebates  had  been  paid  on  their  road  since  the  suits  of  1879  upon  petro- 
leum. He  said:  "As  general  freight  agent  of  this  I'oad,  I  should  know,  and 
I  give  my  oath  that  no  rebates  were  paid." 

The  auditor  of  the  road.  *IVIr.  Downing 

Mr.   LEE.     Mr.  Taylor. 
WITNESS.      Mr.   Downing. 
Mr.  LEE.     Taylor. 
WITNESS.     Taylor  was  the  clerk. 
Mr.  LEE.     Justis  was  the  auditor. 

WITNESS.  Well,  Mr.  Justis  or  Mr.  Taylor— I  think  both  of  them— one 
was  the  auditor  and  the  other  the  assistant  auditor.  I  thought  Mr.  Taylor 
was  the  bookkeeper.  Mr.  Taylor  stated  that  rebates  had  been  paid,  and  if  I 
had  my  books  here  I  could  read  you  when  they  were  and  under  what  circum- 
stances. 

Next  was  called  Mr.  Justis,  I  believe,  and  he  corroborated  Mr.  Taylor 
that  rebates  had  been  paid  on  the  Pennsylvania  Railroad. 

Q.  (By  Mr.  CLARKE.)  I  was  perhaps  at  fault  in  not  hearing  your 
reading  of  this  and  I  did  not  hear  when  and  where  and  before  whom  this 
testimony  was  taken.  A.  This  testimony  was  taken  before  the  master, 
under  the  court  requirement. 

Q.  Can  it  be  produced?  A.  Oh,  yes,  sir;  I  have  the  testimony.  I  have 
sent  for  it.  Mr.  Roberts  was  examined  in  court  and  I  haven't  his  testimony 
here,  Mr.  Clarke. 

The  next  man  called  in  the  case  was  the  bookkeeper.     *You  gave   his 
name,  which  !  have  forgotten   (turning  to  Mr.  Lee).     Can  you  remember  it? 
Mr.  J.  W.  LEE.    Thayer. 

The  WITNESS.  Thayer,  who  had  stood  at  one  desk,  he  said,  26  years, 
keeping  accounts  in  a  certain  department,  and  he  was  asked  the  question  if 
rebates  had  been  paid  by  any  shippers  of  oil  over  the  road,  and  he  said  they 
had.    We  called  a  large  number  of  witnesses. 

Q.  (By  Vice-Chairman  PHILLIPS.)  What  were  these  rebates?  How 
large  were  they?  To  what  extent  were  the  rebates  paid.  A.  The  rebates 
ran  from  eight  cents  a  barrel  to  28  cents.  Eight  to  28  cents  a  barrel.  Under 
the  anti-discrimination  law  of  Pennsylvania  the  penalty  prescribed  was  that 
three  times  the  damages  could  be  collected  by  the  man  bringing  the  case. 
A  large  amount  of  our  shipments  of  crude  oil  fi"om  the  oil  regions  to  Philadel- 
phia, where  Logan,  Emery  &  Weaver  owned  their  refineries  at  w'hat  is  called 
Greenwich  Point,  on  the  Delaware,  was  shipped  from  Olean,  N.  Y.  When 
we  came  into  the  court  with  our  evidence,  exceptions  were  taken  to  that 
part  of  our  claim  relating  to  shipments  to  the  State  of  New  York,  which  was 
opposed  in  the  decision  of  the  court  as  interstate  commerce.  We  com- 
menced this  suit  early  in  1887,  and  it  was  not  concluded  until  1890.  The  rail- 
road people  were  able  to  send  word  to  the  master  that  they  could  not  come 
to-day,  but  they  would  come  some  other  day,  and  we  traveled  with  our  attor- 
neys. 500  miles  simply  to  go  home  again.  We  were  punished  for  nearly 
three  years  in  taking  that  evidence.  It  was  expensive;  it  was  annoying; 
*it  was  unkind  in  every  way;  but  the  court  had  no  power  to  compel  these 
people  to  come  to  the  stand.  When  we  got  them  to  the  stand,  certain  ques- 
tions were  propounded,  and  they  refused  to  answer — under  the  advice  of 
counsel — the  screen  which  all  of  the  criminals  in  this  country,  who  are 
against  these  laws  and  the  rights  of  the  people,  get  under.  *They  all  get 
under  that  very  same  scheme.  "We  can't  answer  that  question  because  it 
might  incriminate  us."  *But  at  the  end  of  this  term  of  years  my  partners 
became  discouraged  and  disgusted.  They  would  not  even  attend  the  court 
in  McKean  county,  and  the  judge  issued  a  bench  warrant  and  sent  a  consta- 
ble to  Philadelphia  and  brought  Mr.  George  B.  Roberts  *and   Mr.  Justis  and 


*Black  faced  type  indicates  matter  omitted,  In  the  course  of  editing,  from  the 
official  report. 


344  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

Mr.  Green  and  Mr.  Downing  and  others  to  the  bar  of  justice.  *They  were 
brought  by  a  bench  warrant  from  Philadelphia.  Not  Justis,  because  in  th& 
name  of  justice  he  was  there.  When  they  got  up  into  the  county  of  McKean, 
my  partner  said  to  me:  "There  is  a  proposition  to  settle  this  case."  I  didn't 
want  to  settle  it.  *Mr.  Lee  was  my  attorney — one  of  them,  and  I  wanted  to 
fight  the  thing  through.  We  had  compelled  the  Pennsylvania  Railroad  to 
bring  their  books  there,  and  there  were  three  tons  of  them  that  they  had 
to  bring  up  on  the  train  to  answer  the  summons  of  the  court.  But  we  were 
more  than  a  year  getting  possession  of  those  books  or  getting  them  into 
court — more  than  a  year.  As  they  were  cornered  up,  and  we  had  the  abso- 
lute proof  that  from  eight  to  28  cents  a  barrel  rebates  had  been  paid.  I  had 
been  practically  driven  out  of  the  business  in  Philadelphia,  where  I  went  to 
manufacture  oil  in  1880  at  the  instance  of  the  railroad  officials  themselves, 
after  they  had  a  little  bit  of  a  quarrel  with  the  Standard  Oil  Company,  after 
the  close  of  the  suits  of  1879  of  the  Commonwealth  vs.  the  Pennsylvania 
Railroad.  I  was  invited  again  to  put  my  refinery  there,  and  I  went  there  at 
their  own  solicitation,  and  built  these  works,  and  ran  them  from  1879,  or 
rather  from  1881,  when  1  completed  them,  up  to  1887.  But  I  was  devilled  to 
death.  *l  cannot  tell  you  the  story,  but  the  story  is  in  that  little  book,  in 
my  testimony,  and  shows  exactly  what  methods  were  used  in  driving  us  out 
of  the  trade;  and  I  wish  every  commissioner  would  read  my  testimony  in 
that  book.  (Referring  to  his  book  of  testimony.)  Their  attorney  came  to 
our  attorney  and  said:  "We  will  give  you  $35,000  to  quit,  and  the  expenses 
of  the  suit."  We  took  the  money.  We  didn't  go  on  with  the  interstate  com- 
merce suit  because  we  knew  that  we  would  never  get  through  with  it; 
because  1  entered  one  suit  here  in  the  Interstate  Commerce  Commission,  and 
it  was  seven  years  before  I  got  a  decision  upon  that  case. 

Q.  (By  Vice-Chairman  PHILLIPS.)  What  was  the  amount  of  your  claim 
that  you  so  compromised  with  these  people?  A.  My  claim  was  $107,000.  A 
great  portion  of  that  was  on  the  shipments  handled  from  the  State  of  New 
York.  If  I  had  gone  on  with  that  suit  we  could  have  secured  a  large  sum 
of  money  from  the  shipments  of  oil,  but  I  hadn't  the  heart  to  do  it.  I  was  not 
able  to  do  it.  My  finances  were  not  such  that  I  could  spare  the  money  to  go 
into  the  courts  at  the  enormous  expense  and  overcome  the  dilatory  actions 
of  the  railroad  officials  irv giving  testimony.  I  simply  dropped  it  in  disgust 
and  took  the  $3.5,000  and  they  paid  the  costs  of  the  suit. 

This  is  the  docket  of  the  court  in  McKean  county,  and  it  is  only  a  few 
words  that  I  wish  to  read  to  you.  This  is  the  testimony  of  B.  B.  Campbell.  I 
cannot  leave  this  with  the  commission,  but  I  will  furnish  it  or,  in  fact  the 
whole  testimony.  I  will  give  them  a  copy  of  it,  or  a  copy  of  the  whole  testi- 
mony in  this  suit,  if  they  would  like  it.  If  the  chairman  desires  me  to  read 
this  for  the  information  of  the  stenographer.  I  will  do  so. 

"B.  B.  Campbell,  in  the  suit  of  Logan,  Emery  &  Weaver  vs.  the  Pennsyl- 
vania Railroad  Company. 

"B.  B.  Campbell,  being  first  duly  sworn,  testified  as  follows  in  answer 
to  questions  of  Mr.  Lee.     (Senator  Lee,  on  my  left) : 

"Q.  You  were  sworn  as  a  witness  in  this  case  and  testified  before?  A. 
Yes,  sir. 

"Q.  And  certain  questions  you  declined  to  answer,  under  the  advice  of 
your  counsel?    A.  Yes,  sir. 

"Q.  You  received  certain  allowances  on  freight  shipped  over  the  Penn- 
sylvania Railroad.    From  what  place  and  by  whom  was  that  freight  shipped? 

"(Counsel  for  the  defendant  objected  to  the  question  in  the  manner  in 
which  it  is  put,  if  it  is  assuming  the  fact  that  he  did.  Second,  the  form  of  the 
question  is  bad.) 

"Q.  You  may  answer  whether  you  received  any  allowance  on  freight 
shipped  by  the  Bear  Creek  Oil  Refining  Company,  Limited,  over  the  Pennsyl- 
vania Railroad,  and  from  what  point  that  freight  was  shipped  and  to  what 
point.  A.  Those  matters  are  fully  stated  in  my  answers  to  questions  pro- 
pounded under  the  rule  of  court.  The  freight  from  the  Bear  Creek  Refining 
Company  was  shipped  from  Coleman  Station,  on  the  Allegheny  Valley  Rail- 

*Black  faced  type  indicates  matter  omitted,  In  the  course  of  editing-,  from  the 
official  report. 


LEWIS  EMERY,  JR.  345 

road,  as  far  as  the  junction,  and  from  the  junction,  I  believe,  to  Bolivar,  over 
the  West  Pennsylvania,  and  from  thence  mostly  to  Philadelphia;  some  few 
shipments  were  made  to  Communipaw  and  some  few  to  Bolivar.  There  was 
some  little  local  trade,  but  the  great  majority  were  shipments  of  export  oil 
to  Philadelphia. 

"Q.  During  what  period  were  these  allowances  made  to  you?  A.  That 
is  fully  stated  in  my  answer  to  the  court,  which  was  carefully  made  up  and 
fully  stated;  from  October  1,  1884,  until  July  1,  1888." 

A  year  and  four  months  after  the  interstate  commerce  act  went  into 
effect. 

"Q.  You  may  give  the  allowances  by  the  year? 

"A.  They  are  already  given.  From  October  1  to  September  30,  1885,  the 
rebates  were  $8,607.51;  until  September  30,  1886,  $10,313.47;  until  Septem- 
ber 30,  1887,  $15,200;  until  July  1,  1888,  $13,980.15;  total  received,  $48,101.13." 

Q.  (By  Mr.  CLARKE.)  Nearly  all  of  that  was  before  the  passage  of  the 
interstate  commerce  law?  A.  Yes,  sir;  there  was  a  year  and  a  half  of  that 
time,  or  a  year  and  four  months,  after  the  passage  of  the  law. 

Q.  The  last  item  given  there  is  the  only  one  which  includes  any  since  the 
passage  of  the  interstate  commerce  law,  is  it  not?  A.  No,  sir;  the  interstate 
commerce  law  took  effect  in  1887.  From  September  30,  1886,  to  September 
30,  1887,  it  was  $15,200. 

Q.  Now,  from  April  to  September?  A.  All  of  the  last  item  and  part  of 
the  next  to  the  last.  Now,  then,  let  me  state  that  we  knew  that  these  same 
rebates  were  continued  up  to  that  time,  and  therefore  the  bringing  of  our 
second  suit  which  was  settled  for  the  $35,000;  so  we  dropped  the  whole  case. 

Now.  I  desire  to  further  fortify  this  statement  if  I  can.  After  this  suit 
was  decided,  a  great  number  of  suits  were  brought  against  the  Pennsylvania 
Railroad  Company,  *a  very  large  number  of  them,  in  all  of  which  cases  Sen- 
ator Lee  here,  was  in  as  the  attorney.  There  was  the  Independent  Refinery, 
of  Oil  City;  S.  Y.  Ramage,  of  Crown  Oak,  Pa.;  the  Germania  Refining  Com- 
pany; the  Continental  Refining  Company;  the  American  Oil  Company,  of 
Titusville;  Rice,  Robinson  &  Foggan,  of  Titusville;  the  Seneca  Oil  Works,  of 
Warren;  and  the  Cornplanter.  of  Warren.  All  of  these  companies  brought 
suit  against  the  Pennsylvania  Railroad  Company  and  other  roads.  This  is 
a  dispatch  that  I  received  to-day.  I  had  other  memoranda  of  this  suit,  but  I 
wanted  to  be  able  to  speak  definitely  upon  this  question,  so  I  sent  another 
telegram  yesterday,  and  if  it  is  required,  of  course,  the  court  record  of  these 
suits  can  be  produced  to  the  commission,  but  I  make  affidavit  here  that  this 
is  true  and  correct  to  the  best  of  my  knowledge  and  ability.  This  is 
addressed  to  myself,  care  of  the  Industrial  Commission:    (Reading.) 

"Refiners'  claims  were  filed  with  Roger  Sherman;"'  (he  was  also  an 
attorney  with  Mr.  Lee),  "against  Pennsylvania  up  to  August  1,  1888"  (which 
was  contemporaneous  with  those  that  I  have  read) ;  "compromised  and  set- 
tlement agreed." 

That  is  to  say,  they  compromised  these  suits  and  took  their  money.  The 
amount  collected  at  that  time,  as  I  recollect  it,  was  about  $84,000 — on  these 
several  suits.  It  may  have  been  a  good  deal  more — ^I  may  have  been  mis- 
taken^— or  it  may  have  been  less;  but  I  understood  that  that  was  the  amount. 

Q.  (By  Mr.  CLARKE.)  Were  these  suits  all  settled  by  the  railroad 
companies?  A.  Yes.  sir;  by  the  Pennsylvania.  "Claims  therefor  filed  with 
the  Interstate  Commerce  Commission."  *These  claims  that  were  already 
filed,  so  that  claim  represents  up  to  1893.  The  case  was  tried  in  the — will 
the  commission  permit  me  to  ask  Senator  Lee?  He  was  the  attorney,  and  I 
am  not  entirely  familiar  with  it — when  that  case  was  tried. 

Vice-Chairman  PHILLIPS.  Without  objection.  Senator  Lee  may  inform 
Mr.   Emery  on  this  question,. 

The  WITNESS.  Therefore  the  claim  was  filed  up  to  1893  before  the 
Interstate  Commerce  Commission,  and  the  Interstate  Commerce  Commission 
acted  upon  it  and  rendered  a  judgment  against  the  railroads  for  $86,000;  a 
finding  against  the  railroads  of  $86,000,  which  takes  the  rebates  up  to  1893. 

♦Black  faced  type  Indicates  matter  omitted,  in  the  course  of  editing,  from  the- 
official  report. 


346  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

Q.  (By  Mr.  CLARKE.)  And  dates  them  back  how  far?  A. 
Dates  them  back  to  1888.  They  settled  up  to  August,  1888,  and  from 
August,  18S8,  up  to  1893,  the  Interstate  Commerce  Commission  has  rendered 
a  decision  that  the  railroads  are  responsible  to  these  refiners  for  $86,000. 

Q.  Is  that  decision  reported  in  their  annual  report  of  that  year?  A. 
Yes,  sir;  you  will  find  it  in  that  case.  *The  Independent  Refiners'  Associa- 
tion against  the  Railroads  would  be  the  title  of  the  case,  if  you  will  please 
take  a  memorandum.  The  railroads  have  refused  to  pay  this  $86,000  and  it 
has  gone  to  the  Circuit  Court  of  the  United  States  at  Pittsburg,  where  a 
suit  is  now  pending  for  the  collection  of  this  money.  *l  think  I  have  an- 
swered  this  question  right  up  to  after  the  existence  of  the  Interstate  Com- 
merce Commission.  I  think  that  I  have  fully  proven  that  rebates  have  been 
paid  up  to  1893.  Now  I  want  to  clinch  this  thing  right  here  and  I  am  going 
to  do  it  by  reading  you  a  letter.  You  will  excuse  me,  Mr.  Chairman  and 
gentlemen  for  a  minute. 

*Vice-Chairman   PHILLIPS.     Certainly,  take   your   own  time. 

Q.  (By  Mr.  FARQUHAR.)  What  document  is  that  you  are  reading  now, 
Senator? 

A.  1  am  reading  from  a  letter  addressed  to  the  Interstate  Commerce 
Commission  by  tlie  receivers  of  the  Baltimore  &   Ohio  Railroad  Company. 

Q.    (By  Vice-chairman  PHILLIPS.)     Under  what  date?   A.  December  22. 

Q.  1898?    A.  1898;  less  than  a  year  ago. 

"Will  Maintain  Rates. 
"Baltimore  &  Ohio  Adopts  a  New  Policy." 

*l  may  say  to  the  commission,  Mr.  Chairman,  that  a  certified  copy  of 
this  can  be  obtained  by  any  member  of  the  commission,  undoubtedly,  if  you 
were  to  demand  it. 

Q.  (By  Vice-Chairman  PHILLIPS.)  To  the  Interstate  Commerce  Com- 
mission?    A.  Yes,  sir;  the   Interstate  Commerce  Commission. 

Q.  (By  Mr.  FARQUHAR.)  Who  was  the  author  of  that  letter?  A.  It 
was  published  a  short  time  ago;  it  is  a  public  matter.  I  don't  know  who 
published  it;  I  don't  know  the  Washington  parties  that  published  it. 

Q.  That  is  all  right  enough;  but  who  is  the  authority  for  the  letter.  A. 
Mr.  Co  wen. 

Q.  Mr.  Cowen  of  the  Baltimore  &  Ohio  Railroad?    A.  Yes,  sir. 

Q.  He  signs  this  letter?  A.  To  the  Interstate  Commerce  Commission; 
yes,  sir. 

Q.  That  is  all  we  are  looking  for — to  know  the  author.  A.  Yes,  sir. 
"Plan  to  prevent  rate-cutting. — Receivers  Cowen  and  Murray  address  a  letter 
to  the  Interstate  Commerce  Commission,  stating  their  purpose  to  adhere  to 
the  published  tariff,  and  to  report  to  the  commission,  in  lieu  of  other  agency, 
the  failure  of  other  roads  to  do  the  same. 

"Chairman  Knapp,  of  the  Interstate  Commerce  Commission,  has  received 
a  letter  from  Receivers  Cowen  and  Murray,  of  the  Baltimore  &  Ohio  Rail- 
road, announcing  that  after  January  1  that  railroad  will  maintain  scrupu- 
lously the  published  tariff  and  rates  filed  with  the  commission,  and  will 
appeal  to  the  commisison  for  aid  in  cases  coming  to  their  attention  of  rail- 
roads failing  to  maintain  rates  to  the  detriment  of  their  interests.  This 
step  is  an  important  one,  which  will  interest  largely  all  other  railroads. 
What  the  attitude  of  other  roads  will  be  is  unknown  here.  The  letter  in 
full  follows: 

"  'Within  the  territory  north  of  the  Ohio  river  and  east  of  the  Mississippi 
the  railroad  carriers  are  transporting  the  larger  part  of  the  interstate  traffic 
at  rates  less  than  those  shown  on  the  published  tariffs  filed  with  your  com- 
mission, which  are  by  statute  the  only  lawful  rates. 

"  'While  this  condition  continues,  there  will  exist  the  unjust  discrimina- 
tions and  the  unjust  preferences  and  advantages  between  persons,  localities 
and  particular  descriptions  of  traffic,  the  prevention  of  which  is  the  main 
object  of  the  act  of  Congress  establishing  your  commission.     Only  by  secur- 


♦Black  faced  type  Indicates  matter  omitted,  in  the  course  of  editing,  from  ilie 
official  report. 


LEWIS  EMERY,  JR.  347 

ing  the  uniform  charging  of  the  published  rates  can  the  just  equality  of  ser- 
vice and  of  charge  required  by  law  be  secured  either  between  persons  or 
between  localities. 

"  'Heretofore  the  Baltimore  &  Ohio  Railroad  Company  and  its  competi- 
tors within  the  territory  above  mentioned  have  maintained  joint  agencies  or 
associations  under  various  agreements  intended  to  act  as  a  restraint  upon 
each  carrier,  and  to  prevent  the  secret  cutting  of  rates  on  competitive  traffic. 
It  has  been  the  practice  for  each  carrier  to  report  to  the  joint  agency  or 
association  any  departure  from  published  rates  by  a  competing  carrier  to 
the  end  that  the  facts  might  be  fully  ascertained  and  the  unfair  competition 
stopped. 

"  'The  Supreme  Court  of  the  United  States  has  now  finally  determined 
that  tlie  so-called  anti-trust  act  applies  to  railroads'  carriers,  and  in  legal 
effect  prohibits  any  agreement  between  them  which  restrains  competition  in 
any  degree,  even  though  such  agreement  goes  no  further  than  to  secure  the 
observance  of  t^e  restraints  imposed  by  the  act  to  regulate  commerce.  It  is 
therefore  no  longer  lawful  for  the  carriers  to  create  by  agreement  between 
them,  joint  agencies  or  associations,  as  formerly,  to  prevent  the  cutting  of 
rates,  however  unlawful.  Without  some  impartial  body  to  investigate  the 
complaints  of  one  competing  carrier  against  another,  and  to  check  illegal 
rate  cutting,  if  found  to  exist,  it  will  be  practically  impossible  for  the  rail- 
road carrier  alone  to  prevent  that  form  of  competition  between  them,  how- 
ever earnest  the  great  majority  of  the  carriers  may  be  to  stop  it. 

"  'The  Interstate  Commerce  Commission  not  only  commands  the  respect 
of  the  railroad  carriers  for  its  impartiality,  but  also,  in  its  powers  to  investi- 
gate complaints  of  illegal  rate  cutting  and  to  put  a  stop  to  all  illegal  prac- 
tices, far  surpasses  any  association  which  the  carriers  have  ever  created  by 
agreements  between  themselves. 

"  'We  see  no  reason  why  the  commission  should  refuse  Its  aid  to  the 
carriers  in  an  effort  to  prevent  competition  from  taking  the  form  of  illegal 
concessions  through  secret  rates,  drawbacks,  rebates,  and  other  devices, 
and  we  see  no  reason  why  the  carriers  should  not  seek  the  aid  of  the  com- 
mission in  such  an  effort  by  reporting  to  the  commission  any  departure  from 
published  rates,  to  the  end  that  the  facts  may  be  fully  ascertained  and  the 
illegal  practice  stopped. 

"  'The  receivers  of  the  Baltimore  &  Ohio  Railroad  Company  will  main- 
tain, on  and  after  January  1,  1899,  upon  the  lines  operated  by  them,  the  rates, 
fares  and  charges  shown  on  the  tariffs  published  and  filed  with  the  commis- 
sion as  required  by  law. 

"  'We  believe  that  all  or  nearly  all  of  the  railroad  carriers  within  the 
territory  above  mentioned  will  likewise  maintain  their  published  tariff  rate" 
from  that  date.  To  prevent  a  relapse,  however,  to  the  conditions  now  exist- 
ing, it  is  necessary  that  no  important  carrier  shall  long  depart  from  the  pub- 
lished tariff  rates.  Should  such  a  departure  occur,  to  the  detriment  of  the 
interests  in  our  charge  We  shall  invoke  the  aid  of  the  commission  to  stop  it. 
We  hope  and  believe  that  many  other  carriers  will  do  the  same.  In  the 
anticipation  that  the  other  railroad  carriers  formerly  associated  with  the  Bal- 
timore &  Ohio  Railroad  Company  in  traffic  associations  will  adopt  the  course 
decided  on  by  us  and  above  outlined,  we  have  taken  the  liberty  of  transmit- 
ting to  each  such  carrier  a  copy  of  this  letter.'  " 

Q.  (By  Mr.  RATCHFORD.)  Is  that  letter  signed?  Is  the  original  of 
that  letter  signed  by  the  receivers  of  the  Baltimore  &  Ohio  Railroad  Com- 
pany? A.  It  is  on  file;  I  suppose  it  must  be;  it  is  on  file  with  the  Interstate 
Commerce  Commission. 

Now,  gentlemen,  there  is  an  absolute  admission  on  the  part  of  the  Balti' 
more  &  Ohio  Railroad,  that  rebates,  drawbacks  and  other  features  have 
taken  place  up  to  January,  1899. 

Q.  (By  Mr.  CLARKE.)  Have  you  any  evidence  that  connects  that  with 
the  business  of  the  Standard  Oil  Company?  A.  Oh,  no;  no,  no;  these  dis- 
criminations are  not  upon  oil,  but  they  are  upon  the  tonnage  of  these  large 
corporations;  there  is  no  question  about  that. 

Q.  Possibly;  I  suppose  so.  A.  Individuals  as  well;  people  and  corpora- 
tions.    That  is   the  point  of  the   whole  thing,   the   discriminating  rates.     I 


348  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

think  the  commission  can  understand  clearly  from  that  paper  that  the  Balti- 
more &  Ohio  Railroad  Company  has  given  these  rebates,  and  they  got  tired 
of  doing  it,  and  they  want  to  obey  the  law. 

*Q.  (By  Vice-chairman  PHILLIPS.)  You  may  make  the  further  state- 
ment that  that  has  been  done,  and  they  desire  the  other  rates.  A.  To  con- 
form to  other  roads. 

Q.  (By  Mr.  RATCHFORD.)  The  hour  of  adjournment  has  about  arrived 
now,  and  there  is  nothing  special  to  be  gained  by  continuing,  and  I  move  we 
adjourn. 

Q.  (By  Mr.  FARQUHAR.)  If  you  will  wait  just  one  minute,  I  would  like 
before  we  leave  this  point  to  ask  a  question.  You  presented  the  evidence  of 
Mr.  B.  B.  Campbell,  in  reference  to  these  rebates.  Mr.  Campbell  was  the 
signing  party  in  respect  to  the  suppression  of  all  rebates  and  drawbacks? 
A.  Yes,  sir. 

Q.  The  document  was  drawn  up  in  April,  1880?    A.     Yes,  sir. 

Q.  That  is  between  B.  B.  Campbell  and  the  Pennsylvania  Railroad  Com- 
pany?   A.  Yes,  sir. 

Q.  Did  he  turn  as  a  witness  after  he  had  received  the  rebates  himself? 
A.  Yes,  sir. 

Q.  Against  his  own  reception  of  rebates?  A.  Yes,  sir;  he  couldn't  help 
himself.  They  kept  him  out  of  our  way  for  a  long  while,  *but  we  were  after 
him  with  a  sharp  stick  and  we  finally  got  him. 

Q.  Then  Campbell  himself  was  the  signer  of  the  original  agreement 
between  the  Standard  Oil  Company  and  the  Pennsylvania,  and  all  you  other 
producers?  A.  No,  sir;  *no  other  producers  ever  signed  the  contract 
but  one. 

Q.  I  have  the  evidence  taken  by  the  Bacon  Committee.  A.  The  only 
thing  I  want  to  explain  to  you  before  I  complete  this  argument  is  this,  and 
then  I  will  answer  all  these  questions. 

The  commission  adjourned  until  10  o'clock  to-morrow  morning. 

Washington,  D.  C,  September  12,  1899. 

The  commission  was  called  to  order  by  Mr.  Phillips,  Mr.  Lewis  Emery, 
Jr.,  resuming  his  testimony. 

Vice-Chairman  PHILLIPS.  We  will  proceed  with  Senator  Emery's  tes- 
timony. You  can  resume  your  testimony  and  proceed  in  your  own  way  with- 
out any  questions  from  the  commission  at  present. 

*The  WITNESS.  Mr.  Chairman  and  Gentlemen  of  the  Commission — I 
don't  know  but  that  I  am  committing  a  breach  of  etiquette  in  what  I  am 
going  to  say,  but  there  seems  to  be  a  good  deal  of  question  relative  to  this 
matter  of  rebates  and  drawbacks.  I  did  not  sleep  very  well  last  night,  but  I 
slept  enough  to  have  a  dream,  and  I  thought  that  this  commission  had  called 
to  its  presence  Mr.  Cowen  and  Mr.  Murray  that  they  might  explain  the  letter 
I  read  to  you  yesterday,  which  was  addressed  to  the  Interstate  Commerce 
Commission.  It  may  be  that  I  am  a  little  ahead  of  the  times,  but  I  would 
like  to  know  and  feel  that  that  letter  is  explained.  Now,  Mr.  Chairman  and 
gentlemen  of  the  commission,  I  have  no  doubt  that  you  want  to  get  rid  of  me 
quickly 

Vice-chairman  PHILLIPS.     I  say,  Mr.  Emery 

The  WITNESS.  Just  let  me  get  through,  Mr.  Chairman — and  I  am  per- 
fectly willing  to  go  Just  as  soon  as  you  want  me  to  go.  Now,  I  can  get 
through  quicker  and  perhaps  Just  as  well  if  you  will  permit  me  to  tell  this 
story,  if  you  want  it  told.     If  you  do  not,  shut  me  off. 

I  am  perfectly  willing  to  be  questioned  about  any  point  that  I  bring  out, 
and  I  stop  right  here  to  say  to  you  candidly  again  to  stop  me  in  answering, 
and  ask  any  questions  that  you  wish  to  propound  to  me,  because  I  think  I 
can  answer  them.  All  this  subject  is  printed  in  evidence  from  1871  to  the 
present  time,  and  I  am  telling  nothing  now  outside  of  what  has  absolutely 
been  proven.  I  am  perfectly  willing  to  answer  any  questions,  but  we  can 
get  through  much  quicker  if  you  will  permit  me  to  go  along  in  my  own  way 
and  Jot  down  any  questions  that  you  desire  to  ask,  so  that  you  can  ask  them 
when   I  finish,  and  I  will  hurry  along. 

*Black  faced  type  indicates  matter  omitted,  In  the  course  of  editing,  from  the 
official  report. 


LEWIS  EMERY,  JR.  349 

*Mr.  KENNEDY.  You  must  not  assume  that  the  commission  has  any 
desire  to  hurry  you  or  to  be  rid  of  you  at  all. 

The  WITNESS.  No,  no;  I  understand  that,  and  I  treat  it  in  that  way, 
and  anything  that  you  gentlemen  may  say,  I  will  endeavor  to  answer  you. 
I  did  not  make  the  remark  in  that  spirit,  but  if  you  have  got  lots  of  time,  I 
have;    I   don't  care. 

Mr.   KENNEDY.     We  will   hear  anything  you  have  to  say. 

The  WITNESS.  But  let  us  take  it  up  in  order.  For  instance,  you  only 
permitted  me  to  get  to  1872  yesterday,  and  you  carried  me  along  to  1879  with 
questions.  *and  I  was  going  to  reach  this  very  point  that  you  questioned  me 
upon,  and  I  was  going  to  give  you  a  more  detailed  reply  than  I  gave  you, 
through  the  evidence  and  references  that  I  have  got;  but  if  it  is  the  desire 
of  the  commission  to  stop  me,  I  will  gracefully  submit  to  whatever  it  may 
desire. 

Vice-Chairman  PHILLIPS.  Without  objection.  Senator  Emery  will  pro- 
ceed in  his  own  way. 

Tiie  WITNESS.  Mr.  Chairman  and  gentlemen,  I  got  up  to  this  South 
Improvement  Company  contract  and  showed  you  its  repeal.  I  will  read  you 
from  a  public  document  as  follows: 

"A  history  of  the  rise  and  fall  of  the  South  Improvement  Company. 
Report  of  the  executive  committee  of  the  Petroleum  Producers'  Union,  em- 
bracing the  reports  of  the  several  committees,  transportation,  legislation, 
investigation,  and  producers'  report,  at  Oil  City,  Pa.,  1872." 

This  is  not  in  my  book,  I  am  sorry  to  say.  There  is  so  much  to  put  into 
a  little  pamphlet  like  this  that  I  got  up  in  the  space  of  four  or  five  days,  and 
I  could  not  incorporate  everything  appertaining  to  it.  Therefore,  I  beg  the 
indulgence  of  the  commisison  to  listen  to  this: 

"On  February  20,  1872,  rumors  were  rife  in  business  circles  that  the 
railroads  having  their  main  lines  or  feeders  extending  into  the  oil  regions, 
had  formed  a  joint  arrangement  to  advance  the  freights  on  crude  and  refined 
oil  from  the  fields  of  production  to  the  seaboard. 

"With  a  production  of  16.000  barrels  of  oil  per  day — and  the  coming  of 
spring — which  always  brings  renewed  energy  to  operation — and  an  already 
depressed  market,  this  rumor  created  the  greatest  uneasiness  in  the  minds 
of  all  operators  and  shippers.  Nothing  definite  could  be  ascertained,  and 
nothing  further  than  the  rumor  could  be  heard,  and  the  region  settled  back 
to  fancied  security. 

"In  a  few  days,  however,  a  second  rumor  was  circulated  that  not  the 
railroads,  but  a  company  bearing  the  wonderfully  inappropriate  cognomen 
of  the  'South  Improvement  Company'  had  purchased  a  right  to  all  petroleum 
transportation,  and  were  to  arrange  the  rates  of  shipment  of  all  the  oil  pro- 
duced, and  that  an  immediate  advance  of  50  per  cent,  was  but  the  first 
advance,  with  promise  of  more  in  the  future. 

"This,  however,  seemed  so  quixotic  that  it  did  not  meet  with  general 
credence,  until  it  was  confirmed  by  telegrams  on  the  26th.  from  railroad 
officials  to  their  agents  at  shipping  points  in  the  oil  regions  advising  them  of 
the  new  rates,  to  take  effect  immediately.  An  advance  of  100  per  cent,  on 
all  freight  charges  on  crude  and  refined,  was  equivalent  to  a  complete  par- 
alysis of  all  operations  for  and  in  oil  in  the  entire  region.  But  oil  men  are 
made  of  sterner  stuff  than  to  tamely  submit  to  so  gross  an  outrage,  let  it 
come  from  what  quarter  it  would. 

"The  thousands  of  operators  were  electrified  with  indignation  and  rose 
as  one  man  to  defy  and  resist  the  levying  of  a  tribute  so  palpably  unjust. 
Meetings  were  called  in  all  the  principal  towns  and  cities.  The  honor  of 
calling  and  organizing  the  first  meeting  is  conceded  to  Tidioute.  E.  E. 
Clapn  was  elected  to  the  chair,  and  resolutions  indicative  of  the  spirit  and 
determination  of  the  producers  of  that  field  was  passed.  It  was  resolved, 
inter  alia,  to  shut  down  all  their  wells  until  the  old  rates  were  restored,  or 
until  a  pew  outlet  could  be  found  to  remove  their  oil  to  outside  markets,  if 
such  a  step  were  necessary. 


*Black   faced   type   Indicates   matter  OTiitted.  in   the  coi:rse  of  editing,   from  the 
official  report. 


350  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

"Delegates  were  also  chosen  to  attend  a  mass  meeting  called  to  assem- 
ble at  Titusville,  on  the  evening  of  the  27th,  'To  consider  the  necessity  of 
constructing  a  railroad  from  Erie,  by  the  way  of  Titusville,  into  the  oil 
regions,  as  a  competing  railroad,  connecting  with  water  communication  to 
New  York  and  Europe,  and  such  other  business  of  interest  to  the  people  as 
might  come  before  the  meeting.' 

"The  meeting  at  Titusville  demonstrated  the  fact  that  the  wealth,  deter- 
mination, spirit  and  practical  ability  of  the  men  of  the  oil  regions  would 
render  victory  for  them  in  the  battle  with  monopoly  an  absolute  certainty. 
"The  wonderful  resources  of  oil  men,  when  pressed  by  great  difficulties, 
here  became  apparent  in  the  plans  and  suggestions  laid  before  the  meeting. 
Railroad  routes,  with  suggestions  and  estimates  of  cost,  to  reach  the  lakes 
on  the  north,  and  railroads  not  in  the  combination  of  the  south,  pipe  lines 
and  other  remedies  were  suggested  and  the  feasibility  of  some,  if  not  all,  did 
much  to  reassure  the  mass  of  people  that  they  would  speedily  find  a  solution 
of  the  difficulty." 

I  rf-ad  only  so  much  of  it  only  to  show  you  the  spirit  aroused  at  the  time 
of  the  first  notice  of  the  complete  formation  of  the  South  Improvement  Com- 
pany. I  need  not  make  any  remarks  upon  that  question,  excepting  this  fact. 
Let  me  read  you  the  repeal  of  the  South  Improvement  Company  act. 

Now,  Mr.  Chairman  and  gentlemen,  if  you  will  turn  to  page  15  of  this 
book:      (Reading.) 

AN  ACT  TO  REPEAL  THE  CHARTER  OF    THE    SOUTH    IMPROVEMENT 

COMPANY. 
Section  1 — Be  it  enacted  by  the  Senate  and  House  of  Representati^•es  of  the 
Commonwealth  of  Pennsylvania,  in  General  Assembly  met,  and  it  is  hereby  enacted 
by  the  authority  of  the  same,  that  the  act  entitled  "An  Act  to  incorporate  the  South 
Improvement  Company,"  approved  the  6th  day  of  May,  Anno  Domini  1871,  be  and  the 
same  is  hereby  repealed. 

WILLIAM   ELLIOTT 
Speaker  of  the  House   of  Representatives. 
JAMES  S.  RUTAN. 

Speaker  of  the  Senate. 
Approved  the  2d  dav  of  April,  Anno  Domini,  1872. 

JOHN  W.  GEARY. 

This  act  I  read  to  you.  or  Senator  Lee  did,  in  full  yesterday.  The  body 
of  it  is  known  as  the  Pennsylvania  Company  act.  Then,  if  you  recollect,  I 
referred  you  to  page  LS^A  to  call  to  your  attention  the  purchase  of  the  same 
identical  act  by  the  National  Transit  Company,  which  is  one  of  the  com- 
panies of  the  Standard  Trust. 

*Q.  (By  Vice-Chairman  PHILLIPS.)  Another  Act  being  the  same,  was 
it  not?     A.  That  is  what  I  say. 

Q.  (By  Vice  Chairman  PHILLIPS.)  You  said  this  identical  act?  A.  I 
said  the  identical  act  has  been  repealed.  The  other  was  an  absolute  copy  of 
it,  which  was  purchased,  as  set  forth  on  page  15%,  which  I  need  not  read 
again,  and  I  will  say  that  it  was  purchased  by  parties  who  were  then,  or 
soon  after  became,  connected  with  the  Standard  Trust,  Clement  A.  Griscom 
being  the  president  of  the  National  Transit  Company,  and  I  understand  at 
this  moment  he  is  a  director  of  the  Pennsylvania  Railroad;  he  was  president 
of  the  National  Transit  Company.  I  know  Mr.  Griscom;  I  know  when  he 
took  possession — but  that  does  not  matter.  I  have  explained  to  you  and  read 
to  you  from  my  book  aboiit  the  demoralized  condition  of  the  trade  at  the  time 
the  South  Improvement  Company  act  was  repealed,  through  this  tremendous 
pressure  of  the  producers  upon  the  railroad,  which  formed  a  part  of  this 
South  Improvement  Company. 

This  is  a  very  important  matter,  and  I  am  goina:  to  follow  thi'^  through, 
and  you  will  see  that  all  this  work  that  was  done  between  these  two  northern 
trunk  lines  of  railroad  and  the  Pennsylvania,  and  the  South  Improvement 
Company,  was  repealed  by  this  act.  But  I  trust  to  show  you  also  in  my  evi- 
dence that  although  the  contract  was  annulled,  both  the  South  Improvement 
Company's  contract,  as  well  as  the  contract  between  the  Standard  Oil  Com- 


♦Rlack   faced    typo   indicates   matter   omitti d,   in   the  course  of  editing,   f'-om   the 
official  report. 


LEWIS  EMERY,  JR.  351 

pany  and  the  railroads,  that  it  was  never  lived  up  to,  and  the  business  of  the 
company  proceeded  just  exactly  as  though  the  South  Improvement  Company 
was  in  full  force. 

If  you  will  turn  to  page  48:      (Reading.) 

"Agreement  between  the  railroads  and  the  petroleum  trade  executed  the 
25th  day  of  March,  1872: 

"That  all  arrangements  for  transportation  of  oil  after  this  date  shall  be 
upon  a  basis  of  perfect  equality  to  all  shippers,  producers  and  refiners,  and 
that  no  rebates,  drawbacks  or  other  arrangements  of  any  character  shall  be 
made  or  allowed,  that  will  give  any  party  the  slightest  difference  in  rates 
or  discrimination  of  any  character  whatever. 

"That  the  present  rates  from  Oil  City,  Union,  Corry,  Irvineton,  Pitts- 
burg, Cleveland,  and  other  competing  points  shall  be  and  remain  in  full  force 
at  following  rates: 

ON  REFINED  OIL,   PENZINE.   ETC. 

From  Oil  City,  Union,  Corry  and  Irvineton  to—  Per  barrel 

Boston    $1.65 

New  York 1.50 

Philadelphia  1..35 

Baltimore  1.35 

From   Cleveland   to— 

Boston    1.65 

New  York 1.50 

Philadelphia  1.35 

Baltimore  1.35 

From  Pittsburg  to— 

New  York 1.50 

Philadelphia  1.35 

Baltimore  1.35 

ON  CRUDE  OIL. 

From  Oil  City,  Union,  Corry  and  Irvineton  to — 

Boston    1.50 

New  York 1.35 

Philadelphia  1.20 

Baltimore  1-20 

Cleveland  50 

Pittsburg   50 

"And  said  rates  shall  not  be  liable  to  any  change,  either  for  increase  or 
decrease,  without  first  giving  to  William  Hasson.  president  of  the  Producers' 
Union,  at  Oil  City,  at  least  90  days'  notice  in  writing  of  such  contemplated 
change. 

"In  the  distribution  of  cars  for  shipments,  it  shall  be  done  without  dis- 
crimination. 

"On  the  basis  as  hereinbefore  stated,  the  parties  respectively  agree  to 
carry  out  the  arrangements  in  good  faith  and  work  for  the  mutual  interests 
of  each  other. 

"In  witness  whereof,  the  parties  have  hereunto  affixed  their  signatures 
this  25th  day  of  March,  A.  D.  1872. 

"For  the  Lake  Shore  &  Michigan  Southern  Railroad  Company — H.  F. 
Clark,  President. 

"For  the  Erie  Railroad  Company — O.  H.  P.  Archer.  Vice-President. 

"For  the  New  York  Central  &  Hudson  River  Railroad — William  H.  Van- 
derbilt,  Vice-President. 

"For  the  Atlantic  &  Great  Western  Railroad  Company — George  B.  Mc- 
Clellan,  President. 

"For  the  Pennsylvania  Railroad  Company — Thomas  A.  Scott,  Vice- 
President. 

"On  behalf  of  the  Producers  and  Refiners — G.  Shamburg,  E.  G.  Patter- 
son, William  Hasson,  Henry  Byrom.  William  Parker,  .lohn  .1.  Fisher.  Oil  City 
Producers  and  Refiners;  J.  J.  Vandergrift.  A.  P.  Bennett,  William  M.  Irish, 
William  T.  Scheide.  Oil  City  Producers  and  Refiners;  Henry  N.  Rogers,  F.  C. 
Flerains".  Josiah  Lombard,  Jr.,  New  York  Refiners;  B.  Vaughan,  Boston  Re- 
finers." 


352  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

Q.  (By  Vice-chairman  PHILLIPS.)  Is  that  the  same  Mr.  Rogers  who  tes- 
tified before  us?  Do  you  know  whether  that  is  meant  for  him  or  not?  A. 
No,  sir;  I  do  not  know.  This  was  in  the  year  1874,  and  I  think  Mr.  Rogers 
did  not  go  into  the  Standard  Oil  Company  until  1875;  but  I  think  it  was 
meant  for  him.  I  don't  know  as  I  have  anything  to  say  about  that.  I  don't 
tnow  whether  it  is  his  name  or  not;  but  it  don't  make  any  difference. 

Q.  (By  Mr.  FARQUHAR.)  But  this  Rogers  was  one  of  the  New  York 
refiners,  allow  me  to  suggest;  this  is  another  Rogers,  I  think;  this  is  H.  N. 
A.  Yes,  sir;  I  think  you  are  right. 

Q.  The  Oil  City  producers  and  refiners  are  headed  by  Shamburg,  and 
then  Vandergrift  headed  the  others.  A.  Well,  it  does  not  make  any  differ- 
ence. 

Vice-Chairman  PHILLIPS.     The  Senator  will  proceed. 

The  WITNESS.  The  date  of  this  contract,  if  you  will  bear  in  mind,  Mr. 
Chairman  and  gentlemen  of  the  commission,  was  March  25,  1872.  I  want 
right  here  to  put  in  a  word  and  that  is  this:  I  tried  to  get  yesterday  a  copy 
of  the  Hepburn  report,  but  I  couldn't,  but  in  1879,  George  R.  Blanchard,  the 
present  manager,  I  think,  of  the  Central  Traffic  Association  of  Chicago — am 
I  right? 

Mr.  CLARKE.  He  has  been;  I  am  not  sure  whether  he  is  at  present 
or  not. 

A.  Well,  he  was  called  to  the  stand  by  the  Hepburn  Committee,  and 
you  all  know  what  that  is — a  committee  of  the  New  York  Legislature.  He 
swore  that  this  contract  that  I  have  just  read  which  is  so  solemnly  and  so 
fairly  worded,  was  not  respected  two  weeks.  I  put  that  in  as  a  part  of  my 
evidence  and  refer  you  to  the  Hepburn  Committee;  that  this  agreement  so 
solemnly  drawn  and  signed  by  the  railroads,  that  I  have  raised  a  question 
about  in  my  argument  here  before  you — or,  rather,  my  testimony — was 
abrogated  within  two  weeks  after  it  was  signed;  according  to  the  testimony 
of  George  R.  Blanchard. 

Q.  (By  Mr.  FARQUHAR.)  Before  the  Hepburn  Committee?  A.  Yes, 
sir.  Now,  does  this  committee  want  me  to  go  into  the  fact  and  prove  re- 
bates and  drawbacks  from  the  date  of  this  contract  up  to  1877?  *Now,  it 
will  take  me  two  or  three  hours.  I  can  do  it  if  you  want  me,  or  I  can  give 
you  the  evidence  and  you  can   look  it  up  for  yourselves. 

Q.  (By  Mr.  CLARKE.)  My  understanding,  Mr.  Chairman,  is  that  these 
rebates  and  drawbacks  are  conceded  by  the  railroad  companies  and  the 
Standard  Oil  Company  until  the  passage  of  the  interstate  commerce  law. 
If  that  is  so,  it  is  not  necessary  to  prove  it.  A.  Well,  I  can  produce  every 
contract. 

Mr.  FARQUHAR.  In  the  matter  of  1880,  which  concerns  the  agreement 
of  the  Producers'  Union,  would  you  have  had  that  agreement  at  all  unless 
they  had  been  giving  rebates?  It  is  conceded  in  the  arrangements  you  made 
with  the  railroads  there  that  the  rebates  were  granted  clear  from  1870  to 
1880.     A.  By  whom? 

Q.  (By  Mr.  FARQUHAR.)  By  all  parties.  A.  No,  sir;  only  to  those  con- 
nected with  the  Standard  Oil  Trust  or  South  Improvement  Company,  sir. 

Q.  Well?  A.  If  you  were  not  a  member  of  that  organization,  you 
couldn't   participate   in   the   drawbacks;    that   is   true. 

Q.  But  that  agreement  of  1880  was  entered  into  afterwards,  at  the  time 
Camp])eH.  1  think,  was  president  of  the  Producers'  Union.  A.  Now,  if  you 
are  going  that  far,  Mr.  Commissioner  Farquhar.  I  will  prove  the  Campbell 
agreement  and   give  you  a  perfect  history  of  that. 

Q.  I  understand  that;  it  is  all  in  black  and  white.  A.  Oh.  if  you  go  into 
that  agreement,  I  will  give  you  the  whole  history;  but  I  want  to  know  if 
I  should  go  on  to  prove  to  this  commission  that  rebates  were  paid  from 
1872  to  1877,  when  the  business  became  an  absolute  monopoly;  when  the 
Pennsylvania  Railroad  surrendered  everything  it  had  to  the  Standard  Oil 
Company. 

Q.  (By  Mr.  KENNEDY.)  I  think,  as  the  other  commissioners  have 
said,  that  there  was  no  question  about  drawbacks  and   paying  rebates  be- 


•Black   faced   type  Indicates   matter  omitted,  in   the  cour.se  of  editing,   from  tlie 
official  report. 


LEWIS  EMERY,  JR.  353 

fore  the  passage  of  the  interstate  commerce  law.  Since  then  there  is  some 
question,  and  it  seems  to  me  that  the  issue  shapes  itself  up  just  this  way. 
The  Standard  Oil  Company  people  have  come  here  and  sworn  that  they 
have  not  asked  nor  received  rebates  since  the  passage  of  the  interstate 
commerce  law;  they  say  that  they  did  not  participate  in  the  practice  of 
taking  rebates,  if  there  were  any;  that  all  they  desired  was  that  there 
should  be  published  rates  and  that  others  should  be  held  to  them.  Now,  it 
seems  to  me  that  the  thing  for  you  to  do,  if  you  can  do  it,  is  to  prove  that 
they  have  taken  rebates  since  that  time.  If  you  do  that  you  will  convict 
somebody  of  perjury. 

Mr.  FARQUHAR.     That  is  just  the  point. 

The  WITNESS.  Why,  my  dear  Mr.  Commissioner  and  others  of  this 
commission.  I  think  that  the  case  is  clearly  proved,  that  rebates  were  paid. 
Mr.  Roberts,  the  president  of  the  Pennsylvania  Railroad,  went  upon  the  stand 
in  the  Court  of  Common  Pleas  of  McKean  county  and  testified  that  the 
railroad  had  not  paid  rebates  from  the  time  the  interstate  commerce  law 
took  effect. 

Mr.  John  S.  Wilson,  whose  testimony  I  have  shown  you.  corroborated 
Mr.  Roberts,  and  I  can  read  here  from  this  testimony  that  I  have  in  my 
hand.  I  have  here  the  testimony  of  all  the  witnesses,  a  hundred  men,  proving 
that  Mr.  Roberts  and  that  Mr.  John  S.  Wilson  were  mistaken  in  their  state- 
ments. 

You  were  saying,  Mr.  Chairman  and  gentlemen  of  the  commission,  that 
you  have  letters  here  filed  by  Mr.  Archbold,  from  honorable  men  represent- 
ing the  several  railroads  of  the  country.  I  have  no  doubt  of  their  honesty; 
I  have  no  right  to  even  cast  a  reflection  upon  Mr.  Archbold  or  upon  these 
letters,  but  I  do  venture  to  say  that  if  Mr.  George  B.  Roberts,  president  of 
the  Pennsylvania  Railroad  at  that  time,  now  deceased,  and  Mr.  John  S. 
Wilson,  its  general  freight  agent,  will  go  upon  the  stand  and  make  oath  that 
no  rebates  were  paid  since  the  interstate  commerce  law  took  effect,  and 
following  their  testimony  the  auditors  and  bookkeepers  of  the  road  go  upon 
the  stand  and  swear  that  rebates  were  paid,  and  one  proved,  from  8  to  28 
cents  a  barrel,  and  my  claim  of  $107,000  was  settled  as  I  told  you  yesterday, 
for  which  I  received  my  $3.5,000  and  costs  in  the  suit,  may  not  these  gentle- 
men who  have  written  these  letters  be  mistaken?  I  would  like  to  see  their 
auditors  and  their  bookkeepers  upon  the  stand,  as  we  put  them  on  in  the 
case  of  the  Pennsylvania  Railroad.  *Do  you  think  that  they  would  swear  to 
a  lie?  For  they  had  to  bring  their  books  into  court,  as  we  had  them,  and 
we  didn't  get  this  information  until  these  books  did  come;  and  when  they 
saw  they  were  in  a  corner  they  surrendered.  I  told  you  yesterday,  or  in 
my  evidence  I  stated  that  out  of  the  production  of  2,'?, 000, 000  barrels  of  oil 
a  year  the  few  outsiders  handled  of  that,  not  to  exceed  3.000,000  barrels,  in- 
cluding the  fields  of  Ohio,  West  Virginia,  New  York  and  Pennsylvania.  And 
do  you  think  that  if  these  small  men  handling  this  small  quantity  of  oil  can 
go  into  the  courts  and  prove  rebates  from  April  4,  1887,  to  August.  1888 — as 
we  did  in  my  own  suit — and  then  bring  suit  before  the  Interstate  Com- 
merce Commission  for  rebates  from  that  time  up  to  1893.  and  the  Inter- 
state Commerce  Commission  rendering  a  verdict  of  $86,000  against  the  rail- 
roads (and  they  carried  it  to  the  United  States  Court  for  the  Western  Dis- 
trict of  Pennsylvania) ;  if  these  men  with  their  ability,  as  one  of  the  wit- 
nesses has  said,  with  their  very  great  competency,  their  very  great  brain, 
having  carried  this  great  product  of  oil  to  the  ends  of  the  earth,  as  nobody 
else  could — and  yet  these  men  that  haven't  got  the  brains  nor  the  ability 
come  into  court  and  prove  that  these  rebates  were  paid  upon  oil.  Do  you 
think  for  one  moment  that  the  Standard  Oil  Company  will  allow  them  to 
beat  them  in  the  transportation?  *Haven't  they  provided  in  their  contract, 
Messrs.  Commissioners,  in  the  Fourth  Section  of  the  South  Improvement 
contract  that  the  rebates  of  any  others  must  be  paid  to  them?  Why,  it  don't 
admit  of  an  argument.  There  is  no  doubt  about  the  complaint  in  addition 
to  the  suits  brought  by  the  associated  refiners  and  the  individual  refiners, 
Logan,  Emery  &  Weaver,  that  I  named  yesterday.     Why,  gentlemen,  there 


•Black  faced   type   Indicates   matter  omitted,  in  the  course  of  editing,   froin  the 
official  report. 

23 


354  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

is  no  court  in  the  land  that  will  not  construe  the  fact  that  the  Standard  Oil 
Company,  shipping  nineteen  or  twenty  millions  of  barrels  of  oil  in  this- 
unfair  way,  and  receiving  in  the  neighborhood  of  $160,000  or  $175,000  in. 
drawbacks  from  the  shipping  of  only  a  trifle — half  a  million  barrels  of  oil — 
would  not  allow  twenty  million  barrels  to  go  unsettled  for.  It  is  sheer 
nonsense;  and  no  court  in  the  land  would  for  a  moment  hesitate  upoa 
such  evidence.  Therefore,  with  no  feeling  of  animosity  towards  the  gentle- 
men, I  ask  you,  as  jurors  in  this  case,  what  are  your  conclusions  on  the 
evidence?  Bring  into  the  courts  of  this  land  the  books  of  these  railroads. 
They  are  responsible  to-day  not  only  for  the  acts  of  the  Standard  Oil  Com- 
pany, or  the  illegal  acts  of  discrimination,  but  years  ago  rebates  were  levied 
of  $1  a  head  on  cattle  that  left  the  western  country  to  go  to  the  eastern 
market,  or  on  the  barrels  of  flour  that  come  from  the  western  limits  of  the 
country.  The  interior  mills  of  this  country  are  paralyzed  because  of  this 
discrimination.  I  am  a  miller,  and  I  make  500  barrels  of  flour  a  day,  *and 
I  make  no  money,  because  of  these  trusts  which  I  say,  are  built  up  at  the 
instance  of  the  railroads.  I  make  the  bold  charge,  that,  if  we  had  had  under 
the  law,  the  rights  of  eminent  domain,  equal  rights  to  all  shippers,  there 
would  have  been  no  trusts,  *and  there  would  have  been  no  dissatisfaction. 
Why,  gentlemen,  go  to  Duluth,  if  you  choose,  and  try  to  buy  a  carload  of  coal 
that  you  wish  to  take  into  Northern  Dakota,  where  I  have  a  wheat  farm. 
The  coal  is  mined  by  the  miner  at  from  35  to  50  cents  a  ton,  drawn  to  Buf- 
falo, I  think,  at  $1  and  loaded  on  the  ship  at  a  cost,  I  understand,  of  less 
than  $1.75.  Allow  75  cents  for  transporting  it  to  Duluth.  and  you  have 
$2.50;  334  miles  from  Duluth.  by  the  Great  Northern  road,  to  my  farm,  west 
of  Grand  Forks  16  miles,  bituminous  coal  is  sold  at  $6  and  $7  a  ton.  I 
say  the  discrimination  is  the  result  of  the  coal  combination,  and  the  rail- 
roads are  responsible  for  it,  *and  you  are  called  here  as  a  committee  of  these 
great  United  States  to  rectify  these  rates. 

Vice-Chairman   PHILLIPS.     Not  to   rectify;    but  to  suggest. 

The  WITNESS.  To  suggest  legislation.  The  milk  in  the  cocoanut  of 
the  success  of  the  Standard  Oil  Company  is  transportation;  unfair,  illegal 
transportation,  *because  there  was  an  undue  discrimination,  as  our  Con- 
stitution says  there  must  not  be  between  shippers.  Do  you  think  you  cannot 
prove  rebates  upon  oil,  if  you  call  before  you.  as  you  have  the  power  to  do, 
witnesses,  books  and  papers?  *Why,  great  God,  the  Pennsylvania  Railroad 
would  have  given  $200,000  rather  than  permit  Logan,  Emery  &  Weaver 
to  look  through  the  three  tons  of  books  that  they  brought  up  to  the  court 
house  in  McKean  county.  It  would  have  sent  them  to  prison;  and  the 
unjust  thing  in  this  country  is  that  the  poor  devil  who  goes  along  the 
street  and  steals  a  loaf  of  bread  when  he  is  hungry  and  out  of  work  is 
arrested  and  taken  to  the  courts  and  sent  up  for  10  or  15  days:  if  he  steals 
a  coat  or  something  of  that  sort  to  keep  his  body  warm,  he  is  sent  to 
prison;  and  yet  these  great  corporations,  and  the  men  managing  them, 
come  into  the  courts  and  say:  "We  won't  bring  our  books;  we  won't  answer 
your  questions,  because  if  we  do  we  will  incriminate  ourselves." 

There  is  the  difficulty;  there  is  the  difficulty,  I  say.  The  Sherman 
act — call  it  the  Federal  act  if  you  choose,  has  been  pronounced  constitutional 
by  the  highest  tribunal  of  this  land,  and  if  it  is  enforced  these  people  will 
go  to  prison. 

*!  don't  want  to  take  up  your  time  by  making  a  speech;  you  can  prove 
it.  Mr.  Chairman  and  commissioners,  if  you  choose;  it  is  in  your  power  to 
prove  those  discriminations,  I  believe,  to  this  moment,  if  there  is  any  truth 
in  the  letter  of  Mr.  Cowen  and  Mr.  Murray. 

*Now,  Mr.  Chairman  and  Gentlemen,  I  want  to  say  to  these  gentlemen, 
in  answer  to  their  questions,  that  I  am  not  here  to  prove  anything  against 
the  Standard  Oil  Company;  they  are  not  my  mark,  although  I  may  be  an 
oil   man.     I   am  that,   it  is  true,  but  I   am   a  miller  and   I   am   a   farmer  and   I 

♦Black  faced  type  Indicates  matter  omitted,  In  the  course  of  editing,  from  the 
ofncial  report. 


LEWIS  EMERY.  JR.  355 

*am  most  everything  in  the  shape  of  business,  and  I  have  a  knowledge  of 
most  all  of  the  industries  of  the  country,  and  I  am  here  for  the  purpose  of 
giving  you  information  upon  the  subject  for  which  you  invited  me.  If  you 
want  me  to  go  into  the  condition  of  the  farmer,  I  shall  do  it,  or  many  in- 
stitutions connected  with  the  business  of  this  country.  Therefore,  if  you 
put  me  down  here  as  after  the  Standard  Oil  Company,  I  am  not  with  you; 
I  am  after  the  wrong  that  is  being  done  the  common  people  in  this  country; 
that  is  what  I  am  after,  and  they  have  got  to  be  righted,  too,  and  I  will  tell 
you  so  in  my  wind-up.  Now,  I  want  to  say  this  much,  and  I  want  you  to 
turn  to  page  78  of  my  pamphlet,  and  I  wish  to  say  that  in  this  list  there  are 
some  refiners  that  went  out  of  the  business  in  1867,  if  I  understand.  I 
don't  charge  that  to  anything  appertaining  to  the  South  Improvement  Com- 
pany; I  don't  charge  their  going  out  of  business  to  the  South  Improvement 
Company  contract  that  was  entered  into  by  the  railroads.  They  went  out 
previous  to  that  date,  1867,  but  now  we  can  come  up  to  1870  or  1871,  when 
the  rebates  were  very  large  to  some  refiners  and  very  small  or  none  at  all 
to  others.  Previous  to  that  date  there  had  been  a  good  many,  as  I  said 
yesterday,  equal  to  the  Standard  Oil  Company.  They  got  drawbacks  and 
rebates.  These  same  railroads  have  been  violating  the  law  ever  since  they 
were  created  in  this  country,  by  giving  rebates  and  drawbacks,  but  they 
were  never  so  large  previous  to  1872,  but  that  the  average  business  man 
could  stand  up  under  them.  He  could  not  make  so  much  money  as  his 
neighbor  and  he  used  to  wonder  why,  and  since  this  thing  has  come  out 
he  understands  it.  In  the  explanation  of  all  the  acts  of  the  railroads  pre- 
vious to  that  time  he  has  learned  the  reason  was  discrimination.  As  I  have 
shown  you,  that  the  contract  of  the  South  Improvement  Company  and  the 
roads  with  their  rebates  larger  than  100  per  cent.,  given  as  privileges  to 
certain  people,  was  the  means  of  these  refiners — most  of  them — going  out 
of  business.  I  have  here  a  list  of  them.  Now  then,  these  refineries  were 
all  in  existence,  Mr.  Chairman  and  gentlemen,  at  the  time  of  the  South  Im- 
provement Company.  That  is  in  accord  with  the  date  of  1872,  I  mean  the 
contemporaneous  date.  I  have  read  to  you  this  morning  the  repeal  of  the 
South  Improvement  Company's  charter.  I  have  read  to  you  the  contract 
between  the  producers  and  refiners  and  the  Standard  Oil  Company  and  the 
railroads.  I  have  also  said  to  you  that  that  contract,  which  was  so  fairly 
drawn  and  so  nicely  worded,  was  violated  within  1.5  days  or  within  two 
weeks,  according  to  the  evidence  of  Mr.  George  R.  Blanchard,  the  foiiner, 
or  perhaps  now.  Central  Traffic  Association  manager.  The  rebates  from  1872 
that  were  supposed,  and  it  is  said  went  out  of  existence  practically,  were  so 
great  that  the  business  of  the  average  refiner  was  silenced.  I  want  you  to 
listen  to  this  marvelous  statement;  now  it  is  a  marvelous  statement,  and  it 
is  in  evidence.  Now,  Mr.  Chairman  and  gentlemen,  I  am  going  to  read  to 
you  from  the  evidence  of  Frank  Rockefeller — testimony  given  before  a 
Congressional  committee  on  July  7,  1876.  I  will  read  from  clause  1.  (Read- 
ing) : 

"Q.  Do  you  know  how  many  refiners  there  were  in  Pittsburg  prior  to 
this  alleged  combination?"     (The  combination  of  1872.) 

If  you  will  refer  to  my  reportf — I  did  not  get  them  from  Mr.  Rockefeller 
even— I  got  the  names  of  these  refiners  by  wading  around  through  the 
country  myself,  and  if  you  will  look  on  page  82  you  will  find  that  in  Pitts- 
burg there  were  58  refineries  in  1867.  Thirty  refineries  have  been  crushed 
out  and  dismantled.  No  record  left.  The  58,  understand  me.  were  those 
that  were  run  and  that  were  not. 

Q.  (By  Vice-chairman  PHILLIPS.)  What  date  was  that?  A.  The  date 
is  1877,  when  I  took  the   inventory.     Thirty  refineries  have  been   crushed 


♦Black  faced  type  Indicates  matter  omitted,  in  the  course  of  editing-,  from  the 
official  report. 

tThis  list  of  refiners  is  taken  from  Mr.  Kmpry's  testimony  before  the  Committee 
071  Manufactures,  House  of  Representatives,  1888,  and  appears  on  page  234  of  the 
report  of  that  committee. 


356 


REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 


out  and  dismantled.     No  record  left.     The  remaining  28  have  been  bought  up 
or  leased  by  the  great  monopoly;    they  are  as  follows: 


Style  of  Works. 


Firm  Name. 


American Holdship  &  Erwin 

Aladdin Aladdin  Oil  Company 

Brilliant Loclihart  &  Frew 

Ely's David  Bly  &  Co 

cosmos i<.   S.   Waring 

Citizens' Citizens'   Oil  Works 

Crystal Livingston  Bros 

Central Central  Refining  Company. 

Eagle William  P.  Logan  &  Co 

Federal iving  &  Goodman 

Fairview D.   Hostetter 

Iron  City John  Spear  &  Co 

Keystone P.  Weisenberger  &  Co 

Liona J.  C.  Kirkpatrick  &  Co 

Lilly Brooks,  Balentine  &  Co 

Liberty J.  A.  McKee  &  Son 

Model Model  Refining  Company.. 

Miller's A.  D.  Miller 

National Standard  Oil  Company 

Nonpariel Loekiiart  &  Frew 

Penn H.  S.  A.  Stewart 

Peerless Central  Refining  Company, 

Petrilite Warmser,  Myers  &  Co 

Radiant J.  D.  Stockdale 

Riverside Elkins  &  Flack 

Star E.   J.    Waring 

Standard Standard  Oil  Company 

Vesta R.   J.   Waring 


Weekly 

Number 

Crude 

of 

Capacity. 

Stills. 

6.82S 

3 

4,017 

3 

13,078 

9 

2,490 

4 

7,394 

6 

6,072 

9 

3,624 

3 

21,867 

13 

2.444 

4 

2.456 

0 

2,136 

3 

1,600 

3 

1,018 

2 

564 

2 

2,072 

6 

5,498 

1 

3,233 

2 

5,238 

4 

5,538 

6 

1,318 

3 

1,854 

3 

3,758 

2 

1,703 

2 

1,906 

3 

1,809 

5 

3.718 

a 

7,250 

0 

9,058 

8 

Now,   listen  to   Mr.   Rockefeller: 

"Q.  Do  you  know  how  many  refiners  there  were  in  Pittsburg  prior  to 
this  alleged  combination?  A.  I  have  been  told  that  there  were  60  and  odd 
refiners. 

"Q.  How  many  are  there  now?  A.  I  was  told  by  the  same  parties  that 
there  were  now  less  than  20,  and  very  few  doing  any  business. 

"By  Mr.  REAGAN." 

Congressman  and  former  Senator  of  these  United  States. 

"Q.  What  is  the  cause  of  the  reduction  in  the  number  of  refineries?" 

Mind  you,  this  is  the  brother  of  John  D.  Rockefeller. 

"A.  I  suppose  the  main  cause  has  been  the  fact  that  they  could  not 
make  money.  I  have  understood  that  the  same  lever  was  brought  to  bear 
upon  them  as  upon  the  Cleveland  refiners.  We  had  in  Cleveland  at  one 
time  about  30  establishments,  but  the  South  Improvement  was  formed  and 
the  Cleveland  companies  were  told  that  if  they  didn't  sell  their  property  to 
them  it  would  be  valueless;  that  there  was  a  combination  of  railroad  and 
oil  men;  that  they  would  buy  all  they  could,  and  that  all  they  didn't  buy 
would  be  totally  valueless,  because  they  would  be  unable  to  compete  with 
the  South  Improvement  Company,  and  the  I'esult  was  that  out  of  the  30 
there  were  only  four  or  five  that  didn't  sell. 

"Q.  From  whom  was  this  information  received?  A.  From  the  officers 
of  the  Standard  Oil  Company.  They  made  no  bones  about  it  at  all.  They 
said:  'If  you  don't  sell  your  property  to  us  it  will  be  valueless,  because  we 
have  got  advantages  with  the  railroads.' 

"Q.  Give  the  names?  A.  John  D.  Rockefeller,  H.  M.  Flagler  and  O.  H. 
Payne. 

"By  Mr.  ROSS. 

"Q.  Mr.  Payne  is  the  son  of  a  member  of  Congress  of  that  name?  A. 
Yes,  sir. 

"Q.  Have  you  heard  these  gentlemen  say  what  you  have  stated?  A.  I 
have  heard  Rockefeller  and  Flagler  say  so;  other  iiartios  have  told  me  that 
Payne  had  used  the  same  argument  with  them. 


LEWIS  EMERY,  JR.  357 

"Q.  What  other  parties?  A.  I  won't  give  you  the  names  now.  There 
are  some  20  men  In  Cleveland  who  sold  out  under  the  fright,  and  almost  any 
of  them  would  tell  you  that  story. 

"Q.  Give  us  the  names  of  some  of  those  that  sold  out?  A.  J.  W.  Fau- 
cett,  of  Cleveland;  W.  C.  Scofield,  Joseph  Stanley,  John  Critchley,  John 
Stanley.     These  are  some  of  them. 

"By  Mr.  BUNNELL. 

"Q.  Do  you  make  the  same  statement  with  regard  to  the  shipment  of 
crude  oil  to  the  seaboard  that  you  do  with  regard  to  the  shipment  of  re- 
fined oil?     A.  We  do  no  business  of  that  kind." 

Now,  I  do  not  read  from  the  same  book,  but  it  is  the  same  testimony 
and  it  is  in  the  same  book,  but  I  can  find  it  quicker  in  this  one.  Shall  I 
proceed? 

Vice-Chairman  PHILLIPS.     Certainly. 

(Reading)  "Q.  You  spoke  a  while  ago  of  having  personal  knowledge 
of  certain  railroad  officials  having  been  stockholders  in  the  Standard  Oil 
Company.  How  do  you  know  that?  A.  I  know  it  from  the  officers  of  the 
Standard  Company  telling  me  that  they  were  stockholders. 

"Q.  Who  are  they?  A.  William  H.  Vanderbilt,  vice-president  of  the  New 
York  Central  Railroad  Company,  was  at  one  time  a  stockholder  in  the 
Standard  Oil  Company;  also  Amasa  Stone,  of  Cleveland,  the  general  man- 
ager of  the  Lake  Shore  road,  and  I  have  very  good  reasons  for  believing, 
though  I  don't  know  it,  that  Mr.  Devereaux  and  Mr.  Newell,  both  got  rebates. 
Mr.  Stone  sold  his  stock  two  years  ago,  or  before  the  time  when  he  quit  the 
railroad.  He  put  the  stock  on  the  market  in  Cleveland  and  sold  it,  and  he 
is  not,  I  believe,  a  stockholder  to-dav. 

"Mr.  KERR. 

"Q.  Therefore,  the  fact  is  that  whilst  he  is  a  railroad  official  he  dis- 
posed of  his  stock  in  the  Standard  Oil  Company.  A.  Yes.  sir;  but  that 
was  previous  to  the  time  when  we  surmised  that  this  arrangement  was 
made  by  the  pooling  of  freights. 

"Clause  K. 

"(Vanderbilt.  Tom  Scott,  Devereaux,  Newell  and  other  officers  of  these 
roads  got  rebates.) 

"By  the   CHAIRMAN. 

"Q.  Give  us  the  names  of  the  officials  of  the  railroads  that  you  think 
received  the  benefit  of  this  rebate?  A.  Understand  me,  I  do  not  say  that 
they  did  get  it.     It  is  merely  my  opinion. 

"Q.  Give  us  the  names  of  the  gentlemen  who  you  think  do  reap  the 
benefits  of  that  rebate?  A.  I  think  that  Mr.  Deveraux  gets  it,  and  that  Mr. 
Newell  gets  it.  and  that  Tom  Scott  gets  it.  that  Vanderbilt  gets  it,  and  other 
officers  of  those  roads,  whose  names  are  not  in  my  mind  just  at  present. 

"Q.  What  do  you  mean  by  a  pool,  a  pool  among  the  railroads  or  among 
the  oil  men?  A.  I  do  not  give  this  as  a  positive  fact,  but  as  I  understand  the 
arrangement,  this  is  a  pool  that  they  went  into;  I  understand  that  the  New 
York  Central  and  the  Erie,  the  Atlantic  &  Great  Western,  the  Pennsyl- 
vania Railroad,  the  Cleveland,  Columbus  &  Cincinnati  and  the  Baltimore  & 
Ohio  railroads  had  that  pool  and  are  combined  for  the  purpose  of  shipping 
oil  and  oil  only,  and  in  this  pool  the  Baltimore  &  Ohio  gets  a  certain 
number  of  barrels  to  go  over  its  road,  the  Lake  Shore  so  many  barrels  to 
go  over  its  road,  and  the  Pennsylvania  so  many  barrels  to  go  over  its  road 
from  different  points  in  this  country,  and  on  oil  that  is  shipped  over  these 
roads  in  the  pool  the  Standard  Oil  Company  draws  a  rebate  or  a  drawback 
from  the  shipments  of  so  much,  which  is  put  into  this  pool,  from  which- 
ever road  the  oil  can  go  over,  and  the  rebate  is  divided  up  between  the 
Standard  Oil  Company  and  the  railroad  officials. 

"Q.  The  railroad  officials,  do  you  say?  A.  So  I  understand  it;  I  don't 
Bay  that  of  my  own  knowledge.     No,  sir. 

"Q.  Then  it  does  not  go  to  the  railroads  themselves?  A.  No,  sir;  to 
the  railroad  officials. 

"Q.  To  the  railroad  officials?     A.  Yes.  sir. 


358  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

"Q.  And  do  you  think  it  extends  in  reality  to  Cleveland?  A.  Well,  we 
should  do  the  same  as  we  have  done  in  past  years  and  are  doing  at  the 
present  time;  we  are  shipping  our  oil  at  the  present  time  by  lake  and  canal^ 
because  we  cannot  ship  our  oil  by  rail  without  losing  money;  by  lake  and 
canal  we  can  just  about  save  ourselves." 

This  was  testimony  in  1876,  and  this  contract  that  I  have  just  read  was 
dated  October  1,  1874.  Have  you  any  doubt  of  rebates  (after  this  evidence 
of  these  men)  extending  between  1872  and  1876?  Why,  I  could  read  you 
volumes  about  it. 

Q.  (By  Mr.  RATCHFORD.)  1  want  to  remind  the  witness,  with  your 
consent,  Mr.  Chairman,  that  even  if  he  succeeds  in  proving  before  this  com- 
mission that  rebates  were  paid  22  or  23  years  ago,  his  testimony  falls  very 
short.  What  we  want  to  know,  Mr.  Witness,  is  whether  these  rebates  have 
been  paid  last  year  or  the  year  before.  You  are  wasting  your  time  in  en- 
deavoring to  prove  something  that  is  of  but  little  consequence.  I  do  not 
understand  that  the  Standard  Oil  Company  has  disclaimed  discriminations 
in  their  favor  prior  to  the  passage  of  the  interstate  commerce  law.  I  do 
not  understand  it  that  way,  but  I  would  ask  that  in  order  to  make  your 
testimony  effective  and  to  say  the  most  in  the  least  possible  time,  that  you 
confine  yourself  to  recent  years.  A.  Very  well,  that  is  what  I  asked  yester- 
day morning,  whether  this  testimony  was  to  be  taken  up  from  the  beginning, 
and  I  understood  the  only  object  was  to  trace  it  right  up  to  the  present  time 
and  to  show  the  discrimination  from  the  evidence,  the  witnesses  on  the 
stand  saying  that  no  rebates  were  paid.  I  was  endeavoring  to  show  that 
the  contracts  were  still  in  existence  at  the  present  time  that  were  made 
in  1872,  and  I  was  requested  to  follow  that  up. 

Q.  (By  Mr.  RATCHFORD.)  If  those  contracts  are  still  in  existence  and 
are  observed,  you  will  certainly  make  a  strong  point  if  you  show  us  that. 
A.  I  don't  say  they  are  in  existence  except  carrying  them  out  in  the  rebates 
and  in  the  methods  of  competition. 

Vice-Chairman  PHILLIPS.  Perhaps  Mr.  Ratchford  may  have  been 
absent  yesterday  when  he  showed  that  the  Standard  Oil  Company  was  or- 
ganized— that  is,  the  National  Transit  Company — under  precisely  the  same 
language  as  the  South  Improvement  Company? 

Mr.  RATCHFORD.     Yes,  I  understand  that. 

Vice-Chairman  PHILLIPS.     Then  he  is  tracing  it  up  from  that. 

The  WITNESS.  I  beg  your  pardon,  Mr.  Chairman  and  gentlemen  of  the 
whole  commission,  but  I  have  been  simply  following  out  that  which  I  was 
asked  to  do,  *and  if  it  is  to  be  cut  off  I  am  perfectly  willing  to  retire  at  once. 

Q.  (By  Representative  LIVINGSTON.)  Do  you  lay  down  the  proposi- 
tion that  that  contract  is  pending  now  and  is  enforced?     A.  No,  sir. 

Q.  Then  how  long  since  it  has  expired?  A.  It  expired  two  wppks  after 
it  was  made  so  far  as  fair  rates  were  concerned,  *if  you  understand  what  I 
am  speaking  about.  The  agreement  between  all  the  railroads  that  were 
in  this  combination  to  stop  the  rebate  system  entirely  and  give  the  op- 
portunity to  the  trade  to  go  on  as  it  had  done  in  former  i-ears,  and  I  am 
trying  to  show  you  that  from  that  time  on  up  to  the  present  time  these 
rebates  were  participated  in.  I  do  not  say  by  the  Standard  Oil  Company, 
but  I  do  say  that  we  have  collected  them  on  oil  we  shipped  and  I  "uippose 
they  have  with  others.     *l  have  no  right  to  say  whether  they  have  or  not. 

Q.  How  lately  have  you  collected  any  rebate?     A.  Up  to  1893. 

Q.  That  is  the  way  to  get  down  to  it?  A.  Well.  I  have  stated  it;  I 
stated  it   frankly  yesterday. 

*Vice-Chairman   PHILLIPS.     Colonel   Livingston   happened  to   be   absent. 

Representative   LIVINGSTON.     No,   I   was   not. 

Vice-Chairman    PHILLIPS.    This   morning   when    he  stated    the    case. 

Th(;  WITNESS.  I  gave  the  evidence  yesterday  that  rebates  had  been 
paid  and  acknowledged  to  the  Interstate  Commerce  Commission  up  to  1893. 
*l  don't  know  whether  that  gentleman  was  present  or  not,  but  that  1  proved 
by  reading  the  document,  and  the  cases  are  right  there. 


♦Black  faced   type   Indicates   matter  omitted,  In  the  course  of  editing,   from   the 
official  report. 


LEWIS  EMERY,  JR.  359 

Q.  (By  Representative  LIVINGSTON.)  Now,  then,  Mr.  Ratchford's 
point  is  this:  If  this  is  acknowledged,  what  is  the  use  of  going  behind  1893? 
A.  I  don't  want  to,  if  you  don't  want  me  to.  *l  thought  I  had  my  orders 
yesterday  morning  to  proceed  in  that  way,  but  I  am  ready  to  quit. 

Q.  (By  Mr.  KENNEDY.)  These  rebates  that  were  ordered  paid  in  1893 
were  for  oil  carried  when?     A.  From  1888  up. 

Q.  Up  to  when?  A.  Up  to  1893,  because  they  got  judgment  up  to  1888 
in  the  courts  of  Warren  county,  and  they  carried  the  balance  into  the 
Interstate  Commerce  Commission  *because  of  some  dispute  in  court,  and 
the  Interstate  Commerce  Commission  rendered  this  judgment  of  $86,000,  as 
J   have  told. 

Q.  (By  Mr.  RATCHFORD.)  I  hope  the  witness  will  not  misunderstand 
my  suggestion.  I  want  to  give  the  witness  all  the  time  he  wants,  as  every 
other  witness  has  had.     A.   I  don't  want  any. 

Q.   You  don't  want  any?     A.   No,  I   am  at  your  service. 

Q.  Well,  sir,  we  want  you  and  we  want  to  give  you  all  the  time  that  you 
require,  but  the  commission  would  like  to  deal  with  present  conditions  as 
near  as  possible,  showing  us  what  exists  to-day,  and  we  want  to  give  you  all 
the  time  you  desire,  and  if  you  wish  to  go  back  and  refer  to  it  fully  to  make 
the  record  complete  we  will  hear  your  testimony  just  the  same:  at  least  I 
am   in  favor  of  it.     A.   Well,  sir,   I   am  right  here  to  be  asked  questions. 

Vice-Chairman  PHILLIPS.  Is  there  any  objection  by  the  commission 
that   Senator   Emery   should   proceed   in   his  own   way? 

Mr.  CLARKE.  The  testimony  of  the  witness  has  been  interesting  and 
instructive,  and  I  have  been  glad  to  hear  it,  but  my  understanding  is  that 
it  is  conceded  by  the  Standard  Oil  Company  and  the  railroad  companies 
and  everybody  else,  that  there  were  discriminations  and  rebates  prior  to  the 
passage  of  the  interstate  commerce  law.  That  being  the  case  we  need  no 
evidence  to  establish  that  fact.  We  are  ready  to  vote  now  that  such  re- 
bates and  such  discriminations  existed,  without  doubt.  All  we  want  is  to 
have  the  witness  give  us  all  the  information  that  he  can  as  to  what  he 
claims  have  been  unfair  discriminations  on  the  part  of  the  railroad  com- 
panies since  the  passage  of  the  interstate  commerce  law.  Now,  if  he  will 
confine  himself  within  those  limits  we  shall  be  glad  to  hear  all  that  he  has 
to  say. 

Vice-Chairman  PHILLIPS.  He  has  agreed  to  do  so.  If  that  will  be 
agreeable  to  Senator  Emery  he  can   proceed. 

The   WITNESS.      I    am   right   here  to  answer  questions. 

Vice-Chairman  PHILLIPS.  Well,  if  it  is  agreeable  to  you,  confine  your- 
self to  testimony  in  regard  to  rebates  since  the  passage  of  the  interstate 
commerce  law.  as  it  is  already  conceded  that  there  have  been  very  large  dis- 
criminations before  that.  You  can  take  it  up  at  that  time  and  go  on  further 
from  there   if  you   want  to  add   to   your  testimony. 

The  WITNESS.  If  it  is  the  question  of  rebate  you  have  asked,  I  have 
given  you   the   proof:    and    I    have   nothing   more  to  say. 

Q.  (By  Representative  LIVINGSTON.)  I  will  ask  you  a  question  now. 
Was  there  any  obstruction  at  that  time,  or  has  there  been  at  a  recent  date, 
on  the  part  of  any  corporation  or  trust  or  combine,  to  lessen  or  retard  com- 
petition   in   the  oil    business  in   any  of  its  branches?     A.   Yes,   siree. 

Q.  Now,  please  give  the  commission  that?  A.  That  is  just  what  I  was 
leading  up  to,  and  I  was  going  to  bring  it  up  to  these  days,  every  bit  of  it.  I 
was  goinq  to  bring  it  right  up  to  date,  and  I  was  very  near  to  it. 

Q.  (By  Vice-Chairman  PHILLIPS.)  How  near  were  you  to  it?  A.  Mr. 
Chairman  and  gentlemen,  1  have  only  tried  to  make  these  things  plain  to 
men  that  perhaps  had  a  limited  knowledge  as  to  how  a  company  obtained 
entire  possession  almost,  and  practically  the  entire  monopoly  of  a  business 
Ihat,  as  I  said  yesterday  morning,  ranks  third  to-day  in  the  matter  of  exports, 
and  during  the  war  you  had  to  depend  upon  oil  for  gold,  because  it  brought 
it  back  to  this  country. 

Q.  (By  Representative  LIVINGSTON.)  I  suppose  he  is  endeavoring  to 
do  a  thing  that  perhaps  we  have   not  considered   and   have   not  appreciated. 

♦Black   faced   type   indicates  matter  omitted,  in  the  course  of  editing,   from  the 
official  report. 


360  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

*it  may  be  that  the  Senator  is  trying  to  put  this  in  an  accumulative  form — 
this  testimony  before  the  commission — so  that  it  cannot  be  denied.  The 
baie-naked  fact  that  he  has  asserted,  in  answer  to  my  question,  I  suppose 
may  be  denied  by  somebody  in  the  future.  Isn't  that  the  purpose?  A.  They 
cannot  deiy    it  truthfully,    Mr.    Livingston. 

Representative  LIVINGSTON.  Then  I  think  we  had  better  allow  the 
Senator  to  go  on   in  his  own  way. 

The  WITNESS.     I   do   not  ask  it,   I   am   ready  to   be  dismissed. 

Representative  LIVINGSTON.  I  do  not  think  the  commission  wants  to 
dismiss  you. 

The  WITNESS.  Not  that  I  care  anything  about  this.  I  was  called  here 
by  your  commission. 

Representative  LIVINGSTON.  Well,  it  is  our  duty  to  economize  time, 
you  understand.  A.  Well,  my  time  is  as  valuable  as  yours.  I  have  an 
enormous  business  on  my  hands,  and  I  am  here  at  the  expense  of  that  now; 
and  you   must  say  what  I  am  to  do  and  what   I   am  not  to  do. 

Mr.   RATCHFORD.     Continue   in   your  own   way.  Senator. 

Vice-Chairman  PHILLIPS.  If  there  are  no  objections  the  Senator,  at 
the  suggestion  of  Representative  Livingston,  will  continue  in  his  own  way 
to  give  his  testimony. 

Representative  LIVINGSTON.  I  would  suggest  to  the  Senator  that  as 
far  as  transactions  are  concerned,  down  to  the  interstate  commerce  law — 
down  to  1887 — we  understand  that,  and  I  suppose  Mr.  Ratchford  had  his 
mind's  eye  on  that  fact  when  he  interrupted.  Therefore,  unless  it  is  abso- 
lutely necessary  to  bring  it  out  step  by  step,  in  the  accumulated  form,  so 
that  it  cannot  be  disputed  hereafter,  I  would  suggest  that  everything  back 
of  that  is  irrelevant  now.  A.  Well,  I  was  going  to  show  you  the  contract 
that  existed  between  the  railroads  in  1874  and  1876,  and  I  was  going  to  prove 
that  it  was  the  contract  in  existence  to-day,  and  that  the  system  of  attempt- 
ing to  break  up  competition  in  trade  was  going  on  through  certain  con- 
tracts.    Then   I   will  stop. 

Q.  It  is  better  to  proceed.  A.  I  don't  think  I  can  educate  this  commis- 
sion on  anything  unless  you  ask  me  questions. 

Representative  LIVINGSTON.  How  was  that?  A.  I  don't  think  I  can 
educate  this  commission  on  anything  unless  you  ask  me  questions. 

Vice-Chairman  PHILLIPS.  I  don't  think  the  Senator  means  to  cast  a 
reflection. 

The  WITNESS.  I  beg  your  pardon,  no  reflection,  indeed.  I  profess  to 
be  a  gentleman.     No  reflection  whatever,  because  I  care  nothing  about  it. 

Q.  (By  Vice-chairman  PHILLIPS.)  But  you  meant  to  say  the  better 
way  to  educate  us  would  be  to  answer  questions?  A.  Yes,  sir.  I  said  I  was 
here  to  answer  questions. 

Vice-Chairman  PHILLIPS.  The  other,  then,  will  be  stricken  out  of  the 
record. 

The  WITNESS.  No,  I  think  the  gentleman  misunderstood  me.  I  would 
not  for  the  world  say  anything  to  offend  anyone. 

Mr.  FARQUHAR.  I  will  also  state  to  the  Senator  that  this  commission 
understands  pretty  generally,  I  know  quite  a  number  of  the  members  do, 
the  investigation  by  the  Committee  on  Manufactures  in  this  volume  here, 
which  was  taken  up  to  1888.  and  we  know  these  contracts  and  other  matters 
that  you  are  discussing,  are  contained  in  extenso  in  the  Bacon  report.  The 
whole  of  that  mass  of  testimony  is  of  the  Standard  Oil  Company  from  begin- 
ning to  end,  up  to  1888.  I  thought  of  asking  some  questions  out  of  this,  but 
it  seems  to  be  the  sense  of  most  of  the  commission  here  that  it  is  not  neces- 
sary to  go  into  it  prior  to  that.  But  I  may  say  here  that  we  can  sit  for  one 
whole  month,  and  we  cannot  get  any  more  than  is  given  in  the  Bacon  report, 
because  the  original  documents,  the  very  ones  that  are  being  discussed  by 
the  Senator,  are  in  it.  Yet,  after  all,  on  the  ground  that  it  is  both  interesting 
and  possibly  instructive  to  know  how  business  was  done  on  the  railroads 
from  1870  to  1887,  I  certainly,  as  a  commissioner,  haven't  a  particle  of  objec- 


*f!lack    faced    type    indicates    matter   nmittcd,   in   the  cour.'.-e   of  editinff,    from    the 
official  report. 


LEWIS  EMERY,  JR.  361 

*tion.  I  would  like  very  well  to  hear  Senator  Emery  explain  the  Campbell 
contract  and  the  Scott  contract,  and  everything  else.  To  an  unprejudiced 
man  there  is  no  trouble  in  looking  over  this  report. 

The  WITNESS.     That  is  back  in   1872. 

Mr.  FARQUHAR.  Between  1870  and  1880.  When  a  new  contract  was 
made,  it  impliedly  declared  that  there  had  been  discriminations  without 
number  before  that;  yet  it  is  simply  a  matter  of  record  here.  We  may  have 
it  from  the  remarks  of  Senator  Emery  and  he  read  a  good  part  of  this 
pamphlet  before  that  covered  a  good  deal  of  this  ground.  I  join,  however, 
in  the  idea  with  some  of  the  other  commissioners  here,  that  for  our  report 
to  Congress,  it  is  the  discriminations  from  1887  that  we  would  like  to  get 
hold  of,  if  we  can.     This  evidence  is  very  strong,  I  know. 

Mr.  A.  L.  HARRIS.  How  are  we  utilizing  that  testimony  that  has  been 
taken  by  Congress?  It  has  been  used  by  Congress,  but  how  are  we  utiliz- 
ing it? 

Mr.  FARQUHAR.  Well,  that  was  the  very  reason  that  I  sav  now  that  I 
am  very  willing,  as  a  commissioner,  to  hear  Senator  Emery  give  the  testimony 
that  he  has  with  regard  to  this  report,  to  the  Campbell  agreement — to  all  of 
those  things  tnat  are  germane  to  the  question.  But  I  would  rather  like  to 
proceed  in  that  way,  and  I  would  suggest  to  the  Senator  that  as  a  mere 
matter  of  time — of  course.  It  is  not  his  own  fault — but  he  sometimes  drifts 
on  to  a  side  issue,  a  good  deal  as  we  do  in  stump  speaking — and  sometimes 
loses  the  exact  line  of  the  evidence  he  wants  to  bring  out. 

The  WITNESS.     Well,  gentlemen,  a  man  can't  help  it  sometimes. 

Mr.  FARQUHAR.  As  I  say,  I  feel  quite  interested,  and  yet  it  is  very 
plain,  Mr.  Chairman,  that  we  can  use  this  only  as  a  historical  or  a  chronolog- 
ical review,  in  making  a  report  to  Congress,  unless  perhaps  the  witnesses 
were  summoned,  just  as  we  did  in  the  case  of  Havemeyer  and  Elder,  right 
before  the  commission,  then  having  the  whole  testimony  to  prove  it. 

Mr.  A.  L.  HARRIS.  Now,  Mr.  Chairman,  as  I  understand,  the  witness  is 
attempting  to  show  conditions  and  contracts  and  charges  of  years  ago.  He 
is  showing  conditions  that  existed  prior  to  the  passage  of  the  interstate 
commerce  law,  and  he  will  follow  that  up  no  doubt  by  showing  that  the  same 
conditions  exist  now,  notwithstanding  the  fact  that  the  fnterstate  commerce 
law  has  been  passed. 

The  WITNESS.     Yes,  that  is  it. 

Mr.  A.  L.  HARRIS.  And  those  are  the  circumstances  and  the  facts,  I 
think,  that  the  Senator  has  gone  over.  That,  I  feel,  will  be  necessary  when 
it  comes  to  wind  up  his  testimony.  While  we  are  consuming  some  time  with 
him,  yet  at  the  same  time  I,  for  one,  feel  like  permitting  Senator  Emery  to 
go  on  in  his  own  way  for  the  purpose  of  showing  facts  that  we  desire  to 
take  hold  of  at  the  present  time. 

Vice-Chairman  PHILLIPS.  At  the  request  of  Mr.  Livingston,  Governor 
Harris  and  Mr.  Ratchford,  the  Senator  will  proceed  in  his  own  way,  unless 
there  are  some  further  objections.     If  not  the  Senator  will  proceed. 

Representative  LIVINGSTON.  I  want  to  bring  to  the  Senator's  atten- 
tion one  thing.  I  am  very  anxious  to  hear  him  out,  and  it  is  a  duty  made 
incumbent  upon  this  commission  by  the  United  States  Congress  when  we 
were  appointed,  to  endeavor  to  ascertain  the  facts.  It  was  made  incumbent 
upon  this  commission  by  Congress,  and  we  were  appointed  for  a  single  pur- 
pose, to-wit.  to  learn,  if  possible,  if  combinations,  trusts,  combines,  or  corpora- 
tions lessen  legitimate  competition  in  any  way  in  any  of  these  industrial 
pursuits.  I  want  to  know  if  you  have  any  testimony  to  lead  up  to  the  fact 
that  the  railroads,  as  you  asserted  on  yesterday  or  the  day  before,  are 
largely  to  blame  for  this   discrimination   in  favor  of  one  oil  company  and 

against  another.    I  want  you.  before  you  proceed,  to  refresh  your  memory 

A.  I  did  not  say  that  yesterday. 

Q.  You  did  not  say  it  in  that  way.  A.  No.  sir;  I  did  not  even  say  it.  I 
said  that  the  Standard  Oil  Company  under  its  former  contracts  had  had 
rebates,  and  I  said  that  these  contracts,  although  they  had  been  repealed, 
some  of  them,  were  practically  carrying  out  their  provisions.  That  is  what 
I  said. 


*BIack   faced   type   indicate?   matter   omitted,   in   tlie  course  of  editing,   from   the 
cfTicial  report. 


362  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

Q.  That  Is  wTiat  I  understood  you  to  say.  A.  And  I  cited  to  you  instances 
in  which  the  trade  was  being  affected  at  the  present  time.  I  don't  know 
whether  the  commissioner  was  present  or  not.     I  did  not  see  him. 

Representative  LIVINGSTON.  I  wanted  your  testimony  explicit  before 
you  went  on — before  you  got  through  with  your  testimony. 

Vice-Chairman  PHILLIPS.  Now,  the  Senator  will  proceed  in  his  own 
way  and  come  to  that  at  the  last,  or  whenever  there  is  an  opportune  time,  as 
requested. 

^Representative  LIVINGSTON.  Yes,  sir;  whenever  it  suits  you  to  bring 
it  up.     I  don't  indicate  the  time  at  all. 

Vice-Chairman  PHILLIPS.  He  has  been  requested  to  proceed  in  his 
own  way  by  unanimous  consent. 

*The  WITNESS.  I  want  you  to  understand,  gentlemen,  that  I  am  per- 
fectly willing  to  leave  this  desk  and  I  will  leave  it.  I  did  not  come  up  here 
at  my  own  request.  I  came  from  my  home  by  invitation,  and  I  will  feel 
just  as  well  towards  you  if  I  stop.  I  came  here  at  your  solicitation,  and  I  was 
told  yesterday  morning  to  go  on  and  give  this  testimony,  and  I  have  done  it; 
and  if  you  see  fit  to  call  me  down  now,  I  will  feel  just  the  same  as  I  did 
yesterday. 

Vice-Chairman  PHILLIPS.  By  unanimous  consent  of  the  commission 
you  are  to  proceed.  Senator  Emery,  in  your  own  way. 

*The  WITNESS.  I  have  been  in  public  life  myself,  and  I  have  been 
speaking  a  good  part  of  my  life,  and  I  know  pretty  near  what  to  do.  I  have 
some  knowledge  of  law  and  things.  Of  course,  I  am  not  here.  !  suppose,  to 
tell  you  anything  appertaining  to  the  government  of  this  country  or  the 
States.  I  am  here,  perhaps  with  my  intelligence  equal  to  anybody's  else, 
and  I  am  ready  to  assert  what  I  know,  and  put  it  in  shape.  My  life  has 
been  just  as  checkered  as  anybody's  else;  I  vvant  to  say  to  this  commission 
and  to  the  gentleman  referring  to  the  Campbell  contract  as  ancient  history, 
that  I  know  all  about  it,  and  I  can  explain  it,  and  if  you  hadn't  asked  me  for 
any  ancient  history  of  this  business,  I  would  not  have  said  a  word  about  the 
Campbell    contract. 

You  may  think  you  have  got  me  in  a  hole  about  the  Campbell  contract. 
I  want  to  give  you  to  understand  that  you  can't  corner  me. 

Mr.  FARQUHAR.     This  is  a  little  ungenerous  in  the  witness. 

Vice-Chairman  PHILLIPS.  I  would  say  that  there  is  no  idea  of  anybody 
to  attempt  to  corner  you.   Senator. 

The  WITNESS.  I  am  not  responsible  for  anything  to  this  committee 
under  its  orders.  Not  a  single  thing.  And  there  are  men  who  have  occupied 
this  chair  two  days  at  a  time  that  were  not  interrupted  that  I  know  of,  that 
were  rendering  testimony  that  was  not  germane  to  this  question  at  all. 

Mr.  CLARKE.  I  hope  the  witness  will  not  entertain  the  idea  that  any- 
body in  this  commission  wishes  to  corner  him. 

The  WITNESS.  On  the  questions,  that  is  all,  Mr.  Clarke,  on  the  ques- 
tions that  may  be  propounded  to  me.  I  know  the  preparation  that  has  been 
made. 

Mr.  CLARKE.  The  witness  is  here  to  give  us  light,  and  we  are  here 
seeking  light,  and  we  wish  him  to  give  us  all  he  can,  being  careful  not  to 
unnecessarily  repeat  statements  or  to  dwell  upon  matters  which  we  all 
recognize  as  truth,  and  to  proceed  as  rapidly  as  he  can,  with  the  understand- 
ing that  we  are  prepared  to  believe  what  he  is  saying,  and  that  we  have  no 
desire  to  embarass  him  in  any  way  whatever  in  presenting  his  testimony. 

Vice-Chairman  PHILLIPS.  Senator  Emery,  then,  will  proceed  in  his 
own  way. 

Mr.  RATCHFORD.  I  want  to  say  a  word  now,  aside  from  what  the  wit- 
ness has  stated,  about  our  inability  to  corner  him. 

The  WITNESS.  No,  now,  I  take  exception.  Permit  me,  Mr.  Ratch- 
ford 

Mr.  RATCHFORD.  That  is  quoting  your  own  language;  if  you  want  to 
correct  it,  we  will  be  glad  to  have  you  do  it. 


*P,l;;.-k   faced   type   indicates  matter  omitted,  in  the  couipe  of  oditinp,   from  the 
official  report. 


LEWIS  EMERY,  JR.  363 

*The  WITNESS.  I  beg  your  pardon.  I  said  so  far  as  questions  were 
concerned.  Now,  I  understood  that  there  was  to  be  somebody  from  their 
side,  and  that  I  was  to  be  presented  with  some  very  hard  questions  and  that 
I  cculd  not  answer  them.  Understand,  it  is  not  a  reflection  on  the  com- 
mittee. It  is  on  somebody  else — that  they  were  going  to  put  me  in  a  hole. 
That  is  the  only  point.  I  said  it  could  not  be  done.  That  is  what  I  meant, 
I  said  it  could  not  be  done.  I  take  no  exceptions  to  what  you  have  said. 
I  have  been  too  long  standing  up  before  people  in  the  Senate  and  in  the 
House  and  receiving  my  rebukes;  that  is  all  right;    I  take  no  offense. 

Representative  LIVINGSTON.  I  do  not  suppose  any  of  the  members  of 
the  commission   said  that  you  would   be   put   in  a  hole,  did  they? 

The  WITNESS.  No,  no,  no;  not  by  any  means;  and  I  don't  want  you  to 
understand  it  that  way. 

Mr.  RATCHFORD.  Now,  I  want  to  take  exception  to  the  statement 
made  by  the  witness  that  other  witnesses  have  been  in  this  chair  for  two 
days  at  a  time,  and  have  not  been  interrupted. 

The  WITNESS.  No,  I  said  that  they  had  occupied  the  time;  I  don't  care 
about  the  interruptions. 

Vice-Chairman  PHILLIPS.  You  said  that  they  had  not  been  interrupted; 
I   refer  to  the  stenographer's  notes. 

(A  pause.) 

The  WITNESS.  Well,  then,  take  it  that  way.  I  meant  to  say  they  had 
occupied    the   time. 

Mr.  RATCHFORD.  No  witness  has  ever  occupied  the  chair  one  hour  or 
one  half  hour  without  interruption. 

The  WITNESS.  I  don't  care  how  much  time  they  occupied.  I  prefaced 
my  remarks  yesterday  morning  by  saying  that  I  had  no  animosity  against 
anybody  at  all;  that  I  was  here  simply  at  your  solicitation,  and  I  feel  now, 
in  this  discussion  here,  that  I  have  rather  imposed  upon  your  time,  and  of 
course  I  do  not  desire  to  continue 

Representative  LIVINGSTON.  V\/ell,  we  have  wasted  40  minutes  now 
and  we  all  feel  better,  and  the  witness  is  rested,  and  we  have  had  this  little 
pow-\Aow,  and   I   move  now  that  we  go  on. 

Vice-Chairman  PHILLIPS.  Well,  he  has  been  requested  to  do  so,  by 
unanimous  consent,  in  his  own  way. 

The  WITNESS.  I  trust  that  you  gentlemen  will  not  harbor  anything 
against  me  for  anything  I  may  have  said,  for  I  had  no  intention  whatever  of 
delivering  an  insult  or  any  rebuke  in  any  way,  as  it  is  beneath  my  diginity 
to  do  so. 

Mr.  KENNEDY.  For  one,  I  want  to  hear  all  you  have  to  say,  if  it  takes 
a  week  to  cay  it,  in  your  own  way. 

The  WITNESS.  A  little  explanation  if  you  will  permit  me.  I  venture 
to  say  this  to  the  commission:  I  don't  think — ^1  will  not  even  except  Mr. 
Phillips,  who  has  been   in  the  oil   business  for  the  last  30  years 

Vice-Chairman   PHILLIPS.     More  than  that. 

The  WITNESS.  Yes,  sir;  35  years,  but  I  have  known  him  for  30  years. 
I  thiok  I  have  told  him  things  that  he  never  knew  about  the  oil  business — 
about  the  trade.  I  have  told  him  things  that  he  never  knew,  and  I  was  sent 
for  to  educate  this  committee,  as  I  understood,  in  the  fact  of  the  injury  that 
has  occurred  to  this  great  industry  that  has  been  monopolized  through  cer- 
tain methods.  I  venture  to  say  you  gentlemen  did  not  know  how  it  was 
brought  about.  That  is  all.  To  a  man  that  has  35  or  40  years'  experience 
in  the  business,  and  I  being  a  manufacturer  and  desiring  to  continue  in  the 
business,  as  I  do,  and  following  these  things  from  America  to  Europe — all 
over  the  wor^ — and  making  it  a  study  for  17  years  of  my  life — I  don't  think 
Mr.  Phillips  himself  knows  one-half  as  much  about  the  subject  as  I  do. 

Q.  (By  Vice-Chairman  PHILLIPS.)  That  is  about  the  manufacture, 
transportation  and  so  on?  A.  I  mean  about  the  methods  of  transportation 
and  taking  it  out,  as  I  have  shown  you.  I  have  produced  evidence  here  as 
simple  as  any  man  has  ever  seen,  so  that  you  can  see  that  this  great  indus- 
try has  been  throttled,  and  I  understand  your  duty  is  to  frame  some   law,  to 


*Black   faced   type   indicates   matter   omitted,  in  the  course  of  editing,   from  ilie 
official  report. 


364  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

♦recommend  some  law  for  saving  a  business  whose  interest  is  as  great 
to  the  people  of  this  country  as  this  is.     That  is  what  I  think. 

Vice-Chairman  PHILLIPS.     The  Senator  will  please  proceed. 

The  WITNESS.     I  wish  to  say 

Mr.  A.  L.  HARRIS.  You  were  dealing  with  the  subject  of  the  refineries 
that  have  gone  out  of  existence. 

Mr.  FARQUHAR.     The  Pittsburg  refineries. 

The  WITNESS.  Well,  we  will  just  drop  that  part  of  it  and  say  that 
more  than  95  per  cent,  of  the  refineries  that  existed  in  1872  were  driven  to 
the  wall  before  1877.  Now,  I  can  give  you  the  proof  of  that,  and  I  will  make 
that  bold  statement.  I  will  also  state  to  the  commission  that  I  proved  yes- 
terday, by  the  testimony  of  Mr.  H.  M.  Flagler,  that  the  Standard  Oil  Com- 
pany was  formed  in  1870  in  Ohio.  I  also  proved  that  Mr.  William  H.  Van- 
dcrbilt  and  other  magnates  became  stockholders  in  it.  I  also  proved  that 
rebates  had  been  paid  and  I  am  prepared  to  prove  that  they  were  paid  clear 
up  to  1879,  *which  you  acknowledged;  and  I  am  prepared  to  prove  that  the 
rebates  were  paid  from  1872  up  to  1879,  when  the  testimony  was  taken 
before  the  Hepburn  Committee,  and  Mr.  H.  M.  Flagler  swore  that  they  had 
a  capacity  of  600  barrels  per  day  of  crude  oil  in  their  refinery.  Not  the 
Hepburn  Committee,  but  the  committee  of  1888. 

*Q.  (By  Mr.  FARQUHAR.)  The  Bacon  Committete?  A.  Yes,  sir;  the 
Bacon  Committee. 

Q.  The  Committee  on  Manufactures,  as  it  was  called?  A.  Yes,  sir;  he 
swore  that  they  had  600  barrels  a  day  capacity  at  that  time.  The  production 
at  that  time  was  about  16,000  barrels  a  day,  which  would  give  them  4  per 
cent,  of  the  refining  capacity  at  that  time.  At  that  time  there  existed  in  the 
oil  country,  or  spread  out  from  Louisville,  Ky.,  to  Portland,  Me.,  upwards  of 
250  refineries. 

Mr.  Henry  H.  Rogers — I  was  going  to  read  you  this  testimony,  but  I  am 
afraid  I  will  dwell  upon  your  time:  it  is  all  contained  in  this  book.  Mr, 
Henry  H.  Rogers  and  Jabez  A.  Bostwick,  deceased,  members  of  the  Standard 
Oil  Trust,  swore  in  1879  before  the  Hepburn  Committee — made  affidavit — ■ 
that  they  owned  90  per  cent,  to  95  per  cent,  of  the  oil  industry  of  America — 
that  is  to  say,  these  refineries.  Bear  in  mind  that  in  1870  and  1871,  they 
owned  4  per  cent,  and  in  the  brief  space  of  seven  years  they  had  silenced  the 
fires  in  all  of  the  refineries,  all  250,  except  their  own.  The  history  is  here. 
You  ought  to  have  it.  Every  man  ought  to  read  it  to  know  the  method  in 
W'hich  they  accomplished  that  great  feat  of  throttling  that  industry  from 
1872  to  ]879. 

Q.  Do  you  desire  that  it  should  be  put  in  the  record  so  that  it  may  be 
put  before  the  commission? 

*Vice-Chairman  PHILLIPS.  He  said  he  had  omitted  calling  attention  to 
these  contracts. 

Mr.  A.  L.  HARRIS.  What  I  had  reference  to  was  the  means  of  utilizing 
that  testimony. 

Representative  LIVINGSTON.  Let  him  state.  Mr.  Chairman,  in  his  own 
way,  how  they  did  that  in  seven  years. 

The  WITNESS.  Mr.  Commissioner,  it  is  simply  on  record  in  this  book, 
the  Commonwealth  of  Pennsylvania  vs.  the  Pennsylvania  Railroad,  which 
suit  was  for  three  years  being  tried  and  testimony  being  taken.  This  is  the 
evidence.     There  it  is. 

Q.  (By  Representative  TJVINGSTON.)  Can  you  state  in  a  few  words 
how  it  was  done?     A.  Discrimination. 

Q.  What  particular  method?  A.  No  different  method;  only  w^hat  I  have 
stated.     The  railroads  paid  it  to  them. 

Q.  If  the  railroads  wore  guilty  of  this,  tell  us  how  they  did  it.  By  con- 
tract? By  agreement?  Did  they  give  it  to  them  in  the  form  of  rebates? 
A.  Certainly;  certainly;  a  rebate  on  crude  oil.  For  instance,  a  man  owned  a 
refinery  or  several  refineries  in  the  oil  country.  At  the  beginning  of  the 
business,  the  Standard  Oil  Company  didn't  have  any.  They  gave  a  rebate  to 
a  man  that  owned  a  pipe  line,  of  22  cents  a  barrel  for  all  oil  loaded  upon 


•Black   faced   type   inrlicate.s   mattfr   -imitted,  In  the  course  of  editing,   from   the 
ofllclal  report. 


LEWIS  EMERY,  JR.  365 

the  cars  at  the  railroad.  The  man  that  owned  a  refinery,  I  care  not  where, 
and  owned  his  own  pipe  line,  was  not  permitted  to  have  that  rebate.  There 
was  22  cents  against  him  right  there.     That  is  the  contract. 

Q.  And  that  is  one  of  the  methods  by  which  they  drove  them  out  of  the 
business?  A.  Certainly.  How  could  you  do  any  business  against  22  cents 
profit  which  they  did  not  earn,  and  you  were  manufacturing  oil.  The  22 
cents  alone  would  have  driven  you  out,  but  in  addition  to  that  they  got  49 
cents  more. 

Q.  For  what?  A.  Transportation  by  railroad,  under  agreements;  and 
that  is  the  way  they  got  from  4  per  cent,  of  the  oil  industry  in  1871,  to  90  or 
95  per  cent,  in  1879,  and  the  whole  country  was  silenced. 

Q.  What  did  the  Standard  Oil  Company  give  the  railroads  for  doing  that 
for  them?  If  they  used  the  railroads  as  a  means  for  doing  that,  what  did  the 
Standard  Oil  Company  pay  the  railroads?  *A.  Didn't  I  read  this  testimony 
just  now? 

Q.  I  want  it  brought  out  right  here.  I  want  it  for  the  purpose  of  con- 
necting it  with  this  testimony.  A.  Very  well;  but  I  just  read  you  from  Frank 
R'.)ckefeller"s  testimony  that  it  was  divided  among  the  officials  of  the  road, 
and  he  gave  the  names  of  the  men.  He  said  the  railroads  didn't  get  it;  that 
is  his  say-so  in  it.  I  read  you  his  evidence  and  you  can  take  it  for  what  you 
choose.  He  was  driven  out  of  the  business.  Out  of  the  fifty-odd  refineries  in 
Cleveland,  20  remained,  and  they  were  owned  by  the  Standard  Oil  Company. 

Q.  You  don't  mean  to  say  that  the  railroads  lost  that  49  and  22  cents? 
They  recouped  somewhere?  A.  I  mean  to  say  that  the  stockholders  did  not 
participate  in  it;  that  is  what  I  mean  to  say. 

Q.  The  stockholders  lost  it? 

*Mr.  FARQUHAR.  The  officers,  then,  must  have  got  It;  where  did  the 
money   go? 

Representative  LIVINGSTON.     That  is  what  I  am  trying  to  find  out. 

The  WITNESS.  I  can  answer  the  question.  There  were  times  when 
these  I'obates  were  40  cents  a  barrel,  and  at  times  $1.06  a  barrel,  and  at 
times  $1.32  a  barrel — rebates  paid  to  these  people,  not  only  on  crude,  but  on 
refined  as  well — on  the  product,  not  only  on  their  oil,  Mr.  Commissioner, 
but  on  the  oil  that  everybody  else  shipped. 

*Q.   I    understand  that.     A.  Yes,  sir. 

Q.  Now.  then,  as  the  stockholders  evidently  lost  that,  as  you  state, 
where  did  the  money  go?  Where  did  it  go?  That  is  the  question.  A.  Well, 
they  maj-  have  spent  it  for  wine  or  they  may  have  bought  a  farm  with  it;  I 
don't  know  anything  about  that. 

Q.  You  cannot  trace  it  and  you  have  no  evidence  to  show? 

The  WITNESS.     Where  it  went? 

Representative  LIVINGSTON.     Yes,  sir. 

The  WITNESS.  No  more  than  the  evidence  that  was  taken  at  the  time 
of  the  investigation  of  Congress,  which  proved  where  this  money  went. 
*That  is  what  I  wanted  to  show  you,  to  give  you  some  knowledge  upon  these 
questions. 

Q.  What  does  the  evidence  say?     *A.   I  don't  know;   I  will  read  it. 

Vice-Chairman   PHILLIPS.     Refer  to  some   special   evidence. 

The  WITNESS.  I  will  take  Mr.  Rockefeller's  testimony  and  it  gives 
the  whole  history,  but  it  takes  time  to  read  it.    He  is  not  a  short  witness. 

*Q.  (By  Vice-chairman  PHILLIPS.)  You  have  read  part  of  it,  have  you? 
A.   I  have  read  part  of  the  history. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Does  that  state  how  it  was  di- 
vied?  A.  Yes,  sir;  I  read  this  morning  that  it  was  divided  between  the 
railroads;  that  Mr.  Vanderbilt  got  some  of  it,  Mr,  Devereaux  got  some  of  it, 
*and  Mr.  Scott  got  some  of  it;  and  they  asked  if  the  road  got  any  of  it  and 
he  did  not  know. 

Representative  LIVINGSTON.  My  purpose  was  to  put  it  right  here 
where  we  could  grasp  it  in  the  proper  shape  when  we  come  to  make  our 
reports,  and  not  have  to  go  through  all  these  papers.     That  was  my  purpose. 


*Black   faced   type   Indicates  matter  omitted,  in  the  course  of  t^ditirig,   from  the 
official  report. 


366  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

*Q.  (By  Vice-chairman  PHILLIPS.)  That  testimony  was  read  just  a 
few  minutes  before  the  question  was  brought  up  by  Mr.  Ratohford.  Is  that 
correct?     A.  Yes,  sir;   there  is  no  question  about  that. 

Q.  (By  Mr.  KENNEDY.)  I  would  like  to  have  you  state  to  the  commis- 
sion how  you  disposed  of  your  different  refineries.  What  became  of  them? 
You  had  one  in  Crawford  county  and  one  in  Philadelphia?     *A.  Yes,  sir. 

Q.  I  think  it  would  be  interesting  to  have  the  history  of  them;  that  is, 
your  own  personal  experience.  A.  Undoubtedly  somebody  has  told  you  that 
I  sold  out  to  the  Standard  Oil  Company? 

*Q.  No,  sir;  I  did  not  know  anything  about  that.  A.  From  the  fact  that 
I   went  to  the  office  of  the  company  these  reports  got  around. 

Q.  1  have  no  such  information  as  that  at  all.  A.  *l  understand  that,  and 
I  want  to  explain  about  this,  too.  In  Titusville,  Pa.,  the  Octave  Oil  Company 
owned  a  refinery  of  about  800  barrels  capacity,  800  to  1,000,  and  the  Standard 
Oil  Company — *now,  this  is  ancient  history  again,  gentlemen — I  went  over 
it,  but  I  want  to  tell  you  how  the  Octave  Refinery  was  disposed  of.  I  am 
going  to  repeat  now  what  I  have  said,  that  we  were  invited  to  come  into  the 
Standard  Oil  Company,  they  saying  that  if  we  would  come  in  we  would  be 
allowed  quite  a  large  amount  of  money  for  our  refinery — to  be  taken  in  the 
stock  of  the  company.  There  was  no  money  used  in  the  forming  of  this 
octopus,  at  the  first,  sir.  They  only  had  a  capital  of  $1,000,000  and  the  system 
was  to  turn  the  crank  and  make  the  stock,  and  you  would  take  it  for  your 
property.  We  refused  to  go  in.  The  contract  was  presented  to  our  com- 
pany, and  we  felt  as  though  it  was  illegal  and  not  right,  and  we  refused  to 
go  in.  We  continued  the  business  the  balance  of  1872,  and  these  rebates 
that  I  have  named  here  were  against  us,  although  the  South  Improvement 
Company  contract  had  been  repealed.  We  struggled  along  until  the  latter 
part  of  1873,  and  we  had  to  quit  and  shut  our  refinery  down.  It  probably 
cost  us  $85,000,  and  I  think  we  got  $45,000  for  it;  we  were  forced  out. 

Q.  So  they  dismantled  your  refinery?  A.  That  refinery  ran  for  two  or 
three  years,  and  finally  was  dismantled  like  every  other  refinery  on  the 
creek.  The  industry,  which  at  one  time  was  located  on  the  creek  and  in  its 
vicinity  at  the  head  of  Oil  creek — or  at  least  97  per  cent,  of  the  products  of 
oil  was  in  the  State  of  Pennsylvania,  and  at  New  York  and  in  Philadelphia; 
but  the  whole  country  has  been  depleted  excepting  the  recent  production  of 
some  few  refineries  belonging  to  the  independents;  demolished,  *and  vines 
are  growing  over  the  tops  where  the  refineries  stood. 

Q.  I  asked  you  about  the  other  one.     A.  The  other  is  in  Philadelphia. 

Q.  Is  that  dismantled?    A.  Yes,  sir;  dismantled. 

Q.  When  was  that  established?  A.  That  was  built  in  1880  or  1881.  I 
think,  at  the  solicitation  of  the  Pennsylvania  Railroad,  after  the  close  of  the 
suits  of  1879,  in  which  they  said  they  were  going  to  do  better;  but  discrim- 
inations again  drove  us  out,  which  I  have  shown  you. 

Vice-Chairman  PHILLIPS.     He  went  over  that  very  fully  yesterday. 

The  WITNESS.  In  this  mass  of  business,  I  believe  there  was  on  every 
barrel  of  oil  that  I  shipped  to  that  port  and  to  that  works  an  average  of  28 
cents  per  barrel.  Who  can  do  business  against  it?  I  own  a  pipe  line  in  the 
oil  country  from  my  wells  and  other  lines  down  to  the  railroad,  and  they 
refused  to  furnish  me  any  cars,  the  Pennsylvania  Railroad  owning  1,126  tank 
cars,  bulk  cars.  I  used  them  for  a  time  until  the  order  came  from  the  Stand- 
ard Oil  Trust  that  I  must  get  no  more  oil.  Previous  to  that  time  they  had 
been  delivering  the  oil.  The  evidence  all  shows  it.  and  there  is  the  whole 
history  right  before  you  in  that  very  book  that  you  referred  to — *the  whole 
history  of  my  being  choked  off.  There  is  no  way  of  my  getting  over  it,^ 
unless  you  want  to  listen  to  it. 

Q.  (By  Mr.  FARQUHAR.)  A  good  deal  of  that  evidence  is  there?  A. 
It  is  all  there. 

Q.  You  make  that  a  part  of  your  evidence?  A.  Anything  you  want  to 
use  as  evidence,  use  it;  and  anything  you  want  to  cut  out.  cut  it  out.  Do 
you  want  me  to  go  on  about  the  Philadelphia  refinery?  Do  you  want  me 
to  tell  how  it  was  sold? 


•Black  faced  type  Indicates  matter  omitted,  In  the  course  of  editing,  from  the 
offlcial  report. 


LEWIS  EMERY.  JR.  367 

Q.  (By  Mr.  KENNEDY.)  I  want  to  know  what  became  of  them.  A.  It 
was  sold  to  the  Standard  Oil  Company;  they  took  it. 

Q.  I  want  to  know  whether  it  was  dismantled  or  not.  A.  It  was  dis- 
mantled and  torn  down  and  has  gone.  Another  refinery  right  close  to  it,  an. 
investment  of  $4,000,000,  that  is  gone  and  torn  down. 

Q.  (By  Mr.  RATCHFORD.)  Did  they  buy  it  to  dismantle  it.  as  far  as; 
you  know?    A.  Yes,  sir;  I  suppose  so;  they  never  held  it,  of  course. 

Q.  The  dismantling  took  place  after  the  sale,  did  it?     A.  *Right  soon 

after;   within  a  year — *and  let  me  say  to  you (a  pause).     Well,   I   won't 

say  it. 

Mr.  KENNEDY.     Say  it. 

The  WITNESS.  I  will  say  it  later  on.t  I  have  got  so  many  things  to 
say.  I  am  afraid  I  am  going  to  trespass  upon  your  time;  I  am  timid  now; 
I  am  getting  timid  about  this. 

Vice-chairman  PHILLIPS.  Don't  feel  so;  we  want  to  hear  you  fully 
and  give  you  the  same  opportunity  as  we  did  the  other  side.  We  design  to 
be   entirely    impartial    in   this   investigation — to   both   sides  of  it. 

The  WITNESS.  *l  know  that,  and  you  are  acting  all  right.  Now  then, 
let  me  explain  about  the  refinery  which  was  sold,  and  I  was  forced  out; 
and  these  cars  were  sent  off  clear  into  Colorado,  Louisiana  and  all  over  the 
country.  A  requisition  was  made  for  these  cars  and  every  one  of  them 
was  sent  out  of  the  State  except  248,  by  absolute  count.  I  sent  three  men 
in  different  directions  in  the  country  to  know  what  had  become  of  those 
cars  so  quickly.  The  oil  got  into  my  tanks  so  that  I  couldn't  do  anything 
with  it,  and  my  property  was  put  into  the  hands  of  the  Producers'  Protective 
Association,  because  they  wanted  me  to  shut  down  my  wells.  I  had  a  very 
large  production  at  that  time,  something  like  2,700  barrels  a  day,  and  I  was 
blocked  in  it  with  a  great  big  refinery  in  Philadelphia,  and  a  railroad  run- 
ning through  the  land  where  my  oil  wells  were  and  a  pipe  line  coming  up  to 
it.  I  could  not  get  a  single  car,  because  Mr.  Merchant,  of  the  Rochester  and 
Pittsburgh  Railroad  Company,  told  me — and  this  is  in  evidence — that  "they 
are  going  to  take  our  coal  trafl[ic  away  from  us  if  I  draw  your  oil."  I  imme- 
diately applied  to  the  courts  against  the  Rochester  and  Pittsburgh  Railroad, 
and  made  them  bring  the  cars  in  as  much  as  I  could,  and  I  got  one  in  a  week 
or  two  weeks  or  three  or  four  weeks,  and  I  was  devilled  to  death  until  I  had 
to  quit. 

Q.  (By  Mr.  KENNEDY.)  Now,  I  want  to  say  to  you,  in  all  kindness, 
that  I  think  you  have  made  a  remark  that  was  rather  discourteous  and 
unkind  in  regard  to  somebody  having  told  me  that  you  entered  the  office  of 
the  Standard  Oil  Company  first,  in  order  to  see  them  about  buying  your 
property.  When  Mr.  Archbold  was  on  the  stand  he  told  about  other  people 
having  gone  to  the  Standard  Oil  Company  to  enter  a  combination  with  them, 
but  your  name  wasn't  mentioned  among  them,  and  I  have  never  known  about 
you  going  to  the  Standard  Oil  Company  at  that  time.  A.  Let  me  say  to  you, 
that  this  charge  was  made  before  the  committee  of  1888,  and  I  have  had  to 
face  it  every  single  time — the  charge  that  I  was  groping  around  trying  to 
sell  to  the  Standard  Oil  Company. 

Q.  (By  Representative  LIVINGSTON.)  Don't  you  think  you  had  a  good 
cause  to  sell  after  they  put  the  screws  to  you?     A.  I  didn't  want  to. 

Q.  I  should  have  sold  out  a  long  time  ago.  A.  Well,  I  would  not.  I 
stuck  to  my  text;   I  didn't  like  it;   it  was  a  gross  violation  of  rights. 

Q.  It  is  a  question  of  sentiment  with  you,  is  it?  A.  No,  it  is  a  question 
of  principle;  I  can't  afford  to  disobey  the  law;  not  now.  I  am  in  this  thing, 
and  if  it  keeps  up  eight  or  ten  years  longer,  if  God  permits  me  life,  I  may  go 
*into  the  office  of  the  Oil  Company  some  day  to  protect  my  own  rights,  if 
necessary.J 


♦Black  faced  type  Indicates  matter  omitted,  In  the  course  of  editing,  from  the 
official  report. 

fMr.  Emery  never  said  it,  and  his  threat  that  he  would  say  it  was  stricken  from 
the  official  report. 

JThis  answer  in  the  nfflcial  report  is  recorded  as  follows:  "No:  it  is  a  question 
of  principle.  I  cannot  afford  this— not  now.  I  may  if  this  thing  keeps  on.  in  ten  years 
longer,  if  God  permits  me  life.  I  will  go  in  the  face  of  the  law  and  protect  my  own 
rights  if  necessary." 


368  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

Q.  (By  Mr.  FARQUHAR.)  In  this  matter  of  the  Standard  Oil  Company 
buying  up  refineries  and  demolishing  them,  delocalizing  them,  hasn't  this 
been  in  Pennsylvania,  for  a  great  many  years,  quite  an  irritating  subject 
with  a  great  many  of  the  smaller  places  there  where  they  had  refineries, 
that  were  abolished,  after  which  the  trade  passed  away  from  those  sec- 
tions? Has  it  not  caused  an  embitterment  on  the  part  of  the  people  where 
the  local  refineries  had  been  established,  and  were  then  taken  away?  Isn't 
it  a  common  saying  in  Pennsylvania,  as  against  the  Standard  Oil  Company, 
that  by  changing  the  business  from  the  Pennsylvania  field  to  New  York,  it 
has  caused  an  immense  amount  of  hatred  and  abuse  and  vituperation  against 
the  Standard  Oil  Company?     A.  Oh,  no. 

Q.  You  say  no?     A.  I  say  no  positively,  from  this  fact. 

Q.  I  want  to  quote  your  own  testimony  here,  in  which  three  of  the 
gentlemen  complained — that  is  you  and  the  Pennsylvanians— that  Pennsyl- 
vania, and  especially  Pittsburg,  had  been  robbed  of  the  legitimate  work 
that  belonged  to  the  refineries,  and  that  the  whole  labor  of  refining  had  been 
swept  out  of  the  State  of  Pennsylvania,  and  the  works  had  been  taken  away 
from  Pennsylvania?     *A.  Very  true. 

Q.  And  had  been  taken  down  to  New  York?     *A.  Yes,  sir, 

Q.  And  the  through  pipe  line  established?  A.  Now  then,  we  are  not; 
since  that  time  Pennsylvania  has  got  more  refining  capacity  than  she  had 
in  those  days,  and  Philadelphia  has  grown  to  be  one  of  the  largest  manu- 
facturing places,  and  in  Pennsylvania  they  themselves  have  come  back  to 
that  country  and  built  up  the  most  enormous  works;  and  they  have  got  them 
now.  That  wasn't  the  condition  when  this  testimony  was  given,  but  in  these 
times  it  is  different. 

Q.  I  am  glad  to  know  that.  Now,  as  a  refiner  and  business  man,  don't 
you  think  there  was  a  legitimate  reason  why  a  great  deal  of  that  refining 
could  be  better  done  in  New  York,  more  especially  as  the  by-products  come 
into  genera!  use,  than  it  could  have  been  in  scattered  communities  in  Penn- 
sylvania?   A.  No,  and  I  will  tell  you  why. 

Q.  So  you  think  the  Standard  Oil  people  were  incorrect  when  they 
testified  before  this  commission  that  it  was  for  purely  a  business  reason, 
and  not  a  matter  of  prejudice,  that  they  had  dismantled  these  refineries  in 
Pennsylvania  and  Ohio  and  substantially  done  the  work  in  New  York?  A. 
No,  that  is  entirely  wrong.  They  are  mistaken  in  their  answer  to  that 
question  from  the  very  fact  that  they  have  come  back  there  to-day  and  they 
are  manufacturing  largely  of  the  by-products,  and  they  have  come  back 
there  because  it  was  the  natural  place.  They  have  come  back  there  be- 
cause there  is  natural  gas  there  in  endless  quantities.  There  is  most  ex- 
cellent water  for  the  manufacture  of  oil,  which  is  required,  and  I  believe  to- 
day that  they  are  sorry  that  every  single  refinery  they  have  is  not  located 
somewhere  in  the  central  part  of  Pennsylvania.  They  have  come  back 
there  and  spent  millions  and  millions  of  money  in  the  State  since  they  made 
that  excuse  that  they  drove  those  refiners  out  because  it  was  not  the  proper 
place  to  refine.     It  is  sheer  nonsense. 

*Q.  Now,  you  were  permitted  to  go  on  in  your  own  way,  and  we  would 
be  glad  to  make  this  difference.  A.  I  think  you  are  getting  more  out  of  me 
by  going  as  you  were.  I  think  the  more  questions  you  ask  the  deeper  we 
will  get  into  the  subject. 

Q.  You  were  about  to  go  into  the  discriminations  before  the  Interstate 
Commerce  Commission,  and  you  said  you  were  nearly  up  to  that.  Now, 
have  you  indicated  to  your  satisfaction  the  discriminations  up  to  the  time 
of  the  interstate  commerce  act?  A.  Yes,  sir;  to  1893,  and  followed  it  up  to 
about  1899. 

Q.  Then  have  you  any  further  evidence  on  that?  A.  No,  sir;  I  haven't 
any  further  evidence  on  that. 

Q.  Then  you  have  covered  that  ground,  you  think?  A.  I  think  I  have; 
but  I  have  some  other  matters.  *But  still  it  doesn't  matter,  I  have  proved 
that  part  of  it  so  far  as  I   care  to  say  anything. 


*Black   faced   type   indicates   matter   omitt('<l,   in   the  course  pf  editing,   from   the 
ofRcial  report. 


LEWIS  EMERY,  JR.  369 

Q.  Then  are  you  ready  for  questions  in  regard  to  the  formation  of  these 
recent  companies,  pipe  lines,  etc.,  at  this  time?     A.  Yes,  sir;  yes,  sir. 

Q.  It  has  been  charged  here  that  you  and  others  are  connected  with  a 
trust  in  regard  to  the  various  pipe  lines  in  the  oil  country — the  Pure  Oil 
Company.  *A.  Now,  Mr.  Chairman  and  gentlemen  of  the  commission,  I 
think  likely  that  I  had  better  take  the  privilege  given  me  by  Mr.  Ratchford 
and  the  other  gentleman  of  the  commission — I  haven't  the  honor  of  his 
name — and  if  you  choose  to  learn  all  about  the  actual  conditions  of  the  trade 
since  1890  I  will  tell  you;   that  certainly  is  since. 

Representative  LIVINGSTON.  Since  the  interstate  commerce  law?  A. 
Yes,  sir;   since  the  interstate  commerce  law. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Then  will  you  oblige  the  commis- 
sion by  commencmg  at  that  period?  A.  Let  me  take  a  little  rest  here.  I 
was  in  bed  ten  days  before  I  came  here.  In  1890,  in  the  latter  part  of  the 
year,  owing  to  the  high  rates  of  freight  over  the  railroads,  the  transporta- 
tion of  our  refined  and  crude  oil  was  so  expensive  that  personally  I  con- 
ceived the  idea,  or  rather  I  determined  to  build  a  pipe  line  to  the  coast  of 
the  Atlantic,  if  possible.  In  a  secretive  way — as  everything  had  to  be  done 
then  and  now — I  placed  in  the  field  some  20  expert  right-of-way  men  to 
secure  the  right-of-way  for  a  pipe  line.  I  knew  that  it  would  be  impossible 
for  us  to  get  clear  through  to  the  coast  with  a  line,  and  I  went  to  New 
York — or  rather,  I  went  to  Philadelphia  first,  and  saw  the  president  of  the 
Reading  Railroad — *what  was  the  gentleman's  name?  They  called  him  the 
"Napoleon  of  Railroads." 

Mr.   FARQUHAR.      McLeod. 

The  WITNESS.  McLeod:  *that  is  the  fellow;  yes,  sir.  I  presented  my 
question  to  him  personally  with  a  proposition  that  we  would  get  the  pipe,  the 
right-of-way,  to  Williamsport,  and  there  connect  with  the  Reading  Railroad, 
and  with  the  right  to  lay  our  pipe  line,  for  a  time,  as  we  could  build  it  on 
the  right-of-way  of  the  railroad.  I  told  him  the  amount  of  tonnage  that  we 
would  give  him,  and  made  preliminary  arrangements;  and  he  told  me  to 
return  after  a  time,  which  I  did;  I  was  alone;  nobody  knew  anything  about 
what  I  was  going  to  do.  I  met  Mr.  McLeod  and  Mr.  John  Taylor,  the  gen- 
eral manager,  and  Lowery  Brill,  the  general  freight  agent.  Lowery  Brill 
is  now  of  the  New  Jersey  Central.  All  these  gentlemen  came  into  the 
room— and,  by  the  way,  there  was  one  other  man  there,  I  don't  know  his 
name;  I  know  they  were  officials  of  the  road,  I  had  to  reduce  my  proposi- 
tion to  writing.  "The  rate  of  freight  was  agreed  upon  and  the  basis  of  a 
contract  was  put  in  pro  forma  shape,  and  I  was  to  return,  upon  receiving 
their  dispatch,  whenever  they  were  ready.  I  never  got  the  dispatch.  I 
returned  and  took  with  me  some  other  gentlemen  to  the  office,  and  I  said: 
"What  is  the  reason  for  this?"  The  reply  was:  "If  we  give  you  this  con- 
tract we  will  disturb  our  relations  with  the  Standard  Oil  Trust,  and  we 
cannot  do  it,"  and  I  was  dismissed.  From  there  I  went  to  New  York  and 
liad  a  conference  with  two  gentlemen,  members  of  the  Columbia  Oil  Com- 
pany in  New  York,  Mr,  King  and  Mr.  McDonald,  and  laid  the  matter  before 
them,  they  being  independent  refiners  on  the  coast,  I  laid  the  matter  before 
them  and  we  went  from  there  to  the  oflSce  of  the  New  York,  Ontario  & 
Western  Railroad,  which  runs  from  Oswego,  New  York,  to  New  York  City. 
We  then  concluded,  Bradford  being  just  here  (indicating  on  the  map),  to 
follow  the  boundary  line  of  Pennsylvania,  bordering  on  New  York,  as  closely 
as  possible,  to  a  place  called  Hancock,  New  York,  where  the  Erie  Railroad 
crosses  the  Delaware,  and  into  the  same  city  of  Hancock — or  the  village — 
and  across  to  the  New  York,  Ontario  &  Western  Railroad,  it  being  to  the 
north  of  the  Erie  Railroad  about  one  mile.  Our  men  secured  this  right-of- 
way  through  the  State,  without  very  much  opposition,  because  the  Standard 
Oil  Company  didn't  get  on  to  our  operations.  Finally  it  became  known,  and 
all  at  once  came  in  a  number  of  men  who  were  very  anxious  to  build  a  line 
exactly  where  we  were  building  one,  although  the  Standard  Trust  owned 
a  line  parallel  with  the  State  line,  bordering  it  and  back  a  little  in  the 
country,   running  clear  through   to  New  York  City.     They  didn't  need  the 

♦Black  faced  type   Indicates  matter  omitted,  in  the  course  of  editing,   from   tlie 
official  report. 

24 


370  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

line,  because  lying  in  the  ditch  two  parallel  lines  were  running  from  the 
oil  countiy,  trom  Olean  to  New  York,  but  they  didn't  want  us  to  build  a 
line,  and  these  men,  as  set  forth  in  this  pamphlet  (I  will  not  take  the  time 
of  looking  it  up,  but  will  go  right  along)  took  up  rights-of-way  on  top  of  our 
rightb-of-\s  ay.  They  went  to  the  records  of  several  counties,  and  examined 
the  titles  on  the  lines  along  which  we  had  gotten  rights-of-way  and  if  there 
were  any  mortgages  on  these  properties,  they  bought  the  mortgages  of  the 
men  who  had  them.  The  owners  were  in  debt  for  the  places,  and  if  they 
had  ovei-siepped  iheir  rights  in  law,  by  holding  the  mortgage  they  induced 
them  to  give  them  another  right-of-way.  In  the  State  of  New  York,  between 
the  boundary,  we  had  about  six  miles  to  get  down  to  the  Delaware  river, 
and  they  came  along  there  and  bought  strips  of  land  right  across  our  right- 
of-way  in  Pennsylvania — buying  strips  of  land  a  mile  and  a  mile  and  a  half 
long,  throwing  us  into  court  at  every  instance  they  could.  *The  railroad 
opposed  our  efforts,  but  before  we  started  to  lay  our  pipe  I  went  to  the  Erie 
Railroad  office  in  New  York  and  saw  Mr.  George  M.  Thomas,  the  present 
president  of  the  road — I  think  he  was  at  that  time.  *lt  is  all  written  out 
here  in  this  book.  1  met  Mr.  Thomas;  he  was  a  stranger  to  me,  and  I  told 
him  what  we  wanted  to  do;  that  we  wanted  the  right  to  go  under  the  railroad 
at  Bradford;  we  laid  our  case  before  him.  "Why,"  he  said,  "certainly  you 
can  go  under  the  railroad  with  your  pipes." 

■Well.  '  I  saia,  "we  are  going  down  to  Hancock  and  we  want  to  cross 
your  railroad,  or  pass  under  it  there  in  the  deep  water  of  the  Delaware,  or 
else  we  want  to  go  through  the  bank  of  the  road  with  our  pipe."  "Well," 
he  said,  "we  aie  disposed  to  assist  all  progress,  and  1  will  take  that  under 
advisement  and  you  can  come  back  here  in  two  weeks,  but,"  he  said,  "you  go 
ahead  and  go  under  our  road  whenever  you  get  ready  at  Bradford,  or  any 
other  point  that  you  come  to."  *He  detained  me,  and  I  said  I  was  very  glad 
that  he  received  me  so  kindly  and  gave  me  so  much  encouragement;  that 
I  would  commence  laying  our  line  on  the  Ontario  &  Western  road,  a  mile 
north  of  Hancock,  or  within  the  borough  limits  at  least.  "Well."  he  said, 
"you  return  and  we  will  fix  it  up  all  right."  I  said:  "I  am  afraid  there  will 
be  some  individuals  or  some  power  that  will  overcome  you  in  this  matter 
and  your  views  will  be  changed."  "No,  sir,"  he  said,  "the  Erie  Railroad 
runs  its  own  business,  and  whatever  I  have  done  will  be  carried  out,  but 
this  other  matter,"  he  said.  "I  am  obliged  to  take  it  up  in  a  way  that  I  can 
be  certain."  1  couldn't  express  myself  that  I  was  afraid  of  some  unfor- 
seen  power,  and  I  got  up  to  go  and  he  detained  me.  The  question  of  trans- 
portation was  discussed,  and  the  business  generally,  and  I  went  away  and 
went  to  work,  and  worked  a  couple  of  weeks,  connected  our  line  with  the 
Ontario  &  Western  road,  bought  11  acres  of  ground  on  which  to  build 
storage  tanks,  and  put  in  the  pipe.  We  laid  two  lines,  refined  and  crude, 
another  thing  that  the  Standard  Company  never  did.  They  said  it  couldn't 
be  done.  We  pumped  refined  oil  500  miles  and  delivered  it  on  board  of  ves- 
sels that  come  into  New  York,  and  it  comes  out  just  as  bright  as  when  it 
comes  out  of  the  refinery.     We  pump  our  refined  oil. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Did  the  Standard  Oil  Company 
pump  theirs  to  the  seashore?  A.  No,  sir;  they  said  it  couldn't  be  done, 
although  they  are  the  infiniteness  of  everything,  and  the  benefactors  of  the 
world.  I  laid  that  line  down  to  the  Erie  bridge,  the  big  iron  bridge  that 
crosses  the  Delaware,  and  I  went  on  the  other  side  of  the  bridge,  120  feet 
away  from  the  upper  side,  or  the  line  of  the  right-of-way,  and  I  laid  the 
lines  out  towards  Pennsylvania.  We  had  had  our  fights  over  this  right-of- 
way,  and  I  knew  the  men  that  were  there  taking  up  these  rights-of-way  to 
have  been  in  the  employ  of  the  Standard  Oil  Company.  I  knew  the  men 
personally,  and  my  men  knew  them;  if  it  is  necessary  I  can  call  their 
names  at  this  moment.  We  had  overcome,  as  we  thought,  the  obstacles, 
and  1  went  back  to  New  York  and  saw  Mr.  Thomas,  and  he  came  from  his 
inner  room;  *l  didn't  go  in,  but  he  came  out,  and  he  took  me  by  the  hand, 
and  he  said:  "You  can  go  under  our  bridge  at  Hancock  into  deep  water,  if 
it  is  advisable,   or  into  the  bank."   and   he   spoke   to   the   general   manager 


*BIack   facefl   t>pe   indicates   matter   omitted,    n  the  course  of  editing,  from   tlie 
official  report. 


LEVv'IS  EMERY,  JR.  371 

of  the  road,  his  name  I  forget,  who  was  present  at  the  conversation,  as  also 
with  Mr.  King,  of  the  Columbia  Oil  Company.  He  said:  "You  wire  Mr. 
Durr,  the  division  superintendent  of  the  Susquehanna  division,  to  meet  Mr. 
Emery  at  Hancock  to-morrow  morning  and  go  with  him  to  locate  their  oil 
pipes,  either  in  the  deep  water  of  the  Delaware  or  to  pass  through  the  bank 
of  the  Erie  grade."  I  took  the  9  o'clock  train.  This  message  was  sent;  I 
saw  the  gentleman  write  it;  I  took  the  9  o'clock  train  and  went  to  Hancock; 
I  got  there  at  2  o'clock  in  the  morning,  and  I  immediately  went  to  the 
Chandley  House,  which  was  nearby.  I  was  anxious  to  know  whether  Mr. 
Durr  was  there.  I  was  afraid  something  would  happen  even  before  my 
getting  to  Hancock;  but  to  my  surprise  Mr.  Durr's  name  was  registered; 
he  was  waiting  for  me.  The  next  morning  I  took  a  carriage — my  wife  was 
with  me — Mr.  Durr  and  my  wife  and  myself — we  rode  to  the  Delaware  river, 
which  was  not  half  a  mile  away,  crossed  the  river,  it  being  low,  and  sounded 
the  water,  and  went  upon  the  bridge  and  looked  down  to  see  where  the  rocks 
were,  and  concluded  the  best  thing  we  could  do  was  to  go  through  the  bank. 
There  were  the  two  ends  of  the  pipe  120  feet  apart.  He  said:  "Mr.  Emery, 
I  will  make  a  profile  of  this,  and  we  will  have  it  in  your  office  one  week 
from  to-day."  That  was  about  on  Thursday.  I  said:  "All  right."  I  went 
home  and  I  started  our  pipe,  and  the  very  first  place  that  we  had  to  lay 
the  pipe  was  under  the  Erie  track — the  Erie  Railroad  track.  It  was  in  the 
switch  yard,  and  there  were  four  tracks  side  by  side,  and  it  was  a  pretty 
difficult  thing  to  get  under  there.  We  went  there  innocently,  supposing  that 
we  had  the  right  to  do  so.  I  had  spoken  to  the  superintendent  about  it; 
he  didn't  know  anything  different;  when  I  returned  to  New  York  two  or 
three  weeks  previous  to  that  time  it  was  all  right.  We  were  working  away 
there  with  our  men,  and  the  first  thing  we  knew  down  came  a  force  of  two 
or  three  handcars  and  they  jumped  off  on  the  track  and  attempted  to  put 
our  men  out  of  the  ditch.  I  was  up  at  my  office  uptown.  They  went  to 
the  nearest  telephone,  and  they  telephoned,  and  I  went  down  there  and  they 
were  having  a  contest.  My  refinery  was  close  by.  I  commanded  the  whole 
force  out,  and  we  had  what  they  term,  no  doubt,  "a  scrap;"  and  we  drove 
them  away  and  went  on  with  our  work. 

Q.  (By  Vice-chairman  PHILLIPS.)  That  was  near  Bradford,  was  it? 
A.  Right  in  the  city  of  Bradford.  Next  morning  we  were  enjoined  by  the 
court.     This  is  the  Erie  Railroad  that  was  objecting,  understand  me. 

Q.  (By  Vice-chairman  PHILLIPS.)  And  was  it  in  the  State  of  Penn- 
sylvania, where  you  had  the  right  of  eminent  domain?  A.  The  State  of 
Pennsylvania  has  a  free  pipe  law — what  is  called  the  right  of  eminent  do- 
mnin — quite  correct.  I  should  have  stated  that  before.  Now,  a  letter  was 
addressed  to  me  by  our  attorney.  This  I  will  put  in  evidence,  because  I 
know  all  the  facts. 

Hon.  Lewis  Emery,  Jr.,  Bradford,  Pa.: 

My  Dear  Mr.  Emery— In  reply  to  your  inquiry,  am  pleased  to  make  the  follow- 
ing statement: 

The  first  legal  opposition  that  we  mft  with  in  constructing  the  line  of  pipe  of  the 
United  States  Pipe  Line  Company  was  an  attempt  to  prevent  us  from  laying  pipe 
under  the  track  of  the  Erie  Railroad  within  the  limits  of  the  City  of  Bradford  at  a 
point  where  both  the  National  Transit  Company  and  the  Tidewater  Pipe  Company 
had  previously  laid  their  lines,  and,  so  far  as  can  be  learned  without  the  slightest 
objection  on  the  part  of  the  Railroad  Company.  We  presented  our  bond  and  petition 
to  the  Court  of  Common  Pleas  of  McKean  county,  and  were  met  by  attorneys  on 
the  part  of  the  railroad  objecting  to  the  granting  of  the  prayer  of  the  petition  and  the 
approval  of  the  bond.  They  had  at  this  hearing  a  very  exhaustive  brief  with  which 
they  .seemed  not  to  be  familiar;  they  apuiogiztd  fo  the  court  for  the  way  in  which 
they  presented  game,  saying  that  it  was  prepared  by  Mr.  Elliott  (Mr.  Elliott  was  the 
attorney  for  the  Standard  Oil  Company  at  that  time,  located  in  Oil  City)  and  they 
had  not  had  the  time  to  carefully  consider  the  same.  I  took  very  full  notes  of  the 
authorities  cited  and  of  the  points  made  by  the  attorneys  for  the  Railroad  Company. 

A  short  time  alter  this  I  had  occasion  to  appear  in  the  court  of  Tioga  county 
representing  the  United  States  Pipe  Line  Company  in  opposing  a  bill  to  restrain  the 
company  from  laying  a  pipe  under  the  Tioga  branch  of  the  Erie  Railroad:  the  attor- 
neys at  this  hearing  seemed  to  have  the  same  brief  as  was  used  in  the  hearing  in  Mc- 
Kean county,  citing  the  same  authorities  and  making  the  same  points.  Later  I  rep- 
lesented  the  United  States  Pipe  Line  ComPany  presenting  a  petition  and  bond  to  the 


372  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

court  of  Bradford  County  for  the  right  to  lay  a  pipe  under  the  track  of  the  Northern 
Central  at  a  point  south  of  Elmira,  and  was  again  met  by  what  appeared  to  be  the 
same  brief,  authorities  and  points.  The  objections  in  all  the  caaes  were  many  and  the 
authorities  cited  numerous,  and  what  seemed  to  me  straige  was  the  fact  that  in 
each  appeared  to  be  the  most  complete  harmony.  It  is  wonderful  how  the  minds  and 
labor  of  attorneys,  so  far  separated,  should  bring  out  the  same  objections  and  sup- 
port them  by  the  same  argument,  yet  so  it  was. 

Very  truly  yours, 

W.  E.  BURDICK. 

Now,  we  bought  our  way  under  every  single  rod  from  there  to  Hancock, 
and  what  do  you  think?  When  we  got  to  Hancock  (I  knew  there  was 
something  wrong  before  I  went  there)  I  went  with  my  men  to  put  these 
two  pieces  together,  120  feet  apart,  we  were  met  first  with  two  derricks  and 
two  locomotives,  a  flat  car  containing  lumber  and  a  little  brass  cannon  that 
had  been  used  for  shooting  holes  through  a  tank  that  was  run  off  the  track; 
a  load  of  lumber,  and  a  car  holding  about  75  men.  The  moment  we  got 
there  with  our  men,  they  supposed  of  course  we  were  to  connect  up  these 
two  pipes,  and  they  threw  off  these  old  slabs  and  stuff,  and  they  built  a 
sort  of  a  cob  fire  over  each  end  of  the  pipe,  and  they  threw  off  the  lumber 
and  they  built  a  house  on  each  side  of  the  track,  and  put  two  men  in  it, 
W'ith  Winchesters;  and  we  stayed  there  three  months,  looking  one  another 
in  the  eyes.     We  never  got  under  that  track.     We  spent  $75,000. 

The  Ontario  &  Western  were  induced  to  violate  their  contract,  and  I 
may  state,  for  the  information  of  this  commission,  that  we  went  to  the 
Ontario  &  Western  because  we  got  the  contract  out  of  them  by  which 
we  might  ship  our  oil  down  to  Cornwall-on-the-Hudson.  and  from  there  we 
were  going  to  put  it  into  boats,  and  draw  it  down  to  New  York  and  deposit 
it  in  our  tanks.  That  contract  gave  us  the  right  to  construct  a  pipe  line 
over  the  right-of-way  to  the  Hudson,  for  which  we  were  to  pay  them  a 
royalty  of  two  cents  a  barrel.  We  were  even  ctxt  off  from  that  contract  by 
the  same  power,  but  they  kept  a  standing  armj^  there  at  Hancock,  and  we  came 
back  70  miles  to  the  Susquehanna  river,  and  we  flanked  the  enemy  until  we 
got  down  to  Wilkesbarre.  At  Wilkesbarre  we  had  contest  after  contest, 
and  contest  after  contest,  passing  under  the  tracks  of  the  Delaware,  Lacka- 
wanna &  Western  and  the  Lehigh  Valley  and  other  roads.  This  same 
brief  came  into  court,  and  seven  lawyers  were  representing  all  the  different 
lines  that  were  against  us,  each  one  reading  the  same  brief  and  making 
the  same  points.  We  beat  them,  and  we  built  our  line  and  we  connected 
up  with  the  Jersey  Central  Railroad,  a  friendly  railroad,  that  contracted 
with  us  to  draw  oil  for  a  term  of  99  years,  with  the  right  to  cancel  the  con- 
tract by  a  certain  number  of  months'  notice. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Who  had  the  right  to  do  that;  to 
cancel  the  contract — the  United  States  Pipe  Line  or  the  railroad?  A.  The 
United  States  Pipe  Line.  We  stopped  there  for  a  while  because  we  were 
out  of  money.  It  cost  us  more  than  $150,000  to  fight  our  way  to  that  point — 
their  keeping  us  from  going  to  Hancock,  the  extraordinary  expense  made 
to  us  to  get  it  through  to  Wilkesbarre  and  the  litigation  and  the  loss  of  time 
and  the  loss  of  our  business.  Then  we  stayed  at  Wilkesbarre  for  about  a 
year  and  a  half  or  two  years,  and  we  concluded  we  would  go  on;  so  we 
secured   the  right-of-way  from  Wilkesbarre,  over  to 

*Mr.   FARQUHAR.     Bethlehem. 

The   WITNESS.     Just  a    little   above    Bethlehem. 

Vice-Chairman  PHILLIPS.  Well,  it  is  not  important  about  the  point  now. 

The  WITNESS.  *Anyhow,  within  about  oO  miles  above  Easton.  and 
we  built  that  line  through  to  the  river,  and  then  we  went  into  Jersey. 
The  first  thing  we  had  to  pass  under  was  the  Pennsylvania  Railroad. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Was  there  a  free  pipe  line  law  in 
the  State  of  New  Jersey?    A.  Oh.  no,  sir. 

Q.  (By  Mr.  KENNEDY.)  Is  there  in  New  York?  A.  Yes,  sir.  Do  you 
want  me  to  explain  the  law  to  you? 

Mr.  KENNEDY.     No,  sir;  I  don't  think  it  is  necessary. 


•Black   faced   type   indicates   matter  omitted,   in  the  course  of  editing,   from   the 
official  report. 


LEWIS  EMERY,  JR.  373 

The  WITNESS.  Well,  I  think  I  had  better  do  that  since  he  has  asked 
the  question.  In  1878  the  first  pipe  line  law  was  passed  in  this  country; 
that  was  passed  about  the  same  period  in  which  the  Pennsylvania  law  was 
passed.  It  was  a  good,  free,  open  law  and  the  Pennsylvania  law  is  a  copy  of 
it,  but  some  one  in  1890,  before  we  got  down  to  Hancock,  went  in  and  had 
that  law  amended,  and  it  became  absolutely  inoperative. 

Q.  (By  Mr.  KENNEDY.)  And  you  couldn't  get  the  right  of  eminent 
domain  under  it.  A.  You  couldn't  get  a  right  of  any  kind  under  it,  *until 
you  published  a  certain  number  of  days,  where  you  wanted  to  go;  and  your 
routes  had  to  be  published  and  everything,  which  gave  an  opportunity  for 
everybody  to  come  in  and  take  up  a  line  ahead  of  you.  Draw  your  own 
conclusions. 

Q.  (By  Mr.  FARQUHAR.)  I  think  the  commission's  law  of  the  State 
of  New  York  covers  that  ground.  You  have  got  to  make  publication  there, 
under  the  law  creating  the  railroad  commission  of  the  State  of  New  York. 
A.  Now,  this  was  the  law  passed  in  1878,  and  was  amended.  The  law  was 
operative  and  the  work  was  done  under  it.  The  pipe  line  to  Buffalo  was 
laid  under  the  original  law  and  it  was  a  good  law.  We  had  to  get  under 
the  Pennsylvania  Railroad,  and  fortunately  we  found  one  of  the  secretaries 
of  the  treasury  of  the  United  States,  who  lives  at  Trenton — I  cannot  think 
of  his  name — but  we  searched  the  title  and  we  found  that  he  owned  an  acre 
of  land,  just  one  acre,  which  was  used  many  years  ago,  during  revolutionary 
times,  for  a  wharf  and  a  dumping  place  for  a  very,  very  old  furnace,  an  iron 
furnace  used  to  be  there;  the  most  of  you  that  have  been  in  the  district 
know  where  it  is.  He  didn't  know  that  he  had  it  himself  until  we  searched 
the  title,  and  we  bought  it  and  paid  $500  for  it  and  went  under  the  Pennsyl- 
vania Railroad  track.  *We  had  a  scrap  there,  and  a  very  severe  one.  The 
owner  had  the  title  to  the  land,  and  they  had  an  easement  for  the  rail- 
road; that  is  all;  we  had  it  decided,  and  went  under  there  after  a  long  con- 
flict. We  got  through  to  the  Delaware,  Lackawanna  &  Western  within 
the  borough  limits  of  Washington,  New  Jersey,  and  we  bought  a  farm, 
the  Stewart  farm,  through  which  the  old  Morris  &  Essex  Railroad  passed. 
The  charter  was  granted  in  1836,  and  an  easement  had  been  bought  through 
that  land  and  paid  for;  had  a  deed  of  it;  and  we  bought  the  fee  title  to 
the  land  over  which  the  right-of-way  was  given.  Our  attorney  said  that 
we  had  a  right  to  occupy  that  land.  We  had,  six  or  eight  months  before 
that,  put  in  a  piece  of  pipe  to  test  what  they  were  going  to  do,  and  they 
tore  it  out,  so  we  thought  we  would  not  be  beaten,  and  I  took  50  men  from 
off  another  line,  and  we  went  over  there  in  the  dead  of  the  night,  and  I 
placed  my  men  on  both  sides  of  the  hill.  They  had  a  watchman  on  the  road 
passing  up  and  down  with  a  lantern  in  his  hand,  back  and  forth,  and  coming 
up  to  the  culvert  in  which  we  possessed  the  right  of  way,  14  feet  high  from 
the  ground,  he  would  look  down  and  see  that  silence  prevailed,  and  he  went 
away.  About  4  o'clock  in  the  morning  we  took  possession.  When  9 
o'clock  had  arrived  on  Sunday  morning  we  had  two  pipe  lines  buried  four 
feet  under  the  earth,  fastened  to  timbers  as  heavy  as  a  span  of  horses  could 
draw,  piled  rocks  on  top  of  them,  anchored  them  with  chains,  built  a  house 
on  each  side  of  the  right  of  way,  and  took  our  breakfast  in  the  camp  or 
shanty.  About  12  o'clock  some  men  came  in  there  and  said:  "You  get  out 
of  here,"  and  I  said:  "Not  a  bit  of  it;  no,  sir."  They  said:  "You  w^on't  get 
out?"  and  we  said:  "No,  we  belong  here;  it  is  our  land;  we  haven't  disturbed 
the  railroad;  we  have  got  rights  here."  He  said:  "You  will  get  out:  go  on." 
"Boys,"  I  said,  "don't  be  hasty;"  but  he  was  a  little  bit  hasty,  and  I  told  the 
boys  to  take  him  by  the  seat  of  the  pants  and  shoulders  and  carry  him  out 
and  lay  him  down  carefully,  which  they  did,  with  the  rest  of  his  companions. 
On  Monday  morning,  two  wrecking  cars  and  250  men  rode  in  from  Hoboken 
and  made  a  charge  on  the  little  band  in  the  pit  and  we  drove  them  out. 
That  is  all  there  was  about  it;  we  drove  them  out. 

Q.  (By  Mr.  CLARKE.)  When  was  this?  A.  This  was  in  1891:  no 
doubt  you  have  read  about  it;  some  of  these  men  are  familiar  with  it.  They 
wanted  to  compromise  the  matter,  and  wanted  to  go  to  the  courts,  where  we 


*Black  faced   type  indicates  matter  omitted,   in  the  course  of  editing,   from   the 
official  report. 


374  REVIEW  OF   TESTIMONY— INDUSTRIAL  COMMISSION. 

wanted  them  to  go.  They  said:  "You  permit  our  men  to  come  into  this 
subway,  and  permit  them  to  move  some  earth,  and  let  them  go  through  the 
formality  of  arrest,  and  put  some  of  your  men  in  there  and  let  them  take  a 
little,  and  you  can  go  through  the  formality  of  arrest."  I  said:  "All  right." 
When  they  got  down  they  wanted  us  to  move  the  wagons  away  off  the  pipe. 
I  said:  "No,  here  is  six  or  eight  feet."  They  said:  "The  wagon  is  in  the 
way."  I  said:  "They  are  there  on  purpose.  I  don't  want  you  to  have  any 
advantage,  and  I  am  not  green  enough  to  give  you  any  advantage  just  now." 
I  said:  "The  wagon  will  stay  there,  and  if  you  want  to  do  any  business  of 
this  character,  go  on." 

So  we  arrested  their  men  and  they  arrested  our  men.  And  they  wanted 
to  know  if  we  would  go  up  and  have  the  trial;  so  we  went  up  in  the  town, 
and  the  sheriff  had  the  men,  and  we  went  before  a  Justice  of  the  Peace. 
Each  one  had  his  trial  and  they  were  bound  over  to  the  court,  and  the  issue 
was  made  up.  We  went  off  to  our  dinner  to  the  hotel  as  I  suposed,  when  a 
man  came  rushing  up  on  horseback  and  he  said:  "They  are  in  a  fight 
down  at  the  crossing."  I  jumped  into  the  first  buggy  I  found.  I  didn't  know 
whose  it  was,  and  I  rode  there  as  quickly  as  possible.  I  found  these  traitors 
who  had  promised  me  they  would  put  this  thing  into  court,  there  with  two 
locomotives,  standing  on  top  of  the  track,  lashed  close  together,  and  they 
were  running  hot  steam  and  hot  water  down  into  this  pit  on  my  men.  And 
they  went  to  the  fire  box  [at  this  point  the  witness  was  overcome  and 
wept]  and  threw  hot  coals  down  on  them;  and  they  threw  stones  at  us  and 
clubbed  us;  but  we  whipped  them.  I  ordered  every  man  out  of  the  pit;  I 
told  them  that  if  they  came  back  there  I  would  shoot  them.  We  barricaded 
ourselves,  and  the  Grand  Army  of  the  Republic  gave  us  48  muskets,  and  I 
sent  to  New  York  and  got  18  Springfield  rifles,  and  we  bound  them  in  with 
wire  and  tied  our  pipes  down,  barricaded  our  house  and  stayed  there  for 
seven  months,  holding  possession  until  the  court  decided  that  we  had  a  right 
to  stay  there.  And  the  very  men  who  were  at  the  head  of  this — I  know 
them — the  men  who  were  there  on  watch  were  in  the  employ  of  the  Tide- 
water and  the  Standard  Oil  Company.  We  are  pumping  oil  through  to  the 
junction,  after  the  difliculties  we  had  in  getting  these  rights  of  way  through 
Jersey;  here  came  the  very  same  men  that  we  found  up  in  New  York, 
offering  as  high  as  $5  to  the  farmers,  instead  of  $1.50.  which  was  our  price, 
to  give  them  the  right  of  way  instead  of  us  at  the  other  price,  and  the 
farmers  saw  that  we  were  in  a  hole  in  it  and  they  turned  out  to  help  us, 
because  it  was  a  public  wrong,  and  we  built  that  line  through. 

Q.  Through  to  where?  A.  Through  to  the  junction,  50  miles  from  New 
York;  from  there  we  have  a  rate  of  freight  which  was  termed  here,  by  one 
witness  on  the  stand,  a  discriminating  rate.  The  total  price,  I  believe,  as 
given  here,  for  transporting  a  barrel  of  oil  from  the  oil  regions  to  the  sea- 
board— I  think  by  Mr.  Rogers — was  45  cents.     *Am  I  mistaken? 

Mr.  A.  L.  HARRIS.  That  is  my  recollection;  I  think  that  is  right.  A. 
Forty-five  cents.  We  pay  for  that  50  miles  on  our  refined  oil.  seven  and  two- 
tenths  rents,  and  on  our  crude  oil  we  pay  six  and  one-half  cents  for  hauling 
it  50  miles;  *and  we  don't  give  them — it  is  not  by  the  car  load,  or,  as  stated 
by  the  witness,  amounting  to  only  $6  or  $7  a  car.  We  give  them  cars  that 
hold  from  132  to  150  barrels,  that  is  $7  and  $3  are  $10  a  car.f  A  great  big 
rate  of  freight  for  a  haul  of  50  miles,  and  the  road  is  awful  glad  to  get  it, 
because  it  gives  them  a  revenue  of  about  $200,000  a  year  from  the  product 
they  bring  over  it. 

Q.  (By  Mr.  CLARKE.)  What  road  is  that?  A.  The  New  Jersey  Central, 
friendly  to  us;  I  commend  them.  No  discriminating  rate;  it  is  a  rate  that 
is  open,  fair  and  square  to  anybody  else  that  wants  to  ship  on  it;   they  can 


*Black  faced  type  Indicates  matter  omitted,  in  the  course  of  editing,  from  the 
offlcial  report. 

tMr.  Archbold,  in  his  testimony,  gave  the  exact  rates  that  were  charged  the 
United  States  Pipe  T^ine  Company  l)y  the  Central  Railroad  of  New  Jersey  on  the 
crude  and  refined  nil  transported  over  that  lino  from  thoir  terminal  point  at 
Hampton  Juncticn,  N.  J.,  to  Bayonne,  N.  J.,  a  distance  of  52>4  miles,  the  witness 
stating  that  he  considered  it  a  lower  freight  rate  than  the  Standard  Oil  Company 
evor  had  for  an  equal  distance  at  any  time  in  the  history  of  Its  business.  (See  Mr. 
Archbold's  testimony,  page  410  or  619.) 


LEWIS  EMERY,  JR.  375 

come  in  and  get  the  same  price;  but  we  pay  from  that  point  seven  cents,  if 
we  choose  to,  or  six  cents,  and  we  beat  the  Standard  Oil  Company  in  the 
marliets  wherevei'  we  have  fair  competition  and  fair  railroad  rates.  Now, 
we  have  contested  this  suit  in  the  courts  of  New  Jersey  for  the  last  four 
years  and  a  decision  was  rendered.  *There  is  a  law  there  that  1  will  not 
judge.  The  judgment  was  handed  down  by  the  Chancellor's  Court  that  the 
rights  of  the  United  States  Pipe  Line  under  the  Delaware,  Lackawanna  & 
Western  were  not  valid ;  we  have  notice  now  that  we  must  take  these  pipes 
out  from  under  that  road,  and  under  that  decision  the  railroads  of  this 
country  are  a  barrier  to  any  modern  means  of  transportation. 

Q.  What  was  the  ground  of  the  decision?  A.  On  the  ground  that  they 
had  a  title — not  only  the  easement — but  they  had  a  title  or  a  fee  in  the  land, 
although  they  didn't  buy  the  fee.  There  were  two  decisions  by  the  Vice- 
Chancellors;  one  by  Vice-Chancellor  Emerick,  and  the  other — I  don't  recol- 
lect his  name — but  they  reversed  us  and  our  line  has  got  to  come  out  from 
under  that  road.  It  is  doing  no  harm  laying  in  the  midst  of  a  large  open 
cut  and  the  old  farmer  reserved  the  right  to  have  egress  and  ingress  to  his 
fields  on  both  sides,  but  nevertheless  the  court  is  against  us.  I  think  I  can 
produce  the  letter  giving  notice  that  we  must  remove  those  pipes  imme- 
diately. 

Q.  In  what  State  is  that?  A.  New  Jersey;  in  the  State  of  New  Jersey, 
about  nine  miles  from  the  State  of  Pennsylvania. 

Q.  (By  Vice-Chairman  PHILLIPS.)  The  decision  in  the  lower  court,  as 
I  understand,  was  in  your  favor.    A.  Sustaining  that  we  had  title. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Was  reversed  in  the  Supreme 
Court?  A.  Reversed  in  the  Chancellor's  Court.  There  is  another  court 
which  is  higher  than  that — called  the  Superior  Court.  They  have  the  old 
English  practice.  Chancellors  and  Vice-Chancellors. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Has  your  company  appealed  the 
case?  A.  Oh,  we  have  gone  through  all  of  it.  Now,  then,  that  is  the  story 
of  attempting  to  stop  competition  in  the  business. 

Note- — At  this  point  the  commission  took  a  recess  until  2  o'clock  in  the 
afternoon. 

The  commission  was  called  to  order  by  Vice-Chairman  Phillips  at  2:20 
o'clock. 

Vice-Chairman  PHILLIPS.  The  commission  will  please  be  in  order. 
Senator  Emery  will  proceed  with  his  testimony  in  his  own  way. 

Mr.  EMERY.  Mr.  Chairman  and  gentlemen,  I  desire  to  take  up,  in 
resuming  where  I  left  off,  the  subject  of  competition.  The  United  States 
Pipe  Line  Company  was  organized  with  a  capital  originally  of  $600,000;  at 
the  present  time  its  capitalization  is  $2,000,000,  I  believe.  We  formed  in 
that  company  a  voting  trust;  I  may  say  that  the  United  States  Pipe  Line 
Company  was  organized  under  the  General  Corporation  Act  of  the  State  of 
Pennsylvania.  We  formed  a  voting  trust  for  the  purpose  of  keeping  the 
stock  out  of  the  hands  of  anyone  that  was  disposed  to  attempt  to  control 
our  operations.  There  was  at  the  time  this  trust  was  formed.  I  think,  about 
$800,000  of  the  stock  subscribed  for,  and  every  dollar  of  it  was  in  the  trust. 
However,  regardless  of  the  provisions  of  this  trust,  the  Standard  Oil  Com- 
pany purchased  at  an  advanced  price  over  the  par  value,  which  was  100 
cents,  $386,000  worth  of  the  stock.  Before  they  purchased  it,  however,  the 
stock  taken  had  been  increased  by  new  subscriptions  to  about  $1,200,000. 
but  their  expectation  and  attempt  was  to  get  control  of  the  stock.  *The 
parties  that  sold  this  stock  to  the  Standard  Trust — now  remember  this  was 
not  the  Standard  Oil  Company — you  see  I  always  used  the  word  "trust"  in 
addition  to  the  Standard  Oil  Company,  because  there  are  so  many  Standard 
Oil  Companies  throughout  the  United  States,  and  it  should  be  the  Standard 
Trust  in  every  instance.  Owing  to  the  loyalty  and  determination  of  the 
balance  of  the  stockholders,  they  were  unable  to  purchase  any  more  stock; 
and  that  trust  is  in  existence  to-day,  a  voting  trust.  When  the  Standard  Oil 
Company  presented  themselves  at  one  of  the  yearly  meetings  of  the  United 
States  Pipe  Line  Company  they  attempted  to  vote  that  stock.     We  refused. 


*Black   faced   type   Indicates  matter  omitted,  In  the  course  of  editing,   fidm   the 
official  report. 


376  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

by  resolution,  by  unanimous  resolution  of  the  stockholders,  to  allow  the 
representative  of  the  Standard  Oil  Company  or  the  Standard  Trust  to  vote 
that  stock  and  he  was  ejected  from  the  room,  out  of  which  grew  the  suit  of 
the  National  Transit  Company  and  J.  C.  McDowell  vs.  the  United  States 
Pipe  Line  Company. 

Q.  (By  Vice-Chairman  PHILLIPS.)  In  what  court?  A.  That  was 
brought  in  the  McKean  County  Court  and  was  appealed  to  the  State  Su- 
preme Court  and  was  never  heard  by  the  Supreme  Court;  the  case  was  not 
even  called  up;  but  our  attorneys  were  notified  that  the  appeal  was  illegally 
taken,  because  an  officer  of  the  company  had  not  made  affidavit  to  the  bill 
of  appeal,  although  a  stockholder  had  made  the  affidavit.  I  was  absent  from 
home.  On  that  ground  the  Supreme  Court  of  the  State  of  Pennsylvania 
threw  it  out,  although  we  gave  to  the  court  several  decisions  wherein  other 
courts  had  held  that  the  affidavit  being  made  by  a  stockholder  of  a  company 
was  quite  sufficient  for  an  appeal  to  the  Supreme  Court.  This  is  the  case. 
The  Standard  Oil  Company  representative  has  been  admitted  to  the 
meetings  and  has  listened  to  its  deliberations  and  has  been  allowed  to  vote 
upon  such  questions  as  he  chose  to  vote,  ever  since  they  have  held  this 
stock,  and  they  still  vote  it. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Was  this  gentleman  elected  as  a 
director  or  not?  A.  He  was  elected,  under  the  circumstances.  He  having 
the  stock,  we  recognized  them,  and  he  has  been  elected  a  director  of  the 
company  and  voted  every  time  we  have  had  a  meeting,  and  things  have  gone 
along  in  his  presence,  he  knowing  just  exactly  what  we  were  going  to  do, 
and  participating  in  everything  appertaining  to  the  general  business  of  the 
company. 

Q.   (By  Mr.  A.  L.  HARRIS.)     Was  he  prohibited  by  the  law  of  the  State 
of  Pennsylvania,  or  by  a  by-law  of  your  company? 
The  WITNESS.    From  owning? 
Mr.  A.  L.  HARRIS.     From  voting. 
Mr.  CLARKE.    From  voting  the  majority. 

The  WITNESS.  He  was;  yes,  sir.  Well,  now,  I  can  answer  that  ques- 
tion later;  I  cannot  just  at  the  moment,  because  I  will  have  to  read  the  pleas 
of  our  bill.  It  is  here,  but  what  it  is  I  don't  know.  It  was  on  some  ground, 
but  we  thought  it  to  be  a  legal  ground  and  we  still  think  so.  But  when  we 
were  cut  off  by  the  Supreme  Court's  decision  that  the  affidavit  was  improp- 
erly made,  of  course  our  case  fell,  and  we  couldn't  renew  it;  that  is  all  there 
was  about  it.  Our  attorneys  simply  denominated  it  a  technical  decision,  not 
one  of  good  law.  That  is  what  our  attorneys  said;  of  course  I  don't  know 
anything  about  that.  The  stock  that  these  people  purchased  in  the  United 
States  Pipe  Line,  belonged,  some  of  it,  to  three  of  the  largest  owners  in  the 
association  of  refiners.  I  want  this  commission  to  understand  right  here, 
Mr.  Chairman  and  gentlemen,  that  all  of  the  refineries  belonging  to  the  inde- 
pendents have  no  connection  with  any  of  the  stock  companies.  The  refiner- 
ies are  owned  by  individual  operators  and  have  nothing  to  do  with  the 
United  States  Pipe  Line  or  the  Pure  Oil  Company  or  the  Producers'  Oil  Com- 
pany, Limited,  or  any  other  transportation  or  marketing  company.  They 
market  their  oils  independently;  they  are  competitors  with  one  another. 
Now,  bear  that  in  mind.  I  go  into  the  market  and  I  meet  my  brother  refiner 
and  I  put  a  price  upon  my  goods  and  he  goes  to  that  same  customer  and 
he  puts  a  price  upon  his  goods;  no  combination  there;  free,  open  competi- 
tion among  all  these  refiners  that  are  in  the  field.  There  are  to-day  some- 
thing like  15  of  them  who  furnish  the  oil  to  the  said  transportation  companies, 
and  we  sell  oil.  not  only  to  the  Pure  Oil  Company,  doing  business  in  Europe, 
but  we  sell  oil  to  Italy,  France,  England  and  every  other  country,  independ- 
ently of  the  Pure  Oil  Company.  So.  do  not  confound  these  refiners  with 
what  we  are  going  to  finally  deal  with — the  trusts;  because  they  have  no 
connection  whatever  with  that.  They  are  independent,  and  are  competing 
to-day  in  the  markets  of  the  world. 

Q.  (By  Mr.  FARQUHAR.)  Do  these  refiners  ever  sell  to  the  Standard 
Oil  Company?  A.  Oh,  yes,  sir;  I  sell  the  Standard  Oil  Company  oils  myself 
sometimes,  and  I  make  them  pay  all  I  can,  too. 


LEWIS  EMERY,  JR.  377 

*Q.  Oh,  you  are  right.  A.  Like  everybody  else.  These  three  gentlemen 
that  I  referred  to  as  owning  three  of  the  largest  refineries  connected  with 
this  refiners'  association,  if  you  choose  to  call  them  such — they  are  not  an 
association — I  would  say  three  of  the  largest,  among  that  number  of  15. 
not  only  sold  their  stock,  but  they  sold  their  refineries  as  well,  for  which 
they  received  a  large  sum  of  money,  and  the  ownership  of  these  refineries 
has  been  in  the  Standard  Oil  Company,  and  within  the  last  eight  months  one 
refinery,  belonging  to  Mr.  Ramage,  was  destroyed  and  dismantled.  The 
next  to  be  partially  dismantled  was  that  belonging  to  the  Hon.  John  Fertig, 
of  Titusville,  known  as  the  National  Refining  Company.  Mr.  Ramage's 
refinery  was  known  as  the  Mutual.  It  doesn't  make  any  difference.  The 
next  was  the  Continental  Refining  Company. t  All  of  these  refineries  were 
first  class,  and  built,  especially  the  last  two,  in  modern  times,  and  were  very 
improved.  So  was  Mr.  Ramage's;  in  fact,  he  made  more  by-products  in  his 
than  any  other.  All  of  these  refineries  have  been  demolished  and  taken 
from  the  ground  where  they  originally  stood.  That  has  all  been  since  1895. 
Is  there  anything  further  in  that  connection? 

Q.  (By  Vice-Chairman  PHILLIPS.)  Was  any  effort  made  to  buy  other 
refineries,  or  all  the  refineries  connected  with  your  lines  or  not?  A.  Oh. 
yes,  sir;  these  people  seemed  to  constitute  themselves  a  committee  and  they 
labored  with  me  and  labored  with  others;  said  it  was  the  best  thing  to  sell 
out  and  quit.  The  balance  of  us  didn't  think  so,  and  we  are  on  earth  yet. 
I  would  have  been  glad  for  Mr.  Ratchford  to  have  heard  this  recitation  and  also 
the  other  gentleman  who  was  so  very  anxious  to  hear  about  this  this  morning. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Now,  will  you  state  something  in 
regard  to  the  Producers'  Oil  Company?  A.  I  desire  to  also  say  it  has  been 
referred  to  in  evidence  that  the  Standard  Oil  Company  bought  a  majority  of 
the  stock  of  the  Producers'  Oil  Company,  Limited.  Its  method  of  operation 
in  purchasing  that  stock  you  have  before  you  already  and  there  is  no  use  of 
my  going  into  it;  but  through  the  same  method  they  purchased  a  majority  of 
the  stock  of  this  Pure  Oil  Company,  Limited,  and  they  have  not  been  per- 
mitted by  the  courts  to  vote  it,  and  it  has  gotten  back  into  the  hands  of  the 
orieinal  owners  after  the  privilege  of  voting  it  was  denied  them  by  an  order 
of  the  court. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Now,  then,  will  you  make  some 
statement  in  regard  to  the  Pure  Oil  Company,  which  was  organized  there- 
after? A.  The  Pure  Oil  Company  was  organized  under  the  laws  of  New 
Jersey;  I  don't  know  what  you  would  denominate  the  law,  but  I  think  it  was 
under  the  general  incorporation  act.  Its  capital  at  present,  I  believe,  is 
$2,000,000,  with  $377,000  paid  in.  We  are  very  much  afraid  that  when  our 
United  States  Pipe  Line  Trust  expires,  which  will  be  within  the  next  15 
months,  there  will  be  some  attempt  to  get  possession  of  some  more  of  that 
stock,  and  we  have  felt  the  necessity  of  combining,  or  putting  our  stock 
into  the  hands  of  the  Pure  Oil  Company  and  to  form  a  voting  trust,  solely 
for  the  purpose  of  protection.  I  desire  to  say  that  the  paper  to  which  Major 
Farquhar  referred  last  week,  has  been  amended.  First,  it  is  not  a  perma- 
nent voting  trust.  Second,  three-fifths  of  the  stock  voted  at  any  time  can 
dissolve  the  trust,  or  can  overrule  the  power  of  the  voting  trust — three- 
fifths  of  the  stock. t    *The  power  is  entirely  in  the  hands  of  the  stockholders; 


*Black  faced  type  indicates  matter  omitted,  in  the  couree  of  editing,  from  the 
official  report. 

tThe  Continental  was  not  sold  nor  dismantled  and  is  still  in  operation  by  its 
original  owners. 

tThe  original  voting  trust  of  the  Pure  Oil  Company  provided  that  four-fifths  of 
the  stockholders  could  terminate  the  trust.  Tn  both  agreements  it  is  provided  that 
the  stock  of  the  company,  which  had  a  par  value  of  $5  per  share,  should  be  re- 
deemed at  $110  per  share  before  the  voting  trust  could  be  dissolved. 

The  voting  trust,  both  as  originally  formed  and  as  later  amended,  provides: 

"Third— This  agreement  may  be  changed  at  any  time  only  with  the  consent,  in 
writing,  of  the  Pure  Oil  Company,  three-fifths  of  the  persons  at  the  time  acting  as 
trustees  hereunder,  and  of  the  equitable  owners  of  three-fifths  of  the  shares  held 
in  trust  hereunder." 

It  will  be  seen  that  three-fifths  of  the  shareholders  "can  overrule  the  power  of 
the  voting  trust"  only  when  three-fifths  of  the  trustees  agree  that  they  themselves 
shall  be  overruled.  Mr.  Emery  says,  "The  power  is  entirely  in  the  hands  of  the 
stockholders."  As  will  be  seen,  if  the  stockholders  should  unanimously  vote  for  any 
change  of  the  trust  agreement  they  could  do  nothing  without  the  support  of  three- 
fifths  of  the  trustees,  and  they  could  exercise  control  in  no  other  way. 


37S  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

*and  understand  that  only  one-half  of  this  stock  is  put  in  the  trust  with  the 
exception  of  10  shares  over  and  above  that;  but  three-fifths  of  the  whole  at 
any  time  can  control  the  policy  of  the  company,  under  the  terms  of  the 
charter,  which   terminates  within  46  years.     Therefore  it  is  not  perpetual. 

Q.  (By  Mr.  FARQUHAR.)  Is  that  one  of  the  new  amendments?  A. 
Yes,  sir. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Was  the  company  originally  formed 
for  over  50  years?  Was  it  chartered  for  over  50  years  originally?  A.  No, 
sir;  it  was  chartered  for  50  years. 

Q.  (By  Mr.  FARQUHAR.)  The  old  form  was  for  four-fifths?  A.  Yes, 
sir. 

Q.  It  required  four-fifths?     A.  Yes,  sir. 

Q.  Section  4  of  this  agreement  is:  "This  agreement  may  be  cancelled 
and  the  trust  hereby  created  dissolved  only  by  the  winding  up  of  the  Pure 
Oil  Company,  or  by  the  consent  in  writing  duly  executed,  of  the  equitable 
owners  of  four-fifths  of  the  shares  held  in  trust  hereunder "  A.  (Inter- 
rupting.)     Yes,  sir. 

Q.   (Resuming.)      " and  of  four-fifths  of  all  the  other  shares  of  the 

company,  after  providing  in  full  for  the  redemption  or  purchase  at  $110  per 
share  in  cash  of  all  the  preferred  and  common  shares  of  the  company  at  the 
time  outstanding."    A.  Yes,  sir. 

Q.  Does  that  remain  intact,  with  the  exception  of  the  three-fifths?  A. 
Yes,  sir. 

Q.  With  the  exception  of  three-fifths,  then,  that  paragraph  remains 
intact  in  the  new  corporation?  A.  No,  sir;  it  is  amended;  it  has  been  cut 
to  three-fifths. 

Q.  Is  this  redemption  feature  in  it,  that  the  trust  cannot  be  dissolved 
until  "after  providing  in  full  for  the  redemption  or  purchase  at  $110  per 
share,  in  cash,  of  all  the  preferred  and  common  shares  of  the  company  at 
the  time  outstanding?"  A.  That  provision  is  wiped  out  by  the  fact  that 
three-fifths  can  control  and  change  the  by-laws  and  change  anything  apper- 
taining to  the  organization  or  management  of  the  company. 

Q.  Is  this  stock  redemption  feature  still  retained?  A.  I  don't  know,  sir; 
I  cannot  answer  that  question. 

Q.  Now,  it  has  been  represented  here.  Senator,  that  this  Pure  Oil  Com- 
pany is  not  a  trust.  I  called  the  attention  of  another  witness  to  the  fact  that 
it  is  specifically  mentioned  as  a  trust  here  in  the  articles  of  agreement,  and 
also  in  the  incorporation;  so  that  you  are  not  afraid  to  call  it  a  trust?  A. 
No,  I  should  call  it  a  voting  trust. 

Q.  Well,  a  voting  trust;  let  us  get  down  to  it  now.  A.  I  will 
submit  that  question  to  the  decision  or  to  the  definition  of  a 
trust,  if  you  please.  The  definition  of  a  trust,  given  by  the  Commercial  Year 
Book  of  the  New  York  Journal  of  Commerce,  is:  "As  popularly  used,  the 
word  'trust'  is  now  applied  to  any  consolidation,  combine,  pool,  or  agree- 
ment of  two  or  more  naturally  competing  concerns  that  establish  a  partial 
or  complete  monopoly  in  certain  territory,  with  powers  to  fix  prices  or  rates 
in  any  industry;  viewed  from  the  standpoint  of  the  consumer,  any  formal 
agreement  and  an  iron-clad  combine  look  alike,  if  the  one  has  the  same 
effect  as  the  other  upon  prices." 

Now,  there  is  nothing  in  the  world  about  the  Pure  Oil  Company  that 
leads  up  to  that  definition.  There  are  several  other  definitions  that  I  can 
refer  to.  Let  me  suggest  that  there  are  five  full  definitions  given  by  Mr. 
Cook,  an  authority,  one  of  the  greatest  lawyers  in  the  country;  and  also  by 
Mr.  Von  Halle.     There  are  five  forms  of  trusts. 

Q.  (By  Vice-chairman  PHILLIPS.)  I  would  like  the  Senator  to  read 
the  definition  under  the  Sherman  act,  if  he  has  it.  A.  It  needs  no  argument 
to  show  that  the  Pure  Oil  Company  is  not  a  trust;  it  lacks  every  element  of 
a  trust. 

A  trust  is  defined  by  the  anti-trust  law,  known  as  the  Sherman  act  of 
1890,  as  follows: 

"All  trusts  and  combinations  in  restraint  of  trade  are  unlawful." 


♦Black  faced  typ«  indicates  matter  omitted,  In  the  course  of  editing,  from  the 
official  renort. 


LEWIS  EMERY,  JR.  379 

Another  accepted  definition  is,  that  corporations  or  combinations  of 
corporations  with  vast  capital,  made  for  the  purpose  of  securing  and  main- 
taining a  monopoly  in  any  branch  of  industry,  is  a  trust.  The  odious  feature 
is  the  aim  and  purpose  to  secure  a  monopoly.  The  Pure  Oil  Company  was 
organized,  not  to  secure  a  monopoly,  but  to  prevent  a  monopoly  in  the  oil 
industry.  The  Pure  Oil  Company  is  not  in  restraint  of  trade,  but  in  aid  of 
trade,  and  to  maintain  competition.  It  expires  by  the  expiration  of  its 
charter.  46  years  from  the  6th  day  of  next  November.  It  is,  therefore,  not 
permanent  nor  perpetual,  as  alleged.  It  would  be  silly  to  hold  that  a  cor- 
poration with  a  paid-up  capital  of  only  $377,000,  opposed  by  a  trust  in  the 
same  industry  with  a  par  value  over  200  times  and  a  market  value  over  1,000 
times  as  great,  could  be  a  monopoly  or  restrain  trade;  and  unless  it  is  a 
monopoly  or  is  restraining  trade,  it  cannot  be  a  trust. 

One-half  of  its  stock  being  held  by  trustees  to  vote  the  same  and  to 
prevent  the  intrusion  of  a  great  monopoly  to  destroy  it,  does  not  change  the 
character  of  the  corporation,  or  make  it  a  trust.  If  the  Pure  Oil  Company 
should  develop  monopolistic  tendencies,  the  present  holders  would  be  glad 
to  have  it  destroyed.  *And  I  would  agree  as  quickly  as  possible  to  let  it 
stop  In  case  of  any  change  or  any  attempt  to  control  any  trade.  If  any  anti- 
trust legislation  at  any  time,  brings  within  its  restrictive  or  destructive 
provisions  the  Pure  Oil  Company,  the  stockholders  of  that  company  will 
welcome  its  destruction. 

Q.  Just  there.  Senator  Emery,  you  are  a  large  holder  in  most  all  of 
these  companies,  and  you  are  president  of  the  United  States  Pipe  Line 
Company.    A.  Yes,  sir. 

Q.  And  also  a  large  holder  in  the  Pure  Oil  Company.  Did  you  ever 
authorize,  or  do  you  know  of  any  effort  ever  having  been  made  to  make  a 
combine  of  these  various  companies  with  the  Standard  Oil  Company?  A. 
No,  sir;  never. 

Mr.  FARQUHAR.  Before  we  leave  the  matter  of  the  Pure  Oil  Company, 
will  the  Senator  pardon  me? 

The  WITNESS.    Will  you  allow  me  to  answer  this  question  first? 

Q.  (By  Mr.  FARQUHAR.)  Can  you  furnish  the  commission  the  original 
form  of  incorporation  of  the  Pure  Oil  Company,  and  it  will  be  printed  as  a 
part  of  the  minutes  of  this  commission.  Can  you  furnish  with  your  testi- 
mony a  copy  of  the  amended  form  of  incorporation?  A.  Oh,  yes,  sir;  cer- 
tanly. 

Q.  That  is  all  I  care  for.  A.  I  will  be  very  glad,  indeed.  Now,  under- 
stand, Mr.  Farquhar,  these  recommendations  concerning  the  changing  of  the 
trust.  Understand,  we  haven't  got  the  voting  trust  yet.  We  perhaps  are 
crossing  the  bridge  before  we  get  to  it;  it  has  not  Ibeen  accomplished,  so 
far  as  the  combination  of  the  stock  of  these  companies  is  concerned.  All 
there  is  to-day  that  is  in  the  shape  of  a  trust,  out  of  about  three  or  four 
million  dollars,  is  $377,000.  The  other  is  in  contemplation,  because  we  fear 
that  when  this  present  trust  of  ours,  the  United  States  Pipe  Line  Company, 
runs  out,  we  shall  be  in  danger,  and  we  are  going  to  put  ourselves  under 
cover;  that  is  all. 

Q.  You  say  you  have  incorporated  this  Pure  Oil  Company  in  the  State 
of  New  Jersey?    A.  Yes,  sir. 

Q.  You  have  so  much  capital  paid  already  into  your  company?  A. 
Three  himdred  and  seventy-seven  thousand  dollars. 

Q.  You  are  still  under  the  operation,  possibly,  of  a  merger,  to  bring  in 
other  companies  or  other  stock?  A.  No,  it  is  not  a  merger:  we  are  simply 
talking  about  doing  this,  and  we  expect  to  expand  it,  call  it  what  you  choose, 
a  merger  or  whatever  you  choose.  It  is  not  a  question  that  has  been  abso- 
lutely accomplished,  but  we  are  going  to  do  it.  These  forms  have  not  been 
printed,  but  we  are  going  to  try  to  get  this  stock  in  for  self  protection;  that 
is  what  we  are  now  putting  it  into  a  voting  trust  for;  it  is  not  accomplished 
by  any  means. 

*Vice-Chairman  PHILLIPS.  I  would  state  to  Mr.  Farquhar  that  !  will  see 
that  when  they  are  issued,  one  of  the  amended  forms  will  be  presented  to 
this  commission. 


♦Black  faced  type  indicates  matter  omitted,  in  the  course  of  editing,  frum  the 
official  report. 


380  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

*Mr.  FARQUHAR.    So  that  we  will  have  a  copy  of  both;  it  will  be  right 
to  get  the  amended  features. 

Vice-Chairman    PHILLIPS.      Certainly;    certainly;    we   want    it    for    the 
information  of  this  commission. 

Mr.  FARQUHAR.     Certainly;   that  is  all   I  care  for. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Now,  Senator  Emery,  will  you 
answer  the  other  question  in  regard  to  any  effort  amongst  all  of  these  other 
companies  to  make  a  combine  with  the  Standard  Oil  Trust?  A.  Mr.  Chair- 
man and  gentlemen  of  the  commission,  I  was  president  and  general  manager 
of  the  United  States  Pipe  Line  Company  from  its  inception  up  to  a  little 
over  a  year  ago  and  probably  I  would  have  been  still  in  the  management 
of  it  had  my  health  not  failed.  I  was  always  present  at  the  general  meet- 
ings, and  had,  under  our  by-laws,  the  appointment  of  all  committees.  Dur- 
ing our  dire  trouble  that  I  have  recited  to  you  this  forenoon  relative  to  the 
construction  of  this  line,  I  appointed  a  committee,  as  chairman  of  the  board 
of  directors  to  go  to  New  York  and  see  if  some  arrangement  could  not  be 
made  with  the  Standard  Oil  Company  by  which  they  would  permit  us  to  go 
under  the  railroads  of  the  country.  We  didn't  go  to  the  railroads;  the  rail- 
roads had  nothing  to  say  about  it;  but  we  went  to  the  Standard  Oil  Com- 
pany for  the  purpose,  not  of  selling  one  single  share  or  dollar's  worth  of  our 
property;  that  never  entered  into  the  resolution.  The  resolution,  or  motion, 
was  that  the  committee  go  to  New  York  for  the  purpose  of  seeing  if  the 
Standard  Oil  Company  would  not  let  up  and  allow  us  to  go  through  to  the 
coast.  I  appointed  that  committee  under  that  resolution  myself,  and  Mr. 
Phillips,  Mr.  Lee,  Mr.  Murphy,  Mr.  King,  Mr.  Jennings,  of  Pittsburg,  and 
some  other  gentlemen  were  appointed  to  go  there  for  that  purpose.  There 
was  no  proposition  made — or  at  least  if  there  was  they  had  no  authority  to 
make  it  under  the  resolution — and  I  don't  think  there  was  any  proposition 
made  to  sell  any  portion  of  this  property,  or  to  make  any  settlement  with 
the  Standard  Oil  Company  on  any  such  basis  as  selling  out  any  of  the  com- 
pany's property. t  *And  any  charge  that  is  made  against  Mr.  Phillips  is 
absolutely  and  unqualifiedly  wrong.  And  just  here,  Mr.  Chairman  and  gen- 
tlemen of  this  commission,  I  feel  it  my  duty,  and  I  beg  you  will  give  me  the 
indulgence  to  correct  the  testimony  that  has  been  given  or  the  general  im- 
pression that  has  been  given  to  the  public  by  the  Washington  Post  and  the 
Pittsburg  Post  relative  to  Mr.  Phillips'  connection  with  that  matter.  I  would 
defend  either  of  you  gentlemen  were  I  acquainted  with  you  in  your  career 
of  life,  just  as  quickly  as  I  would  defend  Mr.  Phillips  at  this  moment;  and 
I  believe  it  is  due  to  Mr.  Phillips  and  due  to  this  commission  that  there 
should  be  no  besmirching  of  the  character  of  any  member  of  this  commis- 
sion. 

The  Washington   Post  of  September  11   says: 

"The   Commission   and   the  Trusts. 

"Ex-Congressman  Phillips,  acting  chairman  of  the  Industrial  Commis- 
sion, which  is  now  engaged  in  the  investigation  of  trusts,  combinations,  etc., 
made  a  statement  last  Saturday  which  we  find  extremely  interesting.  Sig- 
nificance is  added  through  the  circumstances  that  Mr.  Phillips  is  the  head 
of  a  tribunal  before  which  the  trusts  occupy  the  attitude  of  a  defendant. 
Let  us  quote,  however,  from  the  Post's  report  of  the  incident,  as  it  appeared 
in  our  edition  of  Sunday: 

"'Mr.  Phillips  admitted  that  some  four  or  five  years  ago  he  had  called 
upon  the  Standard  Company  authorities  with  the  view  of  making  a  combina- 
tion, but  said  that  he  had  not  done  so  since.  The  object  then  was  to  secure 
a  cessation  of  hostilities  in  the  piping  and  selling  of  oil  and  to  secure  the 
right  to  deliver  oil  in  New  York.  The  Standard  people  had  refused  to  make 
any  concessions,  and  had  proposed  in  lieu  to  buy  the  independent  pipe  line. 
There   never   had   been   a  time  when   he  would   have   been   willing  personally 

♦Black  factd  type  indicates  matter  OniittPd,  in  tlie  couisc  of  editing,  from  tiie 
offlcial  report. 

tin  the  official  report  the  following,  which  is  not  in  the  stenographic  report,. 
appears:     "I  am  sure  they  did  not  make  any  such  proposition  " 


LEWIS  EMERY,  JR.  381 

*to  go  into  a  combination  with  them,  and  the  insinuation  of  Mr,  Archbold 
that  his  people  lacked  faith  in  the  independent  managers  was,  he  said,  a 
gratuitous  insult  to  a  large  body  of  business  men  of  high  character.' 

"The  'gratuitous  Insult'  in  question  consisted,  we  fancy  in  a  suggestion 
by  Mr.  Archbold  to  the  effect  that  the  average  complainant  against  the 
trusts  is  a  person  who  once  endeavored  but  failed  to  get  into  one  of  them. 
No  doubt  Mr.  Phillips,  who  is  not  only  acting  chairman  of  the  industrial 
Commission,  but  an  official  and  a  large  stockholder  in  the  Pure  Oil  Com- 
pany, regarded  this  as  a  thrust  at  him,  and  at  the  business  concern  in  which 
he  was  involved.  No  doubt  Mr.  Phillips  was  perfectly  correct  in  his  assump- 
tion. Most  people,  we  think,  will  agree  that  an  outside  corporation  which 
has  tried  to  get  into  a  trust  is  but  poorly  qualified  as  a  witness  against  the 
trusts.  To  the  unprejudiced  bystander  its  antagonism  seems  to  be  inspired 
more  by  vengeance  than  morality.  Mr.  Phillips  frankly  admits  that,  on 
behalf  of  the  Pure  Oil  Company,  he  once  approached  the  Standard  Oil  Com- 
pany— which  is  notoriously  one  of  the  worst  of  octopuses — 'with  a  view  to 
making  a  combination.'  He  has  'not  done  so  since,'  he  says — which  we  can 
well  believe — but  is  now,  on  the  contrary,  one  of  the  severest  critics  of  the 
trusts  in  general.  He  recognized  his  mistake — after  the  Standard  Com- 
pany's refusal  to  negotiate — and  is  no  doubt  sincere  at  this  time  in  his  hos- 
tility to  trusts.  But  we  must  confess  that  the  case  would  be  stronger  for 
the  Industrial  Commission,  and  the  attitude  of  that  tribunal  much  more 
impressive,  if  its  chairman  were  not  a  disappointed  aspirant  to  'combina- 
tion' with  the  Standard  Oil   Company." 

Vice-Chairman  PHILLIPS.  Now,  I  am  satisfied.  Senator  Emery,  I  did 
not  know  that  you  would  read  that  paper  and  I  wanted  to  ask  you  a  legiti- 
mate question.     You  heard  my  testimony  on  this  question?     A.  Yes,  sir. 

Q.  (By  Vice-chairman  PHILLIPS.)  And  did  I,  in  that,  state  that  I  had 
ever   endeavored   to   combine   with   the    Standard   Oil    Company?     A.   No,   sir, 

Q.  rSy  Vice-chairman  PHILLIPS.)  But  did  I,  or  did  I  not,  absolutely 
say  that   I    rever   have?     A.   Yes,  sir. 

Q.  (By  Vice-Chairman  PHILLIPS.)  On  that  occasion  or  on  any  other 
occasion?     A.   No  occasion. 

Q.  (By  Vice-Chairman  PHILLIPS.)  On  any  occasion  attempted  a  com- 
bine?    A.   No,   sir. 

Mr.  RATCHFORD.  Is  that  an  editorial  from  the  Washington  Post?  A. 
Yes,   sir. 

Q.  Let  me  ask  you  this:  Is  it  your  intention  that  that  shall  become  a 
part  of  your  testimony?  A.  Oh,  no;  I  just  called  this  up  because  the  ques- 
tion of  trusts  was  here,  and  I  felt  that  I  should  defend  the  gentleman  whom 
1  have  known  for  his  high  integrity  for  more  than  20  years. 

Q.   Without  wishing  to  have  it  in  your  testimony?     A,  Yes,  sir. 

Q.  (By  Vice-chairman  PHILLIPS.)  I  hope,  without  objection,  that  the 
editorial  read  from  the  Washington  Post  will  be  stricken  from  the  evidence. 
You  have  no  objection  to  doing  that.  Senator?     A.   No,  sir. 

Mr.  FARQUHAR.  And  the  remarks  that  precede  it  and  follow  it  will 
have  to  go  with  the  editorial,  so  that  Senator  Emery  is  simply  addressing 
the  commission  now  in  a  personal  way,  and  his  remarks  will  not  be  made 
a  part  of  the  record  of  testimony  of  this  commission.  Is  that  understood? 
A.   Yes,   sir. 

Q.  (By  Vice-Chairman  PHILLIPS.)  I  will  just  state  this,  Mr.  Farquhar: 
1  did  not  know  that  he  was  going  to  read  the  paper,  and  I  will  ask  him  the 
question,  if  he  heard  my  testimony,  whether  I  had  ever  made  any 
such  statement  as  alleged;  that  is,  I  will  put  it  in  this  form:  Did  I  ever, 
in  my  testimony,  state  that  I  sought  a  combination  with  the  Standard 
Oil  Company?  That  was  the  question;  I  think  that  was  the  ques- 
tion, and  it  was  legitimate.  A.  No,  sir;  not  in  any  testimony,  nor  ever  in 
your  life  since  I  have  been  by  your  side;   not  since  1872  did  you  ever  venture 

*Black  faced  type  indicates  matter  omiltfd,  in  the  course  of  editing,  from  the 
cfflcial  report. 


382  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

*to  say  that  you  had  sought  any  connection  with  the  Standard  Oil  Company 
or  any  other  combination.  I  have  known  you,  Mr.  Phillips,  for  50  years,  and 
I  know  you  to  be  a  highly  upright,  conscientious.  Christian  man,  and  when 
the  editor  of  the   Post  says  that,  he  does  not  know  the  man. 

Vice-Chairman  PHILLIPS.  Please  do  not  refer  to  the  editor  of  the  Post, 
A.  I  want  to  pay  the  gentleman  a  compliment.  If  the  editor  of  the  Post,  a 
gentleman  I  do  not  know,  had  had  the  facts  of  this  case  fully  before  him, 
his  mind  would  have  been  very  materially  changed  relative  to  his  assertions 
in  the  editorials.  I  have  the  highest  regard  for  editors;  I  have  the  highest 
regard  for  newspaper  men  in  every  sense  of  the  word,  but  sometimes  they 
are  apt  to  say  things  that  they  do  not  fully  understand,  with  no  intention  of 
hurting  or  abusing  the  character  of  any  gentleman;  and  I  do  certainly  be- 
lieve that  the  editor  of  the  Washington  Post  is  a  man  who,  if  he  understood 
exactly  the  situation  in  this  question,  would  soon  actually  publish  a  retrac- 
tion of  what  he  has  said  about  Mr.   Phillips. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Have  you  anything  further  to  say 
in  regard  to  combination.  Does  that  cover  the  ground  in  regard  to  combina- 
tion? A.  Yes,  sir;  it  covers  the  ground  on  any  question  that  has  been 
asked  me. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Well,  you  haven't  referred — proba- 
bly you  have  referred  to  it  before.  Senator  Emery,  but  I  do  not  know  that 
you  have  given  a  full  statement.  I  believe  you  did  say  in  regard  to  the  oppo- 
sition these  companies  met  in  Europe.  If  that  ground  has  been  fully  cov- 
ered in  the  testimony  that  has  been  given,  we  will  not  desire  you  to  repeat 
it.  A.  I  think  I  detailed  all  of  that,  there:  the  conduct  of  the  business  in 
Europe,  how  it  was  carried  on,  and  I  hope  the  other  will  not  go  into  the 
record. 

Q.  (By  Vice-Chairman  PHILLIPS.)  That  will  be  stricken  out,  without 
objection.  Now.  Senator,  have  you  anything  further  to  state  in  regard  to 
this  matter?  I  know  there  has  been  some  question  about  the  Oil  City  Der- 
rick being  an  organ  of  the  producers,  or  an  organ  of  the  Standard  Oil  Com- 
pany.    Do  you  know  the  relation  that  paper  sustains  to  the  oil   industry? 

Mr.  FARQUHAR.  Now.  Mr.  Chairman,  before  that  question  is  an- 
swered, I  do  not  see  what  it  has  to  do  with  this  commission.  The  Oil  City 
Derrick  is  not  here;  the  Oil  City  Derrick  is  not  a  trust.  Objection  has  been 
made  to  that  class  of  testimony  heretofore,  and  it  stood  good  with  the  com- 
mission: and  I  maintain  it  would  be  improper  to  drag  it  in;  we  will  have  to 
stay  vA'here  we  were  before. 

Vice-Chairman  PHILLIPS.  In  regard  to  that  I  will  state  this:  The 
reason  I  raised  this  question  was  that  I  wanted  Mr.  Boyle's  position  defined 
as  a  witness  when  he  came  here — whether  he  came  here  as  a  representative 
of  the  Standard  Oil  Company  or  not.  We  understand  that  Mr.  Boyle  is  here 
in  defense  of  the  trust  question;  the  same  as  Mr.  Rogers  or  Mr.  Archbold. 
When  we  asked  him  the  question  in  regard  to  the  Oil  City  Derrick,  he 
stated  it  was  an  organ  of  the  producers.  The  question  is  whether  this  puts 
him  in  his  proper  position  as  a  witness  here;  whether  he  is  pro  or  con  on 
these  questions,  and  that  was  the  only  reason  I  had,  the  only  object,  for 
asking  Mr.  Boyle  that  question — to  define  his  position  before  this  commis- 
sion. 

Mr.  FARQUHAR.  In  our  orderly  way  of  doing  business,  we  have  a 
committee  on  procedure,  which  usually  investigates  the  witnesses  as  to 
tlieir  knowledge,  and  that  committee  has  passed  upon  this  question,  and 
their  report  has  come  before  the  commission,  and  Mr.  Boyle  was  invited 
here  to  give  testimony.  The  commission  don't  take  these  things  into  con- 
sideration, unless  it  is  a  question  of  a  doubtful   matter  in  the  committee. 

Vice-Chairman  PHILLIPS.  Well,  we  will  withdraw  the  question  and 
the  stenographer  will  not  make  this  a  part  of  the  record,  if  there  is  objec- 
tion, unless  by  request  of  the  commission. 

Q.  (By  Vico-Chairnian  PTTITJJPS  )  Therp  was  a  quostion  came  up 
here  if  I  recollect  it,  in  Mr.  Archbold's  testimony,  in  resjarrl  to  onnosition, 
some  years  ago,  to  laying  a  pipe  line  through  Pennsylvania,  in  which  it  was 


''Blark   faced    type   indicates   matter  Dmittcd,   in  the  course  of  editing,   from   the 
GfTicial  report. 


LEWIS  EMERY,  JR.  383 

slated  by  Senator  Lee  that  certain  dodgers  were  circulated  in  the  eastern 
part,  if  I  recollect,  of  the  State.  That  was  confirmed  by  Senator  Lee  and 
denied  by  Mr.  Archbold.  Can  you  state  the  purpose  of  these  dodgers,  or 
have  you  any  knowledge  of  them?  A.  In  1868,  in  the  Legislature  of  Penn- 
sylvania was  introduced  a  bill  for  the  incorporation  of  a  free  pipe  line  law, 
and  as  I  told  you  yesterday  we  secured  it  only  through  the  permission  of 
Mr.  Thomas  A.  Scott,  for  eight  counties  in  the  northwestern  part  of  Penn- 
sylvania, and  the  Wallace  act  of  1874  repealed  that  law.  We  immediately, 
upon  the  passage  of  that  repeal  act,  attempted  to  get  a  law  passed  giving 
us  the  right  of  eminent  domain  for  the  construction  of  pipe  lines.  That  was 
introduced  regularly  from  1874  to  1883 — every  session.  During  my  career 
in  that  body,  both  in  the  House  and  Senate,  for  10  years,  it  was  my  duty  to 
introduce  this  bill,  and  endeavor  to  pass  it.  In  1883  the  bill  was  pending. 
The  Standard  Oil  Company,  by  its  agents,  had  gone  all  through  the  southern 
portion  of  Pennsylvania,  which  is  a  very  beautiful  farming  country,  as  you 
know,  and  they  had  said  to  the  farmers  that  if  pipe  lines  were  laid  through 
that  country  there  would  be  a  general  destruction  of  their  orchards  and  the 
springs  would  be  spoiled,  that  there  would  be  general  havoc  with  their 
property,  even  that  the  pipes  would  blow  up  and  probably  kill  somebody. 
At  the  same  time  they  had  thousands  and  thousands  and  thousands  of  miles 
of  pipe  lines  through  the  State  of  Pennsylvania.  Ohio  and  West  Virginia.  In 
order  that  we  might  counteract  the  impression  upon  the  people,  Senator  Lee 
and  myself,  night  after  night  and  week  after  week,  visited  the  school  houses 
and  the  court  houses  and  every  place  where  we  could  get  a  gathering  of  peo- 
ple to  listen  to  our  explanation  of  the  necessity  of  the  passage  of  this  law. 
Dodgers  were  issued  in  every  single  case,  and  pushed  in  my  arms  wherever 
I  was.  to  get  attention  to  them;  and  as  I  entered  the  court  house  in  Lancas- 
ter, Pa.,  there  was  pushed  under  my  arm  a  paper  which  read:  "Look  out 
for  false  prophets."  Beneath  it  read:  "These  people  are  endeavoring  to 
pass  a  law  that  will  destroy  the  springs  on  your  farm;  it  will  blow  up  your 
houses;  it  will  create  havoc  in  the  field  when  a  pipe  bursts,  killing  all  the 
grass.     The  most  dangerous  of  all  laws." 

We  had  placed  our  circulars  on  all  of  the  seats  of  the  court  house  in 
Lancaster,  Pa.  And  there  some  miscreant,  whoever  he  might  be.  undoubt- 
edly he  was  paid  25  cents  or  so  for  it,  went  in  and  took  all  of  our  circulars  set 
ting  forth  our  object,  or  the  object  that  we  had  in  view,  and  in  their  stead 
he  dropped  into  those  places  these  yellow  papers  on  which  was  written: 
"Look  out  for  false  prophets."  These  dodgers  were  printed — I  don't  care 
what  Mr.  Archbold  says.  He  was  not  on  the  ground;  he  made  no  speeches 
in  their  behalf  in  the  oil  country,  and  on  the  contrary  he  cannot  say  that 
these  dodgers  were  not  printed;  if  he  does  say  it,  he  certainly  speaks  of  that 
of  which  he  does  not  know  anything.  I  was  there  through  the  whole  of  it 
and  we  went  on  with  the  operation,  week  in  and  week  out,  and  for  months 
and  months,  and  we  were  from  1874  to  1883  getting  that  law. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Now.  there  was  one  other  question 
of  testimony  that  was  brought  up  by  Mr.  Archbold,  about  that  $10,000,000 
of  rebates  that  was  said  to  have  been  paid  in  a  given  time.  Mr.  Archbold, 
I  believe,  I  think  it  was  in  that  case,  denominated  this  as  a  lie,  or  a  lusty 
lie,  in  the  report.  I  think  it  was  in  connection  with  this  question.  A.  Well, 
I  don't  mean  to  lie;  I  don't  mean  to  do  anything  but  tell  the  truth,  as  I 
understand  it,  and  I  have  said  nothing  before  this  commission  *as  evidence 
that  I  cannot  prove,  and  my  statements  made  in  1888  are  just  as  sacred  to 
me  as  they  were  when  I  made  them.  If  I  have  told  any  lie  I  shall  beg  the 
pardon  of  the  great  United  States  of  America,  and  of  all  my  friends  therein, 
and  endeavor  to  rectify  any  wrong  that  I  have  done,  or  anything  that  I  have 
said.  My  authority  upon  that,  which  I  will  produce,  is  unquestioned,  and  I 
defy  anybody  to  prove  that  my  statements  or  my  assertions  at  that  time 
were  false.  I  desire  you  to  turn  to  page  101  in  the  book  that  I  have  given 
you.  I  do  not  know  that  I  need  take  up  your  time  by  reading  from  that 
evidence.  It  is  there,  on  pages  101.  102  and  103.  and  you  can  read  it  just  as 
well  as  I  can;  but  we  will  go  over  to  104,  where  there  is  a  recapitulation  of 
the  whole  business. 


*Black   lacel   type   indicates   matter  omitted,  In  the  course  of  editing,   from  the 
official  repTft. 


384  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

*Now,  Mr.  President  and  gentlemen,  this  is  ancient  history  again,  but 
now  that  you  have  called  it  up,  you  must  bear  with  my  explanation. 

Vice-chairman  PHILLIPS.  Please  state  it  as  briefly  as  you  can.  1  want 
you  to  put  yourself  right  before  the  commission.  You  have  the  right  to 
answer  a  question  of  that  kind. 

The  WITNESS.  If  you  ask  me  the  question  before  this  committee  I 
will  answer  it  in  my  own  way. 

Vice-Chairman   PHILLIPS.     Certainly;   the  chair  has  no  objections. 

The  WITNESS.  *That  Is  all  right.  Now,  gentlemen.  I  will  hand  you  a 
book  called  the  Commonwealth  of  Pennsylvania  vs.  the  Pennsylvania  Rail- 
road Company.  This  testimony  can  be  had,  I  think,  in  the  Library  of  Con- 
gress; also  in  the  library  at  Harrisbiirg  and  in  many  other  places.  It  is  the 
testimony  that  was  brought  out  by  the  Attorney-General  of  the  State  of 
Pennsylvania,  or  rather  of  the  Commonwealth  of  Pennsylvania.  I  had  the 
honor  of  being  one  of  a  committee  of  three  that  visited  Governor  John  F. 
Hartranft  to  lay  before  him  our  grievances,  and  we  invoked  the  aid  of  the 
Commonwealth  of  Pennsylvania.  That  great  and  good  man  gave  it  to  us; 
he  required  the  Pennsylvania  Railroad  to  answer  the  charges  made  against 
them  as  preferred  under  the  South  Improvement  Company  act,  and  their 
acts  from  the  commencement  of  the  oil  business  or  the  commencement  of 
the  history  of  the  South  Improvement  Company  and  the  Standard  Oil  Com- 
pany, from  1872  to  the  final  hearing  of  the  suit  in  1879.  This  is  the  testi- 
mony of  Mr.  Cassatt,  the  first  vice-president  of  the  Pennsylvania  Railroad, 
making  a  clean  breast  of  everything  appertaining  to  the  contract,  and  the 
combinations  with  the  Standard  Oil  Company  are  made  clear  in  this  book. 
From  his  admissions  and  from  the  admissions  of  other  officers  connected 
■with  the  road,  I  have  computed  by  actual  figures  the  shipments  of  oil  during 
1878,  and  the  total  shipments  of  the  first  quarter  of  1879,  making  a  grand 
total  of  18,556,277  barrels  of  oil  shipped;  and  from  this  testimony  I  have 
deduced  the  fact  that  55  cents  per  barrel  was  paid  upon  the  transportation 
of  that  petroleum.  I  charged  it  all  to  the  Standard  Oil  Company,  or  at  least 
I  charged  that  the  rebates  were  paid  on  all  that  oil;  not  only  on  what  was 
shipped  to  the  coast,  as  I  showed  you  yesterday,  but  on  the  oil  that  went  to 
the  west  also.  They  had  to  have  their  rebate  upon  that,  as  I  clearly  showed 
you  in  the  contract,  and  this  action  was  carrying  out  the  provisions  of  the 
old  agreement  under  the  South  Improvement  Company  contract,  although  that 
had  been  repealed.  I  say  right  here  that  the  drawbacks  on  that  oil  are  even 
greater  than  that  which  I  made  and  published  in  this  report  of  it  in  my  evi- 
dence of  1888. 

Q.  (By  Mr.  KENNEDY.)  How  much  space  does  Mr.  Cassatt's  admis- 
sion occupy  in  that  book — the  admission  on  which  you  made  this  computa- 
tion? A.  Some  50  or  60  pages;  it  starts  on  page  660  (very  fine  print)  and 
goes  to  page  737.  That  is  the  size  of  it,  but  I  refer  you  to  the  book.  Look 
at  my  evidence.  I  refer  you  to  the  pages  in  this  book,  where  you  will  find 
the  confession  of  the  rebates  paid,  the  amount  of  them,  and  everything. 
Make  your  own  calculations  if  you  choose.  The  total  amount  of  oil  is 
18,556,277  barrels.  Now,  I  cannot  say  any  more,  gentlemen.  Here  is  my 
authority,  and  I  have  given  you  the  pages  in  my  testimony.  Let  anybody 
else  prove  that  I  am  mistaken.  *lf  I  am,  then  I  will  make  every  redress 
possible.  But  $10,000,000  is  nothing  compared  to  the  rebates  paid;  why,  it 
is  a  mere  bagatelle.  Nothing  further  on  that  point.  I  was  upon  oath,  and 
to  the  best  of  my  belief  and  knowledge  that  is  true. 

Q.  (Mr.  A.  L.  HARRIS.)  I  think  Mr.  Archbold  stated  that  the  testi- 
mony of  Mr.  Cassatt  had  been  perverted  and  conclusions  drawn  not  war- 
ranted by  the  testimony.     Is  that  correct? 

*Mr.  KENNEDY.     That  is  correct;   yes,  sir. 

Mr.  A.  L.  HARRIS.  That  is  the  reason,  I  suppose,  that  Mr.  Kennedy 
asked  you  to  refer  to  the  exact  proof  as  testimony  in  which  these  admis- 
sions were  made. 


*RIack   faced   type   Indicates  matter  omittci,  in   thf  cour.sc  of  editing,   from  the 
official  report. 


LEWIS  EMERY,  JR.  385 

The  WITNESS.  I  gave  all  the  pages  in  this  book  where  you  can  find 
it.  In  1888  Mr.  Gowen  asked  me  from  which  page  the  calculations  were 
made.  They  are  all  right  there,  and  if  you  desire  me  to  go  over  them  I 
will  do  so. 

Mr.  KENNEDY.  I  thought  perhaps  it  was  a  paragraph  which  was  the 
"basis  on  which  you  made  the  calculation. 

The  WITNESS.  No,  the  testimony  was  by  Mr.  Cassatt,  Mr.  Justis,  Mr. 
Downing  and  the  clerks  of  the  Pennsylvania  Railroad.  That  was  the  object, 
to  find  out  what  the  discrimination  was.     It  is  in  the  whole  book. 

Q.  (By  Mr.  KENNEDY.)  I  think  Mr.  Archbold's  testimony  was  to  the 
■effect  that  this  $4,471,000  which  the  Pennsylvania  Railroad  Company  paid, 
was  all  the  money  which  you  could  figure  from  this  statement  and  that  all 
the  rest  was  presumption.  A.  Oh,  no;  because,  understand  me,  I  only  had 
the  Pennsylvania  Railroad.  If  he  admits  that  they  got  four  millions,  then 
this  will  be  swelled  to  twelve  or  fifteen  million,  because  the  New  York 
Central  and  Erie  participated.     Don't  let  him  confound  you  in  that. 

Q.  He  says  this  is  a  presumption.  A.  No  presumption  at  all;  because 
it  has  been  proved  before  the  Hepburn  committee  just  as  plainly  as  this  is 
proved.  If  he  admits  that  $4,000,000  was  paid  by  the  Pennsylvania 
Railroad  that  is  all  more  than  I  counted  in  that.  This  is  computed  on  the 
total  shipments  that  went  from  the  oil  regions,  and  I  didn't  say  that  the 
Pennsylvania  Railroad  alone  paid  it.  I  do  make  this  statement  that  such 
rebates  were  so  large  on  the  amount  of  oil  going  to  the  coast,  basing  them 
proportionately  on  the  New  York  Central,  the  Erie,  the  Pennsylvania  and 
even  the  Baltimore  &  Ohio.     That  is  the  ground. 

Q.  I  do  not  know  that  he  makes  the  admission  in  regard  to  Mr.  Cas- 
satt's  testimony.  According  to  his  statement  I  believe  it  was  in  regard  to 
the  Pennsylvania  Railroad's  participation  in  it  and  not  in  regard  to  the 
others.  A.  Yes,  but  in  all  of  my  evidence  I  have  shown  conclusively  all 
these  rebates  by  contract.  *You  did  not  permit  me  to  go  on  this  morning. 
I  would  have  produced  three  contracts  that  were  not  cancelled  up  as  late 
as  1879;  *l  would  have  shown  all  these  things.  It  was  a  part  of  my  argument. 
Vice-Chairman  PHILLIPS.  There  is  a  question  that  I  would  like  to  ask 
the  Senator. 

Q.  (By  Mr.  KENNEDY.)  One  commissioner  suggests,  and  it  was  in 
my  mind,  that  you  were  permitted  to  give  any  testimony  that  you  wanted  to. 
You  have  not  been  prevented.  A.  I  wanted  to  show  you  the  contracts  exist- 
ing between  these  roads  on  the  very  point  that  you  are  raising — that  these 
contracts  were   in   existence  between   all  these  three  roads. 

Q.  (By  Vice-chairman  PHILLIPS.)  From  which  you  deduced  the 
$10,000,000?  A.  Why,  the  $10,000,000  was  the  total  rebate  paid  by  all  these 
roads. 

Q.  (By  Vice-Chairman  PHILLIPS.)  And  did  these  contracts  appertain 
to  this  very  question?  A.  Yes,  sir.  No,  sir;  I  don't  say  they  appertained 
to  this,  no,  sir;  these  contracts  show  that  the  railroads  were  under  contract 
to  transport  certain  classes  of  oil  for  certain  prices.  That  has  all  been,  as 
I  showed  you  this  morning,  from  1872  to  1879  or  1877,  when  I  showed  you 
22  cents  for  the  pipe  lines  from  the  well  to  the  car  and  the  49  cents  was 
to  go  for  the  transportation  of  oil  from  Cleveland  and  the  common  points 
in  the  oil  country  to  New  York;   that  has  all  been  proved. 

*Q.  (By  Vice-Chairman  PHILLIPS.)  Well,  then,  you  withdraw  vour 
statement  that  you  were  prevented.  You  don't  mean  to  say  that  this  com- 
mission prevented  you  from  going  into  that;  you  were  given  liberty  to  go 
through  it  in  your  own  way.  A.  Oh,  no,  sir;  it  was  a  part  of  my  argument. 
I  would  have  produced  them  this  morning — don't  take  me  down  that  I  am 
thin-skinned — and  I  don't  think  any  man  at  this  table  is  thin-skinned.  I 
didn't  mean  anything  of  that  kind.  If  they  had  been  hounded  around  the 
country  for  30  years  in  this  business,  as  I  have,  their  hides  would  have  been 
callous.     Please  omit  that  part  in  the  testimony. 

Q.  (By  Vice-Chairman  PHILLIPS.)  I  will  ask  you  a  question  that  oc- 
curred to  me  through  this  telegram.     It  had  slipped  my  memory,  and   I   will 


•Black   faced   type  Indicates   matter  omitted,  in  the  course  of  editing,  from  the 
official  report. 

25 


386  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

state  that  the  question  is  this:  IVlr.  Boyle,  in  his  testimony  stated  that  the 
cost  of  drilling  wells  in  the  last  10  years  was  about  $2,000.  *Mr.  Boyle,  am. 
I   correct? 

Mr.  BOYLE.     You  are  correct,  Mr.  Chairman. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Mr.  Emery  is  a  large  operator  in 
all  the  fields,  and  we  would  like  to  have  his  opinion,  or  his  estimate,  of  the 
cost  of  drilling  wells  during  that  time.  *The  commission  will  see  that  some 
importance  is  attached  to  this  because  it  shows  a  very  large  amount  of 
profit  to  the  producers  according  to  his  estimate.  A.  Why,  Mr.  Chairman 
and  gentlemen,  of  course  I  have  drilled  a  great  many  wells,  lunning  into 
several  thousand,  and  we  always  keep  track  of  the  expense  in  our  office, 
the  cost  of  each  and  every  well.  We  have  drilled  wells  in  the  lower  country, 
which  we  call  deep  territory,  and  they  have  cost  us  $8,000  and  $10,000  and 
some  as  high  as  $30,000  each  to  drill  them.  When  it  gets  up  to  $30,000  of 
course  it  is  accounted  for  by  the  fact  that  something  would  happen  to  your 
tools — that  you  dropped  something  in  the  well,  or  that  your  well  would  cave 
in  and  you  are  obliged  to  remove  that,  which  is  often  the  case.  We  have 
always  figured  that  our  lower  country  Avells  cost  us.  on  an  average,  $8,000. 
In  the  upper  country  we  had  figured  that  we  could  drill  our  wells  for  $2,500; 
we  can't  do  it  now.  That  was  when  we  could  get  pipe  cheap — for  less  than 
it  is  at  the  present  time.  The  reason  that  the  wells  are  so  expensive  in  the 
lower  country  is  that  you  have  to  put  in  three  strings  of  casing,  and  some 
of  your  casing  runs  down  into  the  earth  1,600  and  2,000  feet — solid,  I  mean. 
You  can  put  into  a  single  hole  1.50  tons  of  iron.  I  should  say  this:  Without 
going  into  a  close  calculation  of  it  and  being  a  question  that  is  sprung  upon 
me  here  at  this  moment,  that  the  average  cost  of  a  well  in  the  oil  country, 
under  the  present  condition  of  things,  is  fully  $4,000 ;t  that  is  my  judgment 
about  it. 

Q.  (By  Mr.  FARQUHAR.)  On  account  of  the  high  cost  of  iron  at  the 
present  time?  A.  Oh,  yes,  sir;  if  you  come  down  to  that,  it  will  cost  a. 
good  deal  more.  I  will  put  that  as  the  cost  of  the  well  even  before  iron 
advanced  so  largely;  you  can't  do  it  for  that  now;  you  can't  drill  wells  now 
profitably  at  the  present  prices  of  the  oil,  although  it  is  twice  as  high  as  it 
has  been  on  an  average  for  the  last  five  or  ten  years.  Iron  has  gone  up  100 
per  cent,   and   more. 

Q.  (By  Vice-Chairman  PHILLIPS.)  *There  is  one  question  that  I 
would  like  to  ask  you,  which  is  suggested  by  Mr.  Boyle,  (which  he  has  a 
perfect  right  to  do,  and  I  am  always  glad  to  have  a  question  suggested  by 
any  person  in  the  room — the  chair,  especially,  at  least).  What  is  your  esti- 
mate of  the  average  production  per  well,  taking  the  wells  as  a  whole,  in  the 
period  named,  from  1890?  What  would  be  the  average  production  of  a  well 
in  the  period  from  1890  forward?  *You  can  go  back  further  if  you  desire, 
supposing  that  the  life  of  the  well  was  for  10  years.  A.  That  I  haven't 
got — the  amount  of  production.  If  you  want  me  to  compute  that  I  would 
be  glad  to  answer  the  question,  but  I  cannot  do  it  off-hand.  It  is  a  mathe- 
matical problem. 

Q.  (By  Mr.  CLARKE.)  Mr.  Chairman.  I  would  like  to  inquire  what  the 
present  status  of  the  United  States  Pipe  Line  is  in  New  Jersey?  Are  you 
carrying  oil  there?     A.  Yes,  sir. 

Q.  And  carrying  it  a  part  of  the  way  by  the  railroad  that  you  use  there?" 
A.  Yes,  sir. 

Q.  Is  that  the  case  of  the  right-of-way  under  a  railroad  which  is  in 
litigation?     A.  No,  sir;    it  has  been  settled  by  the  Chancellors'  Court. 

Q.  Settled  in  your  favor?  A.  No,  sir;  we  have  to  take  up  our  pipes. 
We  have  got  to  quit;  we  have  got  to  quit  and  go  to  Philadelphia.  The  right 
of  eminent  domain  in  the  State  of  Pennsylvania  gives  us  the  right  to  go  to 
the  seaboard  at  Philadelphia.  We  have  .got  to  throw  away  all  of  our  ex- 
pense, which  is  upwards  of  $150,000,  and  turn  around  and  go  to  Philadelphia 
with  our  line. 


*Black   faced   type  Indicates   matter  omitted,  in  the  course  of  editing,   from  ttie 
official  report. 

tin   tlic  official   report  tfie  word   "nearly"  instead  of  "fully"  is  used. 


LEWIS  EMERY,  JR.  387 

Q.  And  make  Philadelphia  your  seaport,  so  as  to  keep  within  the  State 
of  Pennsylvania?     A.  Yes,  sir;   we  have  got  to  do  that. 

*Q.  And  what  remedy  would  you  suggest  for  that  State  of  affairs? 

Vice-chairman  PHILLIPS.  Could  you,  if  you  had  had  the  right  of  emi- 
nent domain,  have  gone  through  New  York  or  New  Jersey? 

Mr.  CLARKE.     Let  me  see  if  that  is  his  view. 

The  WITNESS.    Let  me  ask  you  to  ask  that  question  again,  Mr.  Clarke, 

Q.  (By  Mr.  CLARKE.)  You  say  you  could  not  cross  certain  railroads 
in  the  State  of  New  Jersey  and  could  not  get  to  the  seaboard  there?  A. 
No,  sir. 

Q.  With  your  pipe  line?     A.  No,  sir. 

Q.  What  remedy  would  you  suggest  for  that  state  of  affairs?  A.  Well, 
I  would  suggest  that  New  Jersey  pass  a  law  to  let  us  go;  that  is  what  I 
would  suggest,  but  I  want  to  say  to  you  that  I  went  to  Now  Jersey.  *Now, 
I  didn't  want  to  call  this  thing  out,  but  since  you  have  I  am  going  to  make 
my  criticisms.  I  went  to  New  Jersey,  or  went — I  don't  know  that  I  have 
any  right  to  refer  to  any  of  the  officials  of  the  United  States  government,  but 
I  suppose  I  have.  They  are  public  officers  and  I  have  a  perfect  right,  if  I 
choose,  I  suppose.     I  don't  know  how  the  committee  would  view  that. 

Vice-Chairman  PHILLIPS.  Does  any  gentleman  of  the  committee  ob- 
ject? 

The  WITNESS.  I  am  in  the  habit  of  calling  black,  black,  and  white, 
white;    but  there  may  be  a  time  when   I  should  stop. 

Mr.  CLARKE.  Exercise  your  own  judgment  as  to  what  you  say  about 
individuals;    but  I  would  like  your  idea  of  a  remedy  for  this. 

The  WITNESS.  In  order  to  answer  that  question,  in  order  to  have  you 
understand  it,  I  would  have  to  refer  to  some  individuals  that  I  don't  care  to. 
They  stand  very  high  in  office;  one  of  them  is  the  next  highest  officer  in  the 
United  States,  and  the  next  is  the  third  officer  of  the  United  States. 

Q.  Let  me  ask  you  this  simple  question:  Do  you  think  the  passage  of  a 
free  pipe  line  bill  by  the  Legislature  of  New  Jersey  would  give  you  the  light 
you  have  so  long  sought?  A.  Oh,  yes,  sir;  the  free  pipe  bill,  certainly.  Of 
course  it  is  only  a  question  then  of  getting  through  by  paying  damages; 
by  paying  the  same  as  the  railroad  does.  That  is  what  we  couldn't  get.  I 
argued  the  question  long  and  loud  in  the  Senate  of  the  New  Jersey  Legisla- 
turn,  and  my  experience  there  in  the  Legislature  was  one  that  the  public 
ought  to  know;  but  it  is  so  disgraceful  that  I  am  ashamed  to  state  it.  By 
the  way,  I  didn't  answer  a  question  that  somebody  put  to  me. 

*Q.  (By  Mr.  FARQUHAR.)  Have  you  finished  now?  A.  A  question 
was  asked  me  here  by  somebody;  I  started  to  refer  to  this  and  you  got  me 
off  the  track. 

Q.  (By  Mr.  KENNEDY.)  I  asked  you  about  the  testimony  of  Mr.  Cas- 
satt.  A.  Yes,  sir,  exactly;  and  in  relation  to  that  the  outcome  under  it  of 
the  Campbell  contract.  Mr.  Farquhar  has  been  desirous  of  getting  some 
expression  about  this.  The  contract  is  in  my  hand  right  here  now,  and 
everything  appertaining  to  it,  everything,  right  here;  but  I  want  to  say  to 
this  commission  that  the  outcome  of  the  suit  brought  by  the  Commonwealth 
of  Pennsylvania  against  the  Pennsylvania  Railroad  was  this — and  I  think  you 
ought  to  know  it — an  indictment  No.  25,  April  session,  1879.  I  will  lead  the 
indictment. 

The  indictment  is  as  follows:      (Reading.)t 


♦Black  faced  type  indicates  matter  omitted,  in  the  course  of  editing,  from  the 
official  report. 

tThis  indictment  and  bill  of  particulars  was  not  published  in  Mr.  Emery's  testi- 
mony in  the  official  report. 


388  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

INDICTMENT. 
No.   25,   April   Session,  1879. 
Commonwealth  of  Pennsylvania  |    In    the   Court   of   Quarter   Sessions   of   the 

vs.  r      Peace  for  the  County  of  Clarion. 

John  D.  Rockefeller  et  al.  ) 

Clarion  County— ss. 

The  grand  inquest  of  the  Commonwealth  of  Pennsylvania  inquiring  in  and  for 
the  County  of  Clarion,  upon  their  respective  oaths  and  affirmations,  do  present:  That 
heretofore  and  before,  and  at  the  time  of  the  committing  of  the  offense  hereinafter 
next  mentioned,  the  production  and  selling  of  crude  petroleum,  at  the  County  of 
Clarion  aforesaid,  was  and  is  a  large  and  important  occupation  and  business,  where- 
from  and  whereby  many  of  the  citizens  of  the  said  county  derived  and  procured 
great  profit  and  increase;  and  in  which  the  citizens  of  the  Commonwealth  of  Penn- 
sylvania had  invested  large  amounts  of  capital,  and  large  numbers  of  laborers  with 
their  families  were  dependent  thereon  for  their  employment  and  maintenance,  and 
derived  therefrom  their  living  and  support;  and  the  said  business  was,  and  is,  an 
important  branch  of  the  public  trade;  that  John  D.  Rockefeller,  late  of  said  county, 
yeoman;  William  Rockefeller,  late  of  said  county,  yeoman;  Jabez  A.  Bostwick,  late 
of  said  county,  yeoman;  Daniel  O'Day,  late  of  said  county,  yeoman;  William  G. 
Warden,  late  of  said  county,  yeoman;  Charles  Lockhart,  late  of  said  county,  yeoman; 
Henry  M.  Flagler,  late  of  said  county,  yeoman;  Jacob  J.  Vandergrift,  late  of  said 
county,  yeoman;  Charles  Pratt,  late  of  said  county,  yeoman;  George  W.  Girty,  late 
of  said  county,  yeoman,  together  with  divers  other  evil  disposed  persons,  to  the 
said  inquest  as  yet  unknown,  heretofore,  to  wit,  on  the  fifteenth  day  of  April,  in 
the  year  of  our  Lord  one  thousand  eight  hundred  and  seventy-nine,  with  force  and 
arms,  to  wit,  at  the  County  of  Clarion  aforesaid,  did  combine,  conspire,  confederate 
and  unlawfully  agree  together  to  cheat  and  defraud  the  citizens  of  the  Common- 
wealth of  Pennsylvania  by  obtaining  and  securing  to  themselves  and  their  confeder- 
ates, to  the  said  inquest  as  yet  unknown,  a  monopoly  in  the  commerce,  business 
and  occupation  of  buying  and  selling  crude  petroleum,  at  the  county  aforesaid,  and 
did  then  and  there,  falsely  and  fraudulently,  and  in  pursuance  of  the  conspiracy, 
combination,  confederacy  and  agreement  aforesaid,  combine,  conspire  and  confed- 
erate to  prevent  all  other  persons  engaged  in  producing,  buying  or  selling  crude 
petroleum  from  making,  receiving  or  obtaining  the  legitimate  price,  profits  or  re- 
turns from,  out  of,  or  incident  to  such  trade,  business,  commerce  or  occupation,  and 
by  divers  indirect,  subtle  and  fraudulent  means,  impeding  and  preventing  all  other 
persons  in  obtaining  due  transportation  for  petroleum,  and  by  extorting,  levying 
and  collecting  fraudulent  and  unlawful  rebates  and  commissions  upon  the  transpor- 
tation thereof,  and  to  prevent  free  and  voluntary  competition  by  the  public  and 
citizens  of  the  said  Commonwealth  of  Pennsylvania,  and  to  compel  the  producers 
and  owners  of  the  crude  petroleum  to  sell  only  to  the  said  above  named  defendants  and 
their  confederates  unknown,  the  crude  petroleum  by  them  produced  and  owned, 
below  its  actual  market  value,  to  cheat  and  defraud  the  citizens  of  the  Common- 
wealth of  Pennsylvania  and  the  public,  which  said  combination,  so  as  aforesaid 
entersd  into,  is  in  restraint  of  public  trade,  of  grievous  prejudice  to  the  common 
and  public  good  and  welfare,  to  the  great  damage  of  the  citizens  of  the  Common- 
wealth of  Pennsylvania  and  the  public,  contrary  to  the  form  of  the  act  of  Assembly 
in  .such  case  made  and  provided,  and  against  the  peace  and  dignity  of  the  Common- 
wealth of  Pennsylvania. 

Second— And  the  grand  inquest  aforesaid,  inquiring  in  and  for  the  county  afore- 
said, do  further  present  that  John  D.  Rockefeller,  late  of  said  county,  yeoman;  Will- 
lam  Rockefeller,  late  of  said  county,  yeoman;  Jabez  A.  Bostwick,  late  of  said 
county,  yeoman;  Daniel  O'Day,  late  of  said  county,  yeoman;  William  G.  Warden, 
late  of  said  county,  yeoman;  Charles  Lockhart  late  of  said  county,  yeoman;  Henry 
M.  Flagler,  late  of  said  county,  yeoman;  Jacob  J.  Vandergrift,  late  of  said  county, 
yeoman;  Charles  Pratt,  late  of  said  county,  yeoman;  and  George  W.  Girty,  late  of 
said  county,  yeoman,  and  divers  other  evil  disposed  persons  to  the  said  inquest 
unknown,  fraudulently  and  wickedly  contriving  to  injure  one  J.  A.  Vera  and 
others  to  the  said  inquest  unknown,  as  much  as  in  them  lay,  unlawfully  to  injure 
him  and  the  said  other  persons  unknown.  In  his  and  their  trade  and  business  of 
producing  and  selling  crude  petroleum  which  he  and  they  then  and  there  used,  ex- 
ercised and  carried  on,  and  to  hinder  and  prevent  him  and  them  from  using,  exer- 
cising and  carrying  on  the  said  trade,  occupation,  commerce  and  business  in  as  full, 
ample  and  beneficial  a  manner  as  he  and  they  was  and  were  used  and  accustomed 
to  do,  on  the  day  and  year  aforesaid,  to  wit,  on  the  fifteenth  day  of  April,  A.  D. 
1879,  at  the  county  aforesaid  and  within  jurisdiction  of  the  said  court,  unlawfully, 
wickedly  and  maliciously  did  conspire,  combine,  confederate  and  agree  together 
with  divers  indirect,  subtle  and  fraudulent  means  and  devices  to  Injure,  oppress 
and  impoverish  the  said  J.  A.  Vera  and  others  unknown  as  aforesaid,  and  wholly 
to  prevent  and  hinder  him  and  them  from  usifig,  exircislng  and  carrying  on  his  and 
their  said  trade  and  business  of  producing  and  selling  crude  petroleum;  to  the  great 
damage  and  oppression  to  him,   the  said  J.  A.  Vera,  and  the  others  to  the  said  in- 


LEWIS  EMERY.  JR.  389 

<iuest  unknown,  to  the  evil  example  of  all  others  In  like  cas«  offending,  contrary  to 
the  form  of  the  act  of  Assembly  in  such  case  made  and  provided,  and  against  the 
peace   and   dignity   of   the   Commonwealth  of  Pennsylvania. 

Third— And  the  grand  Inquest  aforesaid,  incjuiring  in  and  for  the  county  afore- 
said, upon  their  respective  oaths  and  afliimations  aforesaid,  do  further  present: 
That  the  business,  trade  and  occupation  of  refining  crude  petroleum  is  likewise  a 
great  and  important  branch  of  public  trade  wherein  the  public  and  citizens  of  the 
Commonwealth  of  Pennsylvania  were  and  are  extremely  interested;  that  John  D. 
Rockefeller,  late  of  said  county,  yeoman;  William  Rockefeller,  late  of  said  county, 
yeoman;  Jabez  A.  Bostwick,  late  of  said  county,  yeoman;  Daniel  O'Day,  late  of  said 
county,  yeoman;  William  G.  Warden,  late  of  said  county,  yeoman;  Charles  Lock- 
hart,  late  of  said  county,  yeoman;  Henry  M.  Flagler,  late  of  said  county,  yeoman; 
Jacob  J.  Vandergrift,  late  of  said  county,  yeoman;  Charles  Pratt,  late  of  said 
county,  yeuman,  and  George  W.  Girty,  late  of  said  county,  yeoman,  together  witn 
divers  other  evil  disposed  persons  to  the  said  mquest  as  yet  unknown,  contriving 
unlawfully  to  injure,  prejudice  and  oppress  the  public,  and  to  prevent  and  hinder 
the  free  exercise  and  use  of  business  of  refining  crude  petroleum  by  the  citizens  of 
the  Commonwealth  of  Pennsylvania  and  the  public  in  as  full  and  ample  a  manner 
as  they  are  used  and  accustomed  to  and  of  right  should  do,  on  the  day  and  year 
aforesaid,  to  wit,  on  the  fifteenth  day  of  April,  A.  D.  1879,  at  the  county  and  within 
the  jurisdiction  aforesaid,  unlawfully,  wickedly  and  maliciously  did  conspire,  com- 
bine, confederate  and  agree  together  to  obtain  and  secure  to  themselves  and  their 
confederates,  to  the  said  inquest  unknown,  a  monopoly  in  the  business,  trade  and 
occupation  of  refining  crude  petroleum,  and  to  prevent  free,  full  and  legitimate 
competition  by  making  forced  sales  and  sales  below  the  then  and  there  market  price 
and  by  extorting  unlawful  and  unreasonable  rebates,  discounts  and  commissions 
trom  the  various  railroads,  pipe  lines,  common  carriers  and  transporters  of  petro- 
leum, and  by  divers  indirect,  subtle  and  fraudulent  means  and  devices  to  injure,  to 
prejudice,  oppress  and  impoverish  the  citizens  of  this  Commonwealth  and  the  public, 
wholly  to  prevent  the  public  and  the  citizens  of  this  Commonwealth,  other  than 
themselves  and  their  said  confederates  unknown,  from  using,  exercising  and  carry- 
ing on  said  trade,  business  and  occupation  of  refining  crude  petroleum,  which  com- 
bination so  as  aforesaid  entered  into  is  of  grievous  prejudice  to  the  common  and 
public  good  and  welfare,  in  restraint  of  public  trade,  to  the  great  damage  of  the 
citizens  of  the  Commonwealth  of  Pennsylvania  and  the  public,  to  the  evil  example 
of  all  others  in  like  case  offending,  contrary  to  the  form  of  the  act  of  Assembly  in 
such  case  made  and  provided,  and  against  the  peace  and  dignity  of  the  Common- 
wealth of  Pennsylvania. 

Fourth— And  the  grand  inquest  aforesaid,  inquiring  in  and  for  the  county  afore- 
said, upon  their  oaths  and  aflSrmations  aforesaid,  do  further  present:  That  the  Alle- 
gheny Valley  Railroad  is  and  was,  at  and  from  the  committing  of  the  offense,  here- 
inafter set  forth,  a  company  incorporated  under  the  laws  of  the  Commonwealth  of 
Pennsylvania,  and  exercising  its  franchises  and  occupation  of  and  as  a  general  and 
public  transporter  and  carrier;  that  John  D.  Rockefeller,  late  of  said  county,  yeo- 
man; William  Rockefeller,  late  of  said  county,  yeoman;  Jabez  A.  Bostwick,  late  of 
said  county,  yeoman;  Daniel  O'Day,  late  of  said  county,  yeoman;  William  G.  War- 
den, late  of  said  county.  yeoman;  Charles  Lcckhart,  late  of  said 
county,  yeoman;  Henry  M.  Flagler,  late  of  said  county,  yeoman; 
Jacob  J.  Vandergrift,  late  of  said  county,  yeoman;  Charles  Pratt,  late  of  said 
county,  yeoman,  and  George  W.  Girty,  late  of  said  county,  yeoman,  together  with 
divers  other  evil  disposed  persons  to  the  said  inquest  unknown,  as  much  as  in  them 
lay,  unlawfully  to  oppress,  impoverish  and  ruin  said  Allegheny  Valley  Railroad,  in 
its  business  and  occupation  of  a  public  and  general  carrier  and  transporter,  which 
it  then  and  there  exercised,  used  and  carried  on,  and  to  hinder  and  prevent  it  from 
using,  exercising  and  carrying  on  said  occupation  and  business  in  as  full,  ample 
and  beneficial  a  manner  as  it  was  used  and  accustomed  to  do,  on  the  day  and  year 
aforesaid,  to  wit,  on  the  fifteenth  day  of  April,  A.  D.  1879,  at  the  county  and  within 
the  jurisdiction  aforesaid,  unlawfully,  wickedly  and  maliciously  did  conspire,  combine, 
confederate  and  agree  together,  by  extorting,  by  threats,  and  by  diversion  of  traffic, 
unreasonable  low  rates  of  freight,  below  the  actual  cost  of  transportation,  and  by 
levying  and  extorting  undue  and  unlawful  commissions,  rebates  and  discounts,  in 
pursuance  and  by  means  of  such  fraudulent  combinations,  confederation  and  con- 
spiracy, and  by  divers  other  indirect,  subtle  and  fraudulent  means  and  devices,  to 
injure,  oppress  and  impoverish  the  said  Allegheny  Valley  Railroad  and  wholly  to 
prevent  and  hinder  it  from  profitably  using,  exercising  and  carrying  on  its  said 
business  as  a  public  carrier  and  transporter,  to  the  great  damage  of  the  said  Alle- 
gheny Valley  Railroad,  to  the  evil  example  of  all  others  in  like  case  offending,  con- 
trary to  the  form  and  effect  of  the  act  of  Assembly  in  such  case  made  and  provided, 
and   against    the   peace  and   dignity   of   the  Commonwealth  of  Pennsylvania. 

Fifth— And  the  grand  inquest  aforesaid,  inquiring  in  and  for  the  county  afore- 
said, upon  their  oaths  and  affirmations  aforesaid,  do  further  present:  That  the 
Pennsylvania  Railroad  is  and  was  at  and  from  the  committing  of  the  offense  here- 
inafter   set    forth,    a    company    incorporated  under  the  laws  of  the  Commonwealth 


390  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

of  Pennsylvania,  and  exercising  its  franchises  and  occupation  of  and  as  a  general 
and  public  transporter  and  carrier;  that  John  D.  Rockefeller,  late  of  said  county, 
yeoman;  William  Rockefeller,  late  of  said  county,  yeoman;  Jabez  A.  Bostwick,  late 
of  said  county,  yeoman;  Daniel  O'Day,  late  of  said  county,  yeoman;  William  G. 
Warden,  late  of  said  county,  yeoman;  Charles  Lockhart,  late  of  said  county,  yeo- 
man; Henry  M.  Flagler,  late  of  said  county,  yeoman;  Charles  Pratt,  late  of  said 
county,  yeoman,  and  George  W.  Girty,  late  of  said  county,  yeoman,  together  with 
divers  other  evil  disposed  persons,  to  the  said  inquest  as  yet  unknown,  as  much  as 
in  them  lay,  unlawfully  to  oppress  and  impoverish  the  said  Pennsylvania  Railroad 
in  its  business  and  occupation  of  a  public  and  general  carrier  and  transporter 
which  it  then  and  there  exercised,  used  and  carried  on,  to  hinder  and  prevent  it 
from  using,  exercising  and  carrying  on  the  said  occupation  and  business  in  as  full  and 
ample  and  beneficial  a  manner  as  it  was  used  and  accustomed  to  do,  on  the  day  and 
year  aforesaid,  to  wit,  on  the  fifteenth  day  of  April,  A.  D.  1S79,  at  the  county  and 
within  the  jurisdiction  aforesaid,  did  unlawfully  and  wickedly  and  maliciously, 
conspire,  combine  and  confederate  and  agree  together  by  extorting  by  threats  and 
diversion  of  traffic,  unreasonably  low  rates  or  freight,  below  the  actual  cost  of 
transportation,  and  by  levying  and  extorting  undue  and  unlawful  commissions,  re- 
bates and  discounts,  in  pursuance  and  by  means  of  such  fraudulent  combinations, 
confederacy  and  conspiracy  and  by  divers  other  indirect,  subtle  and  fraudulent 
means  and  devices  to  injure,  oppress  and  impoverish  the  said  Pennsylvania  Rail- 
road, and  wholly  to  hinder  and  prevent  it  from  profitably  using,  exercising  and  car- 
rying on  its  said  business  as  a  public  carrier  and  transporter,  to  the  great  damage 
of  the  said  Pennsylvania  Railroad,  to  the  evil  example  of  all  others  in  like  cases 
offending,  contrary  to  the  form  of  the  act  of  Assembly  in  such  case  made  and 
provided,  and  against  the  peace  and  dignity  of  the  Commonwealth  of  Pennsylvania. 

Sixth — And  the  grand  inquest  aforesaid,  inquiring  in  and  for  the  county  afore- 
said, do  present:  That  John  D.  Rockefeller,  late  of  said  county,  yeoman;  Jabez  A. 
Bostwick,  late,  of  said  county,  yeoman;  William  Rockefeller,  late  of  said  county, 
yeoman;  Daniel  O'Day,  late  of  said  county,  yeoman;  William  G.  Warden,  late  of 
said  county,  yeoman;  Charles  Lockhart,  late  of  said  county,  yeoman;  Henry  M. 
Flagler,  late  of  said  county,  yeoman;  Jacob  J.  Vandergrift,  late  of  said  county, 
yeoman;  Charles  Pratt,  late  of  said  county,  yeoman,  and  George  W.  Girty,  late  of 
said  county,  yeoman,  together  with  divers  other  evil  disposed  persons,  to  the  said 
inquest  as  yet  unknown,  contriving  unlawfully  to  prejudice  the  public  and  injure  and 
oppress  the  citizens  of  the  Commonwealth  of  Pennsylvania,  and  common  carriers 
and  transporters  therein,  to  the  enjoyment,  exercise  and  use  of  the  business  of  trans- 
porting and  carrying  of  petroleum,  goods,  wares  and  merchandise  in  as  full  and 
ample  a  manner  as  was  accustomed  in  said  Dusiness,  on  the  day  and  year  afore- 
said, to  wit,  on  the  fifteenth  day  of  April  A.  D.  1879,  at  the  county  and  within  the 
jurisdiction  aforesaid,  unlawfully,  wickedly  and  maliciously  did  conspire,  combine, 
confederate  and  agree  together  to  prejudice  and  oppress  the  public  and  the  common 
carriers  and  transporters  and  transportation  companies  of  and  within  the  Common- 
wealth of  Pennsylvania  to  the  public  and  common  carriers  without  said  Common- 
wealth, carrying  and  transporting  of  crude  and  refined  petroleum  from  wells,  re- 
fineries and  points  of  delivery  to  and  on  the  way  to  the  markets  and  places  of 
deposit  and  storage  therefor,  by  extorting  by  threats  and  diversion  of  traffic,  unrea- 
sonably low  rates  of  freight  below  the  actual  cost  of  transportation,  and  by  levying 
and  extorting  undue  and  unlawul  commissions,  rebates  and  discounts  in  pursuance 
and  by  means  of  such  fraudulent  combinations,  conspiracy  and  confederation  and  by 
divers  otner  indirect,  subtle  and  fraudulent  means  and  devices;  which  said  combi- 
nation so  as  aforesaid  entered  into  is  of  grievous  prejudice  to  the  common  and  pub- 
lic good  and  welfare,  to  the  great  damage  of  the  public  and  common  carriers  and 
transportation  companies  of  the  Commonwealth  of  Pennsylvania,  to  the  evil  exam- 
pleof  all  others  in  the  like  case  offending,  contrary  to  the  form  of  the  act  of  Assembly 
in  such  case  made  and  provided,  and  against  the  peace  and  dignity  of  the  Common- 
wealth of  Pennsylvania. 

Seventh — And  the  grand  inquest,  inquiring  in  and  for  the  county  aforesaid,  upon 
their  oaths  and  affirmations  aforesaid,  do  further  present:  That  John  D.  Rocke- 
feller, late  of  said  county,  yeoman;  William  Rockefeller,  late  of  said  county,  yeo- 
man; Jabez  A.  Bostwick,  late  of  said  county,  yeoman;  Daniel  O'Day,  late  of  said 
county,  yeoman;  William  G.  Warden,  late  of  said  county,  yeoman;  Charles  Lock- 
hart, late  of  said  county,  yeoman;  Henry  M.  Flagler,  late  of  said  county,  yeoman; 
Jacob  J.  Vandergrift,  late  of  said  county,  yeoman;  Charles  Pratt,  late  of  said  county, 
yeoman,  and  George  W.  Girty,  late  of  said  county,  yeoman,  and  divers  other  evil 
disposed  persons,  to  the  said  inquest  unknown,  contriving  and  intending  so  far  as 
in  them  lay,  to  hinder  and  prevent  the  public  and  all  persons  other  than  themselves 
and  their  confederates,  to  this  inquest  unknown,  from  using,  exercising,  carrying  on 
or  in  any  manner  engaging  in  any  of  the  businesses,  occupations,  trades  or  callings 
of  producing,  refining,  buying,  selling,  transporting  and  storing  petroleum  in  as  full, 
ample  and  beneficial  a  manner  as  the  other  persons,  and  the  public  were  used  and 
accustomed  to  do,  on  the  day  and  year  aforesand,  to  wit,  on  the  fifteenth  day  of 
April,   A.   D.   1879,  at  the  county  and   within    the   jurisdiction    aforesaid,    unlawfully. 


LEWIS  EMERY,  JR.  391 

-wickedly  and  maliciously  did  conspire,  combine,  confederate  and  agree  together  with 
■divers  indirect,  subtle  and  fraudulent  means  and  devices,  to  injure  and  oppress  and 
prejudice  the  public  and  all  persons  engaged  or  ccncerned  in  all  or  any  of  the  occu- 
pations, businesses,  trades  or  callings  aforesail,  by  securing  and  obtaining  to  them- 
selves and  their  confederates,  to  the  said  inquest  unknown,  a  monopoly  in  the  busi- 
ness, trades  and  occupations  and  the  callings  of  producing,  storing,  transporting, 
refining,  buying  and  selling  of  petroleum,  and  by  preventing  free  and  lawful  com- 
petition therein;  which  said  combination,  so  far  as  aforesaid  entered  into  is  of  griev- 
ous prejudice  to  the  common  and  public  good  and  welfare,  of  evil  example,  con- 
trary to  the  form  of  the  act  of  Assembly  of  the  Commonwealth  of  Pennsylvania 
made  and  provided,  and  against  the  peace  and  dignity  of  the  Commonwealth  of 
Pennsylvania. 

Eighth— And  the  grand  inquest  aforesaid,  inquiring  in  and  for  the  county  afore- 
said, upon  their  respective  oaths  and  aflirmatlons  aforesaid,  do  fur- 
ther p-esent,  that  John  D.  Rockefeller  late  of  said  county,  yeoman; 
William  Rockefeller,  late  of  said  county,  yeoman;  Jabez  A.  Bostwlck,  late  of  said 
■cojnty,  yeoman;  Daniel  O'Day,  late  of  said  county,  yeoman;  William  G.  Warden, 
late  of  said  county,  yeoman;  Charles  Lockhart,  late  of  said  county,  yoeman;  Henry 
M.  Flagler,  late  of  said  county,  yeoman;  Jacob  J.  Vandergrift,  late  of  said  county, 
yeoman;  Charles  Pratt,  late  of  said  county,  yeoman,  and  George  W.  Girty,  late  of 
said  county,  yeoman,  and  divers  other  evil  disposed  persons,  to  the  said  inquest  as 
yet  unknown,  contriving  and  intending,  as  much  as  in  them  lay,  to  injure  and 
oppress  the  public,  and  to  acquire  dishonest  and  fraudulent  gain  to  themselves  and 
their  aforesaid  confederates  unknown,  on  the  day  and  year  aforesaid,  to  wit,  on  the 
fifteenth  day  of  April,  A.  D.  1S79,  at  the  county  and  within  the  jurisdiction  aforesaid, 
unlawfully,  w-lckedly  and  maliciously  did  conspire,  confederate,  combine  and  agree 
together  with  divers  indirect,  subtle  and  fraudulent  means  and  devices  to  control 
the  price  and  market  for  the  sale  and  purchase  of  petroleum,  crude  and  refined,  so 
that  at  the  option  of  themselves  and  their  confederates  aforesaid,  to  the  said  in- 
<iuest  unknown,  if  it  would  most  conduce  to  their  corrupt  and  fraudulent  gain, 
they  would  cause  the  price  of  the  market  of  petroleum,  crude  and  refined,  to  rise 
above  its  usual  and  accustomed  price,  and  if  their  corrupt  gains  and  fraudulent 
purposes  were  not  advanced  thereby,  they  would  cause  a  decline  or  fall  in  the 
price  in  the  market  of  petroleum,  crude  and  refined,  to  the  injury  and  ruin  of  all 
honest  dealeis  therein;  which  said  combination  so  as  aforesaid  entered  into  is  of 
grievous  prejudice  to  the  common  and  public  good  and  welfare,  of  evil  example, 
■contrary  to  the  act  of  Assembly,  in  such  case  made  and  provided,  and  against  the 
peace  and   dignity  of  the  Commonwealth  of  Pennsylvania. 

WILLIAM  A.  HINDMAN, 

District   Attorney. 

A  true  bill. 

JOHN  CARLEY,  Foreman. 

BILL  OF  PARTICULARS  IN  THE  CASE  OF    COMMONWEALTH    VS.    JOHN    D. 

ROCKEFELLER  ET  AL. 

Commonwealth  of  Pennsylvania 

vs. 
John  D.  Rockefeller,  William  Rockefeller,        In    the    Quarter    Sessions    of    Clarion 

Jabez  A.  Bostwlck,  Daniel  O'Day,  Will-  County.    No.  25  April  Session,  1ST9. 

lam  G.  Warden,  Charles  Lockhart,  Henry 

M.  Flagler,  Jacob  J.  Vandergrift,  Charles 

Pratt  and  George  W.  Girty. 

Bill  of  particulars  of  evidence  to  be  offered  by  Commonwealth: 

First  Count:  First— That  each  one  of  the  defendants  is  associated  with  each 
and  all  of  the  others,  in  business,  by  means  of  stock  issued  to  each  of  several  cor- 
porations, to  wit: 

The  Standard  Oil  Company,  of  Cleveland,  Ohio;  the  Standard  Oil  Company,  of 
Pittsburg,  Pa.;  the  Acme  Oil  Company,  of  Titusville,  Pa.;  the  Imperial  Refining 
Company,  of  Oil  City,  Pa.;  the  Camden  Consolidated  Oil  Company,  of  West  Vir- 
ginia;   the   Devoe   Manufacturing   Company,  of  New  York. 

Second— That  Charles  Pratt  is  associated  In  business  with  others  under  the  name 
of  the  Charles  Pratt  &  Co.;  that  William  G.  Warden  and  Charles  Lockhart  are  asso- 
ciated in  business  with  others  under  the  firm  name  of  Lockhart  &  Frew  and 
Warden,  Frew  &  Co.;  that  Jabez  A.  Bostwlck  Is  associated  with  others  in  business 
under  the  name  of  J.  A.  Bostwick  &  Co. 

Third— That  the  several  defendants  and  others  now  unknown  are  associated 
together  by  means  of  the  corporate  and  co-partnership  organizations  stated  in  para- 
graphs 1  and  2,  for  the  purpose  of  carrying  on  the  business  of  refining  crude  petro- 
leum and  selling  the  refined  product;  that  each  of  the  said  defendants  is  interested 
in    each    of   the    several    corporations    and  firms  in  refining  and  selling  refined  petro- 


392  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

leum,  and  in  refining  and  selling,  the  said  defendants,  each  and  all,  act  in  concert 
and  harmony  with  each  other  and  as  against  all  other  persons  not  associated  with 
them,  and  share  in  the  profits  of  the  business. 

Fourth— That  the  said  several  defendants,  and  all  of  them,  and  the  said  several 
firms  and  corporations  of  which  they  and  each  of  them  are  members,  by  stock, 
owntrship.  or  otherwise,  are  engaged  in  the  business  of  buying  crude  petroleum  in 
the  Countj  of  Clarion,  in  the  State  of  Pennsylvania,  and  also  in  the  Counties  of 
Armstrong,  Butler,  Crawford.  Forest,  McKean,  Venango  and  Warren,  in  the  State 
of  Pennsylvania;  also  in  the  Counties  of  Allegheny  and  Philadelphia,  in  said  State, 
and  in  the  Counties  of  Cattaraugus  and  New  York,  in  the  State  of  New  York;  also 
in  the  City  of  Cleveland,  in  the  State  of  Ohio,  and  in  counties  in  the  State  of  West 
Virginia.  i 

Fifth — That  in  the  said  several  States  and  counties  and  In  divers  localities  In 
said  States  and  counties,  to  wit,  at  Pittsburg,  Phildelphia,  Butler,  Carbon  Centre, 
Millerstown.  Petrolia,  Parkers  Landing,  Foxburg,  Turkey  City,  Edenburg.  Shippen- 
ville,  Pickwick,  Elk  City,  Monterey,  Emlenton,  Bullion,  Scrubgrass,  Fosters  Sta- 
tion, Oil  City,  Franklin,  Reno,  Rouseville,  Titusville,  Warren,  Tidioute,  Hickory, 
Bradford,  DeGolia,  Derrick  City,  Gilmore,  Foster  Brook  and  Tarport,  in  the  State 
of  Pennsylvania;  Knapps  Creek,  Rock  City,  Four-Mile,  Two-Mile,  Glean,  Carrlton, 
Salamanca  and  in  the  City  of  New  York,  in  the  State  of  New  York,  the  said  defend- 
ants and  the  several  firms  and  corporations  with  which  they  are  associated  and  in 
which  they  are  interested,  carried  on  the  business  of  buying  crude  petroleum  from 
producers  and  owners  therof,  and  in  the  business  of  refining  said  crude  petroleum  and 
selling  the  refined  product,  and  in  so  doing  acted  in  concert. 

Sixth — That  the  said  business  thereinbefore  referred  to  was  so  carried  on  at  the 
several  counties,  cities,  localities,  and  in  the  several  States  aforesaid,  by  the  said 
defendants  in  concert,  in  person  and  through  agtnts  acting  under  the  instructions 
of  the  said  defendants,  and  pursuant  to  their  directions. 

Seventh — That  the  said  defendants  were  engaged  and  are  engaged  in  the  business 
of  transporting  crude  petroleum  through  Iron  pipes,  in  the  Counties  of  Allegheny, 
Armstrong,  Butler,  Clarion,  Crawford,  Forest,  McKean,  Warren  and  Venango,  in 
the  State  of  Pennsylvania,  and  the  County  of  Cattaraugus,  in  the  State  of  New 
York.  That  they  are  so  engaged  by  being  associated  together  in  the  ownership  of 
several  pipe  lines,  such  association  being  accomplished  by  the  said  defendants  bi;iug 
owners  of  shares  of  stock  in  incorporated  companies,  to  wit,  the  United  Pipe  Line 
and  American  Transfer  Company,  and  interested  in  capital  in  limited  partnerships, 
to  wit,  the  Tidioute  and  Titusville  Pipe  Companies,  Limited  and  others,  which  said 
companies  the  said  defendants  at  the  time  of  the  conspiracy  and  combination  charged 
in  the  indictment,  controlled,  and  thereby  controlled  the  transportation  of  crude 
petroleum  from  wells  and  points  of  storage  in  said  several  counties  and  at  the  said 
several  localities. 

Eighth— That  the  said  defendants  and  each  of  them  and  the  said  several  cor- 
porations, firms  and  limited  partnerships,  were  and  are  engaged  by  means  of  the 
ownership  and  control  of  said  several  firms,  limited  partnerships  and  corporations, 
and  by  means  of  ownership  of  stock  and  interests  therein,  were  and  are  engaged  in 
the  business  of  storing  crude  petroleum  in  the  said  several  localities,  cities,  counties 
and  States  by  means  of  storage  tanks,  and  said  business  was  carried  on  in  said 
counties  each  and  all  of  them,  by  themselves  personally,  and  also  through  agents 
acting  by  their  directions. 

Ninth— That  each  one  of  the  said  defendants  and  all  of  them  in  concert  were 
engaged  in  the  several  kinds  of  business  hereinbefore  referred  to,  by  themselves 
and  their  agents  in  the  County  of  Clarion,  and  in  the  other  places  mentioned  herein- 
bffore,  during  the  whole  period  of  two  years  prior  to  the  day  upon  which  the  in- 
dictment was  found  against  them  in  this  case,  and  during  that  time  by  themselves- 
and  their  agents  acting  under  their  directions  in  the  said  County  of  Clarion,  com- 
bined, confederated  and  conspired  together  to  cheat  and  defraud  numerous  citizens 
of  the  County  of  Clarion,  to  wit,  J.  A.  Vera,  William  L.  Fox  and  M.  L.  Lockwood 
and  divers  others,  and  to  cheat  and  defraud  the  public  by  securing  to  themselves  a 
monopoly  of  the  business  and  occupation  of  buying  and  selling  crude  petroleum 
In  the  County  of  Clarion  and  to  prevent  all  other  persons  engaged  in  said  business 
from  making,  receiving  nd  obtaining  the  fair  value,  profit,  price  and  return  from 
such  business,  by  fraudulent  devices,  practices  and  secret  contrivances,  and  among 
others  the  following: 

(a)  Falsely  pretending  during  the  times  aforesaid  and  at  all  times  that  the 
storage  tanks  owned  and  controlled  by  them,  and  of  which  they  had  the  possession, 
msasurement  and  accounts,  were  full  of  crude  petroleum  to  the  extent  of  the  capa- 
city of  said  tanks  and  that  the  said  defendants  could  not  receive  and  store  crude 
petroleum  from  and  for  citizens  of  Clarion  county  and  the  other  counties  and  locali- 
ties named,  when  in  truth  such  representations  and  statements  were  false,  and 
thereby  divers  citizens  lost  oil  and  were  compelled  to  sell  petroleum  at  less  than  the 
value  thereof. 


LEWIS  EMERY,  JR.  393 

(b)  By  representing  to  divers  citizens  of  the  County  cf  Clarion,  engaged  in  the 
business  of  producing,  buying  and  selling  petroleum,  and  to  divers  other  persons 
engaged  in  said  business  in  the  other  counties  and  localities  named,  that  the  said 
defendants  were  unable  to  receive  and  transport  for  said  well  owners,  citizens  and 
W3ll  owners,  citizens  and  producers  of  such  petroleum,  by  reason  of  lack  of  capacity 
and  ironsportalion  facilities,  when  in  fact  said  representations  were  false,  and 
thereby  divers  producers,  dealers  and  well  owners  were  compelled  to  sell  petroitum 
at  less  than  value  thereof. 

(c)  That  the  said  defendants,  by  themselves  and  their  agents,  within  the  County 
of  Clarion,  in  the  State  of  Pennsylvania,  and  at  the  other  counties,  cities  and  locali- 
ties hereinbefore  named,  had  the  control  of  the  entire  transportation  of  crude  pe- 
troleum from  the  producing  wells  and  districts,  and  the  control  of  storing  of  crude 
petroleum  produced;  that  they  and  the  several  firms  end  corporations  of  which  they 
were  members,  and  their  agents  and  the  agents  of  the  said  firms  and  corporations 
acting  under  the  direction  of  the  said  defendants,  corruptly  and  oppressively  used 
the  power  and  control  they  so  as  aforesaid  held,  to  compel  producers  and  owners  of 
petroleum  to  sell  the  same  to  them,  the  said  defendants,  their  agents,  and  the  sev- 
eral firms  and  corporations  aforesaid  and  their  agents,  and  to  sell  the  said  crude 
petroleum  at  less  than  its  value,  and  less  than  the  market  price  thereof. 

(d)  That  the  said  defendants  and  each  of  them,  through  the  several  firms  and 
corparations  of  which  they  were  members  and  by  their  agents  acting  under  their 
directions,  and  the  agents  of  the  said  firms  and  corporation,  corruptly  and  oppress- 
ively used  the  power  so  acquired  by  them  to  enable  them  to  become  the  sole  buy- 
ers and  refiners  of  crude  petroleum; 

(e)  That  among  the  means  used  to  obtain  control  of  the  business  of  transporting 
crude  petroleum  were  the  following: 

First— The  said  defendants  and  the  several  firms  and  corporations  of  which  they 
were  members,  laid  iron  pipes  in  the  County  of  Clarion  and  the  other  counties  and 
States  named  under  charters,  and  charters  from  the  State  of  Pennsylvania,  pretending 
they  did  so  for  the  purpose  of  transporting  for  the  public,  petroleum  from  the  oil  wells 
and  production  districts  to  the  railroads,  for  ship.nent  to  the  seaboard;  when  in  fact 
the  said  pipe  lines  were  not  laid  for  that  purpose,  but  for  the  purpose  of  transport- 
ing oil  for  the  said  defendants  and  the  said  firms  and  corporations  of  which  they 
were  members,  and  not  for  the  public,  and  to  enable  the  said  defendants  and  the 
said  firms  and  corporations  to  dictate  the  rate  of  freight  to  be  charged  to  them  by  the 
railroad  companies  engaged  in  the  business  of  carrying  petroleum  as  common  car- 
riers, and  to  force  the  said  railroad  companies  to  charge  a  greater  and  unreasonably 
high  rate  of  freight  to  all  others,  and  that  this  was  for  the  jmrpose  of  preventing 
citizens  of  Clarion  county  and  the  public  from  engaging  in  the  business  of  buying, 
selling  and  shipping  crude  petroleum. 

Second— The  said  defendants  and  their  agents,  acting  under  their  directions,  and 
the  several  firms  and  corporations  of  which  they  were  members,  also  so  acting,  pre- 
tended and  represented  to  the  several  railroad  companies  engaged  in  the  transporta- 
tion of  petroleum,  and  to  the  agents  and  officers  of  said  companies  that  they,  the  said 
defendants  and  the  several  corporations  of  which  thev  were  members  and  in  wliich 
they  were  interested,  controlled  the  shipments  of  said  crude  and  refined  petroleum  by 
deliveries  tl.ereof  to  the  said  railroad  companies,  and  that  the  said  defendants  were 
enabled  to  withhold  and  drive  said  traffic  and  business  from  them. 

Said  representations  were  false,  but  by  means  thereof  they,  the  said  defendants, 
procured  and  obtained  from  said  several  railroad  companies  enormous  and  unjust 
rebates,  commissions  and  deductions  from  the  rates  of  freight  charged  to  citizens  of 
Clarion  county  and  the  public.  The  citizens  of  Clarion  county  and  the  public  were 
thereby  prevented  from  engaging  in  the  business  of  producing  and  shipping  crude 
petroleum. 

Third— That  on  or  about  the  thirtieth  day  of  August,  1877,  and  again  on  or  about 
the  seventeenth  day  of  October,  1877,  the  said  defendants  met  together  in  the  City  of 
Philadelphia  and  then  and  there  agreed  together  that  they  would  represent  to  the 
officers  of  the  Pennsylvania  Railroad  Company  that  they,  the  said  defendants,  and 
the  several  firms  and  corporations  of  which  they  wore  niembers,  could  and  would 
control  and  guarantee  to  the  said  railroad  company  a  certain  proportion  of  the 
carrying  traffic  of  crude  petroleum  over  said  railroad. 

And  on  or  about  the  same  date  the  said  defendants  further  agreed  together  and 
did  represent  to  the  officers  of  the  New  York,  Lake  Erie  &  Western  Kailroad  Com- 
pany, and  to  the  officers  of  the  Erie  Railroad  Company,  and  to  H.  J.  Jewett,  receiver 
of  the  Erie  Railroad  Company,  and  to  the  officers  of  the  New  York  Central  &  Hud- 
son River  Railroad  Company,  and  to  the  officers  of  the  Atlantic  &  Great  Western 
Railroad  Company,  and  to  John  H.  Devereaux,  receiver  thereof,  and  to  the  officers 
of  the  Michigan  Southern  &  Lake  Shore  Railroad  Company,  and  to  the  officers  of  the 
Baltimore  &  Ohio  Railroad  Company,  that  they  the  said  defendants,  and  the  several 
firms  and  corporations  of  which  they  were  members,  could  and  would  control  and 
guarantee  to  each  of  them  a  certain  proportion  of  the  carrying  traffic  of  the  crude 
petroleum   over   said    railroads    respectively.     But  by  reason  thereof,  the  said  Penn- 


394  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

sylvania  Railroad  Company  and  the  Empire  Transportation  Company  were  induced 
to  and  did  sell,  transfer,  mortgage  and  dispose  of  to  said  defendants  and  to  the  sev- 
eral firms  and  corporations  of  which  they  were  members,  all  of  the  pipe  lines,  crude 
oil  cars  and  transportation  equipment  of  which  they  had  control  or  ownership  in  the 
oil  regions  of  Pennsylvania,  including  the  County  of  Clarion,  and  all  of  the  refiner- 
ies for  refining  crude   petroleum,   of   which  they  had  ownership  or  control. 

Fourth— The  objects  and  purposes  of  said  representations  and  said  transfer  were 
to  enable  the  said  defendants  to  control  the  business  of  buying  and  selling  crude 
and  refined  petroleum,  and  the  transportation  and  storage  thereof. 

Fifth— Tliat  as  stated  in  the  foregoing  paragrapli,  during  the  greater  part  of  the 
year  1877  and  for  some  time  previously  the  Pennsylvania  Railroad  Company  owned 
or  controlled  through  its  shipping  agents,  the  Empire  Line,  a  full  and  complete 
system  of  pipe  lines  throughout  the  Counties  of  Clarion,  Armstrong  and  Butler, 
known  as  the  Empire  Line,  numerous  and  well  appointed  tank  oil  cars,  the  shortest 
and  best  route  to  the  seaboard  over  its  own  lines,  and  the  Allegheny  Valley  Rail- 
road and  other  connecting  lines,  also  controlled  large  and  complete  refineries  situ- 
ated in  Pittsburg,  Philadelphia  and  New  York,  and  was  by  these  means  a  competi- 
tor with  tlie  defendants  and  the  several  corporations  owned  by  them  in  the  business 
of  piping,  transporting,  buying  and  refining  crude  oil,  enabling  producers,  citizens 
of  Clarion  county  and  elsewhere  without  difliculty  to  have  their  oil  piped  and  trans- 
ported, and  to  sell  the  same  at  enhanced  prices,  owing  to  competition.  That  the 
defendants  combining  and  conspiring  to  monopolize  the  entire  and  sole  business  of 
buying  and  selling  and  refining  oil  in  Clarion  coiinty  and  elsewhere,  did  demand  of 
the  Empire  Line  and  the  Pennsylvania  Railroad  'Company  that  they  and  each  of 
them  should  abandon  and  desist  from  the  said  business  of  buying,  selling  and  refin- 
ing oil,  and  that  the  said  Railroad  Company  and  Empire  Line  should  grant  to  them 
exclusively  large  rebates  and  low  or  cheap  rates  of  transportation  of  oil  and  by 
means  of  withdrawing  and  procuring  others  to  withdraw  the  transportation  of  crude 
and  refined  oil  over  and  along  said  Pennsylvania  Railroad,  and  by  means  of  procur- 
ing from  other  railroads  exclusive  rebates  and  low  rates  of  freight  for  transportation, 
below  a  fair  and  just  compensation  for  such  transportation,  did  compel  the  said 
Pennsylvania  Railroad  Company  and  the  Empire  Line  to  sell  to  said  defendants,  or 
to  some  of  the  corporations  controlled  and  owned  by  them,  said  pipe  line,  tank  cars 
and  refineries,  to  the  injury  of  the  producers  of  oil  of  Clarion  county  and  elsewhere, 
by  depriving  them  of  the  benefit  of  competition  in  buying,  piping,  storing  or  refining 
this  crude  oil. 

Sixth— That  the  defendants  and  others  combined  and  confederated  with  them, 
did  conspire  to  monopolize  the  entire  and  exclusive  business  of  refining  crude  petro- 
leum in  Clarion  county  and  elsewhere  by  means  of  throwing  quantities  of  refined  oil 
on  the  market  and  selling  the  same  at  less  price  than  the  fair  market  value  of  the 
same  in  vicinity  of  independent  refiners  in  Clarion  county  and  elsewhere,  and  by 
means  of  such  sales  did  compel  such  refineries  to  sell  out  to  companies  with  which 
defendants   were   connected,   or  to   abandon  or  quit  the  business  of  refining. 

Seventh— That  the  said  defendants  did,  with  others,  conspire  together  to  pur- 
chase all  the  pipe  lines  for  the  transportation  of  oil  within  the  producing  oil  region 
and  all  the  refineries  for  the  refining  of  oil,  for  the  purpose  of  controlling  the  price  of 
oil  and  compelling  the  oil  producers  of  Clarion  county  and  elsewhere  to  sell  their  oil 
to  the  said  defendants  at  ruinous  low  rates,  far  below  the  value  thereof  and  the  price 
that  could  have  been  obtained  for  the  same  in  a  competitive  market. 

Eighth— Although  the  said  representations  were  false  the  said  defendants  and 
the  several  firms  and  corporations  of  which  they  were  members,  procured  the  con- 
trol of  the  business  of  producing,  buying,  and  selling  crude  petroleum  and  of  about  90 
per  cent,  thereof  by  following  acts  dor»e  in  furtherance  of  the  agceements  afore- 
said: 

(a)  To  buy  only  petroleum  for  immediate  shipment  from  the  wells  of  producers. 
And  when  so  bought,  they  refused  to  move  it.  It  was  so  bought  at  less  than  its 
actual  value  and  market  price,  and  the  producers  of  petroleum  were  compelled  to  sell 
the  same  by  reason  of  the  false  representations  as  to  capacity,  storage  and  transpor- 
tation hereinbefore  fully  set  forth. 

(b)  By  giving  to  themselves  and  procuring  for  themselves  exorbitant  and  un- 
reasonable rebates,  commissions  and  allowances  from  the  railroads  and  pipe  lines 
owned  and  controlled  by  them,  which  rebates,  commissions  and  allowances  could 
not  be  procured  by  any  other  than  the  said  defendants  and  the  several  firms  and 
corporations  of  which   they  were  members. 

(c)  By  impeding  transportation  by  railroads,  procuring  them  to  refuse  and  de- 
lay cars  for  shipment  of  petroleum,  procuring  tlie  breaking  connections  with  con- 
necting railroad  lines,  refusing  and  procuring  the  refusal  of  railroad  companies  and 
pipe  lines  to  receive  and  transport  petroleum,  by  refusals  and  procuring  refusals 
to  store  petroleum,  by  refusing  and  procuring  the  refusal  of  railroad  companies 
to  furnish  side  tracks,  cars  and  transportation  facilities  to  pipe  line  companies 
other  than  these  of  the  defendants  and  to  individuals,  by  selling  refined  petroleum 
at  less  than   the  cost   of  manufacture,   by  carrying  and  storing  oil  at  less  than  the 


LEWIS  EMERY,  JR.  395 

cost  of  transportation  and  storage,  and  thereby  forcing  competing  lines  to  sell  to 
them  at  a  loss  by  issuing  certificates  of  accepted  orders  of  pipe  line  companies  in 
violation  of  law  not  representing  the  petroleum  in  the  custody  of  said  corporations 
cf  the  said  defendants,  and  placing  such  certificates  upon  the  market,  thereby  caus- 
ing an  apparent  increase  in  the  quantity  of  oil  in  the  market  for  sale  and  de- 
pressing the  price  of  crude  petroleum  by  making  false  and  fictitious  reports  of 
stock  of  petroleum  in  the  custody  of  the  United  Pipe  Lines,  a  corporation  of  which 
the  defendants  are  the  owners  and  which  they  control,  by  violating  the  laws  rela- 
ti\e  to  making  reports  of  business  of  the  said  pipe  line  company,  but  neglecting 
and  refusing  to  make  the  required  oath  thereto;  by  destroying  refineries  purchased 
by  them  at  less  than  their  value,  of  those  they  had  compelled  to  sell  to  them  by 
the  fraudulent  acts  aforesaid;  by  hiring  and  paying  salaries  to  men  to  remain  out 
of  business  for  a  term  of  years,  and  to  act  as  spies  for  the  said  defendants  and 
the  corporations  and  firms  of  which  they  are  members;  by  selling  crude  and  re- 
fined petroleum  at  less  than  its  cost  to  them;  by  increasing  the  production  by  en- 
tering into  agreements  relative  to  the  price  the  said  defendants  and  the  corpora- 
tions and  firms  of  which  they  were  members;  oy  threatening  common  carriers  with 
destruction  of  the  business  of  carrying  oil  if  they  carried  for  others  than  themselves 
and  those  associated  with  them,  or  permitted  other  pipe  line  companies  to  deliver 
petroleum  to  them,  or  railroads  to  carry  to  them;  by  means  of  said  threats  to  pre- 
vent the  building  or  operation  of  competing  lines  of  pipe  or  railroad  for  transpor- 
tation of  petroleum;  by  refusing  to  store  petroleum  *n  tanks  owned  by  individuals 
for  them,  and  by  filling  such  tanks  with  their  own  oil,  thereby  causing  a  loss  and 
waste  both  of  petroleum  and  in  the  price  obtained;  by  refusals  to  the  citizens  of 
Clarion  county  and  elsewhere  at  the  several  localities  named  to  transport  or  store 
crude  petroleum. 

Second  Count:  All  of  the  evidence  hereinbefore  offered  in  support  of  the  first 
count. 

Third  Count:  All  of  the  evidence  hereinbefore  stated  to  be  offered  in  support 
of  the  first  and  second  counts  and  in  addition  thereto,  evidence  of  purchase  of  re- 
fineries under  false  representations;  that  refiners  were  forced  to  sell  by  reasons  of 
enormous  rebates,  fraudulently  obtained  from  railroad  companies,  as  hereinbefore 
stated,  the  business  being  thereby,  and  not  otherwise,  rendered  unprofitable  to  such 
refineries  as  could  not  obtain  said  rebates,  commissions  and  allowances,  they  being 
all  in  the  said  business  except  the  said  defendants,  and  the  firms  and  corporations 
of   wliich   they   were   members. 

Fourth  Count:  All  of  the  evidence  hereinbefore  stated  to  be  offered  in  support 
of  the  first,  second  and  third  counts,  and  in  addition  thereto,  that  the  said  defend- 
ants and  their  agents  diverted  traffic  from  the  Allegheny  Valley  Railroad  Com- 
pany by  threatening  the  said  railroad  company  and  those  who  were  delivering  pe- 
troleum to  it  for  transportation,  with  loss  and  injury  to  their  business,  and  by  ship- 
ping tliemselves,  over  other  railroads,  unless  the  said  Allegheny  Valley  Railroad 
Company  would  allow  them  exorbitant  rebates,  commissions  and  allowances  upon 
petroleum  carried,  that  other  dealers  and  shippers    could    not    obtain. 

Fifth  Count:  All  the  evidence  hereinbefore  stated  to  be  offered  in  support  of 
the  first,  second,  third  and  fourth  counts,  and,  in  addition  thereto,  that  the  traffic 
■was  diverted  from  the  Pennsylvania  Railroad  Company,  a  common  carrier,  by  the 
same  means,   devices  and   threats  as   hertinbefore   stated. 

Sixth,  Seventh  and  Eighth  Counts:  All  tlie  evidence  hereinbefore  stated  to  be 
offered  as  the  first,  second,  third,  and  fourth  and  fifth  counts.  And  as  to  all  the 
counts  the  indictment  all  the  evidence  hereinbefore  stated,  and  that  in  doing  and 
causing  to  be  done  the  several  acts,  and  in  the  contrivance  of  the  said  several  de- 
vices and  in  the  practice  of  the  said  several  acts,  devices  and  schemes,  and  eacii 
of  them  and  all  of  them  in  the  County  of  Clarion  and  in  the  said  several  other 
places,  cities,  counties  and  states,  the  said  defendants  and  each  of  them  by  and 
through  agents  acting  under  their  directions  and  the  directions  of  the  several 
firms  and  corporations  of  which  they  are  members  and  in  which  they  are  interest- 
ed and  by  the  procurement  and  advice  so  acted,  devised  and  schemed  in  concert 
and  by  agreement  together  for  the  purpose  of  accomplishing  the  oljjects  stated 
in  the  said  several  counts  of  the  said  indictment  and  for  their  private  gain  and 
advantage,  and  to  obtain  the  money  and  property  of  divers  citizens  of  Clarion 
county    and   Pennsylvania   without    giving  value  thereof 

WILLIAM   HINDMAN, 

District  Attorney. 


396  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

ADDENDA.  NO.  25  APRIL  SESSION,  1879.  COMMONWEALTH  VS.  JOHN  D, 
ROCKEFELLER  ET  AL.  AMENDMENT  TO  BILL  OF  PARTICULARS. 
FILED  AND   NOTICE   SERVED  NOVEMBER  28th,   1870,  6:30  P.  M. 

Commonwealth  In    the    Court    of    Quarter    Sessions    of 

vs.  Clarion    County,    No.    25    April    Ses- 

John  D.  Rockefeller  et  al.  sions,  1879. 

Counsel  for  prosecution,  in  obedience  to  the  direction  of  the  Court,  give  notice 
of  the  following  amendments  to  the  Bill  of  Particulars  given  defendants  in  this 
case: 

Insert  in  Bill,  as  printed  by  defendants,  on  page  10,  section  8,  paragraph  C,  by 
adding  at  end  of  third  line  of  paragraph  viz:  On,  by  and  with  the  following  rail- 
road lines:  The  Pennsylvania  Central  Railroad,  The  Allegheny  Valley  Railroad, 
The  Pittsburg,  Titusville  and  Buffalo  Railroad,  The  Atlantic  and  Great  Westera 
Railroad,  The  Erit  RaiJroad,  The  New  York,  Lake  Erie  &  Western  Railroad,  the 
Shenango  Railroad,  the  Lake  Shore  &  Michigan  Southern  Railroad,  the  Dunkirk 
&  Warren  Railroad,  the  Philadelphia  &  Erie  Railroad,  the  Baltimore  &  Ohio  Rail- 
:oad,  the  Philadelphia  &  Reading  Railroad,  the  Lehigh  Valley  Railroad,  the  Central 
Railroad  of  New  Jersey,  and  a  railroad  running  from  the  Bradford  oil  regions  to 
Buffalo,  name  at  present  unknown.  ' 

Also  amend  in  fourth  line  of  said  paragraph  by  Inserting  the  word  "said"  be- 
tween the  preposition  "of"  and  railroad  and  after  the  conjunction  "and"  and  at 
the  end  of  the  line  the  names  following:  "The  Hunter  and  Cummins  Pipe  Line  at 
East  Brady,  Clarion  county,  Pennsylvania;  The  Atlantic  Pipe  Line,  of  said 
county;  the  Fox  Pipe  Line,  of  said  county;  the  Equitable  Pipe  Line,  of  McKean 
county,   and   Emlenton   Pipe  Line." 

In  the  seventh  line  of  same  paragraph  between  the  preposition  "of"  and  rail- 
road,   insert   the    word    "said." 

In  the  eighth  line  between  the  words  "to"    and    "Pipe"   insert   the  word    "said." 

WILLIAM    A.    HINDMAN, 

District  Attorney. 

Now,  gentlemen,  this  was  a  suit  brought  by  the  Producers'  Protective 
Association,*  or  rather  a  complaint  made  by  them  to  the  Commonwealth 
of  Pennsylvania  which  brought  suit,  out  of  this  grew  this  indictment.  This 
case  was  never  tried.  They  attempted  to  get  the  case  up,  to  get  a  change 
of  venue,  I  thinlv  you  call  it;  you  lawyers  know;  and  they  failed  in  that. 
A  very  stubborn  fight  was  made.  They  said  the  oil  country  was  prejudiced; 
that  they  couldn't  get  justice.  They  applied  to  the  Supreme  Court  of  Penn- 
sylvania for  relief  and  through  some  process  of  law  they  got  it.  You  lawyers 
may  know  how  they  obtained  it;  but  the  case  dragged  along  in  the  same 
old  style  that  I  told  you  about,  and  finally,  through  discouragement  and  lack 
of  funds,  and  the  disagreement  of  the  committee  upon  the  matter,  Mr.  B.  B. 
Campbell,  president  of  the  Producers'  Protective  Association,  settled  the 
case  by  receiving  the  sum  of  $40,000,  which  was  used  in  defraying  the  ex- 
penses that  had  been  incurred,  and  receiving  the  contract  that  has  been 
referred  to  by  Mr.  Kennedy.  Now,  I  don't  know  that  it  is  necessaiy  for  me 
to  read  that  contract. 

Q.  (By  Vice-Chairman  PHILLIPS.)  You  had  better  give  us  the  purport 
of  the  contract.     A.  Well,  I  will  read  it  if  you  want  to.f 

Q.  (By  Vice-Chairman  PHILLIPS.)  State  what  it  is  or  about  what 
it  is.     A.  I  wish  somebody  would  read  this  contract. 

Q.  (By  Mr.  FARQUHAR.)  Without  reading  the  whole  contract  you  will 
find  on  page  715  of  the  Bacon  Committee's  report  an  exact  analysis  of  the 
contract  itself.     A.  Well,  that  is  all  right,  you  know  what  it  is. 

Q.  First  of  all,  the  provision  in  respect  to  Mr.  Campbell's  demand  of 
the  United  Pipe  Lines,  and  the  Pennsylvania  Railroad  Company's  reply. 
The  chairman  spoke  about  having  the  analysis;  it  is  presented  here  in  the 
report  of  the  Bacon  Committee.  A.  Now,  I  will  state  briefly.  Mr.  Chairman 
and  gentlemen,  that  this  contract  was  presented  to  the  Producers  to  accept 
the  demand,  and  by  unanimous  vote  they  rejected  the  settlement,  and  there 
was  a  sort  of  general  break-up  over  the  action  of  the  president  of  the  Pro- 
ducers'  Protective  Association,  or  the  Producers' 

Vice-Chairman    PHILI^IPS.     Producers'   Union,   I   think   it   was. 


•Producers'   Union. 

iThc    four   ciucstions   and   answers    following  are  in  substance  made  into  a  single 
answer  by   the  witness,   according   to  the  report  of  testimony   in   the  official   report. 


LEWIS  EMERY.  JR.  397 

The  WITNESS.  Yes,  sir,  the  Producers'  Union;  correct  that,  gentle- 
men, if  you  please. 

Mr.  FARQUHAR.  Here  is  the  resolution  that  was  passed  in  that  con- 
nection, taken  from  the  Bacon  Committee's  report.     (Page  714.)    (Reading): 

'■Resolved,  That  the  general  council  of  the  Petroleum  Producers'  Union 
approves  the  action  of  the  president  in  withdrawing  the  suits  against  the 
Standard  combination  and  the  Pennsylvania  Railroad  Company  as  wise  and 
judicious  and  compelled  under  the  existing  conditions  of  the  litigations. 
While  we  do  not  approve  of  the  reservations  in  the  contracts  presented  of 
the  right  to  make  any  discriminations  in  the  rates  of  freight,  we  tender  to 
our  president  our  thanks  for  the  energy,  fidelity  and  ability  with  which  he 
has  conducted  the  several  legal  proceedings." 

The  WITNESS.  I  am  very  glad  you  corrected  me  on  that,  because  I 
want  to  say  that  is  the  reason  I  said  that  they  didn't  accept  it.  You  see 
from  this  only  two  men  signed  the  contract.  B.  B.  Campbell  and  a  man  by 
the  name  of  A.  M.  Parin,  who  was  a  refiner  and  shipper  of  petroleum  iri 
general  business.  There  were  but  two  names  to  that  contract,  and  B.  B. 
Campbell  being  a  manufacturer  of  oil  received  the  rebates,  but  there  was 
some  question  about  it.  For  a  long  while  there  was  some  difficulty  between 
the  Pennsylvania  Railroad  and  the  northern  railroads  because  Mr.  Campbell 
was  permitted  to  come  in  and  ship  his  oil;  but  I  need  not  go  into  that  explana- 
tion at  all.  Now,  they  are  nothing.  You  are  very  anxious  to  get  something 
up  to  date.  Now  here  is  a  contract  that  went  into  effect  in  1884,  and  was 
recently  brought  out  in  the  suit  of  Ladenburg  and  Thalman,  for  a  large 
sum  of  money,  which  case  is  now  pending  against  the  Pennsylvania  Rail- 
road, as  I  say,  amounting  to  quite  a  large  sum  of  money.  They  purchased 
a  large  amount  of  oil  and  shipped  it  over  the  Pennsylvania  Railroad,  and 
they  are  suing  the  road — and  they  are  suing  the  defendants  in  my  cases 
and  others. 

Q.  (By  Mr.  KENNEDY.)  You  saw  the  contract  of  1884?  A.  I  saw  the 
contract  of  1884,  yes,  sir;  and  it  is  in  existence,  I  understand,  at  the  present 
time.  If  I  am  mistaken  about  its  being  in  force,  then  I  desire  to  be  cor- 
rected because  I  understand  it  is  in  force  at  the  present  time.  I  desire  to 
have  it  read;  I  will  get  somebody  to  read  it;  but  it  is  what  I  term  a  nefari- 
ous contract. 

Q.  (By  Mr.  CLARKE.)  Can  you  not  answer  the  simple  question  whether 
or  not  that  contract  provides  for  rebates?  A.  No,  I  cannot;  it  provides  for 
something  that  is  a  good  deal  worse. 

Q.  (By  Vice-Chairman  PHILLIPS.)  What  is  it  that  is  worse?  A.  It 
requires  that  26  per  cent,  of  the  shipments  of  oil  shall  go  over  the  roads. 
Understand  me,  the  pipe  lines  can  carry  it  all  if  they  want  to,  with  the  ex- 
ception of  the  residuum.  The  railroads  need  not  have  made  this  contract, 
because  the  residuum  has  to  go  in  cars  anyhow;  you  can't  pump  that;  but 
they  made  the  contract  with  the  railroads,  and  that  is — well,  I  will  not  make 
the  statement. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Do  you  call  that  nefarious?  Do  you 
see  anything  wrong  in  a  contract  that  a  certain  percentage  should  go  over 
the  road?     A.  Radically  wrong;    I  should  like  to  have  it  read. 

Q.  (By  Vice-Chairman  PHILLIPS.)  I  should  like  to  have  you  explain 
wherein  it  is  wrong.     A.  Well,  I  should  like  to  have  that  read. 

Mr.  CLARKE.     Well,  I  am  willing  to  see  and  hear  it. 

Vice-Chairman  PHILLIPS.  If  there  is  no  objection  the  contract  will  be 
read. 

The  WITNESS.  *l  will  have  to  ask  one  of  the  young  men,  the  stenog- 
rapher or  somebody,  to  read  it.  I  am  not  strong  enough  to  read  it  myself; 
I  don't  hardly  know  what  its  provisions  are  myself.  In  fact,  I  will  confess 
to  you  right  here  that  the  provisions  of  this  contract  have  only  been  com- 
municated to  me  through  another  source,  and  it  has  never  been  given  to 
the  public  before;  it  never  has  gone  to  the  public,  to  my  knowledge,  until  it 
came  out  in  this  suit.  It  is  practically  new  to  me,  and  I  think  it  will  be 
new  to  you. 


*BIack  faced  type  indicates  matter  omitted,  In  the  course  of  editing:,  from  the 
official  report.  ^ 


398  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

Vice-Chairman  PHILLIPS.  The  stenographer  will  please  read  the  con- 
tract. 

Note — The  contract  is  as  follows,  being  read  by  the  stenographer: 

Agreements  between  the  Pennsylvania  Railroad  Company  and  the  National 
Transit  Company,  dated  August  22,  1884,  being  two  agreements  of  even  date  as  fol- 
lows: 

Memorandum  of  a  traffic  agreement,  made  this  twenty-second  day  of  August, 
1884,  between  the  Pennsylvania  Railroad  Company,  hereinafter  designated  the  Rail- 
road Company,  and  the  National  Transit  Company,  hereinafter  designated  the  Tran- 
sit Company.  i 

Witnesseth:  That  for  considerations  mutually  interchanged,  the  parties  hereto 
agree,  each  with  the  other,  as  follows: 

First — The  Transit  Company  owns  an  extended  system  of  local  pipes  in  the  oil 
regions  of  Pennsylvania  and  New  York,  which  are  grouped  into  a  separate  division 
known  as  the  United  Pipe  Lines  Division  of  the  National  Transit  Company.  This 
division  will  be  hereinafter  designated  as  the  Transit  Company's  Local  Division. 

The  business  of  this  division  is  to  collect  oil  from  producer,  store  it  in  tanks, 
and  deliver  it,  as  may  be  desired,  to  any  through  carrier  of  petroleum,  which  will 
transport  the  same  to  where  it  is  to  be  refined,  or  otherwise  disposed  of. 

The  Transit  Company  also  own  certain  through  or  trunk  line  pipes,  extending 
from  several  points  of  connection  with  the  aforesaid  local  pipe  division  to  various 
refining  and  terminal  points. 

With  these  latter  pipes,  which  will  be  hereinafter  entitled  the  Transit  Com- 
pany's Trunk  Line  Division,  it  competes  in  the  through  carriage  of  petroleum  with 
all  other  through  carriers,  whether  pipe  or  rail. 

The  business  of  its  local  division  is  therefore  entirely  distinct  from  the  business 
of  its  through  trunk  line  division. 

It  undertakes  and  agrees  that  its  local  division  will  deliver  into  cars  furnished 
by  the  Railroad  Company  at  any  of  its  regular  delivery  points,  and  under  its  regular 
delivery  rules,  whatever  petroleum  the  owners  thereof  may  desire  to  have  so  deliv- 
ered, and  as  the  Railroad  Company  may  furnish  cars  to  transport,  and  will  make  no 
discrimination  either  in  its  local  charges  for  carriage,  storage  and  other  services,  or 
in  the  use  of  any  of  its  local  facilities  against  such  oil,  but  will  at  all  times  treat  it  in 
the  said  respects  as  favorably  as  it  at  the  same  time  treats  any  other  petroleum 
which  may  be  delivered  to  its  own  trunk  line  division,  or  to  any  other  through  car- 
riers. 

Second — The  Transit  Company  agrees  that  all  petroleum  brought  to  the  Atlantic 
seaboard  by  all  existing  carriers,  whether  rail  or  pipe,  now  engaged  in  transporting, 
such  property,  or  which  may  hereafter  engage  in  such  transportation  in  conjunction 
with  the  Transit  Company's  pipe  lines,  shall  have  been  ascertained  monthly,  and  so 
much  of  it  as  shall  have  been  shipped  in  the  refined  state,  shall  be  reduced  to  its 
equivalent  in  crude  oil,  by  considering  that  one  and  three-tenths  (13-10)  gallons  of 
crude  are  required  to  make  one  (1)  gallon  of  refined  oil.  It  further  undertakes  and 
agrees  that  if  of  the  total  so  transported,  the  Railroad  Company  shall  not  have- 
moved  in  ito  cars  twenty-six  (26)  per  centum  thereof,  the  Transit  Company  shall 
cause  to  be  delivered  to  cars  furnished  by  the  Railroad  Conipany  at  Milton,  Pa., 
such  quantity  of  crude  petroleum  as  shall,  when  addfeSf^to  the  amount  which  has- 
been  actually  transported  by  the  Railroad  Company  to  the  seaboard  in  said  month, 
make  the  total  transported  by  the  Railroad  Company  in  said  month  equal  to  said 
twenty-six  (26)  per  centum. 

The  Railroad  Company  agrees  to  furnish  the  needful  cars  and  facilities,  and 
promptly  transport  the  oil  which  the  Transit  Company  agrees  in  this  contract  to 
deliver  to  it  at  Milton:  Provided,  that  if  during  any  month  the  Railroad  Company  is 
not  able  to  assign  from  its  oil  equipments  a  sufficient  number  of  cars  to  the  traffic 
of  the  Transit  Company  to  move  the  proportion  of  oil  herein  provided  to  be  delivered 
at  Milton,  then  during  that  month  the  Transit  Company  shall  only  be  required  to  so 
deliver  to  the  Railroad  Company  such  quantity  of  oil  as  the  Railroad  Company  shall 
be  able  to  transport,  and  shall  not  be  required  to  make  up  any  deficiency  that  may 
occur  during  said  month. 

Efforts  shall  be  made  by  the  Transit  Company  to  deliver  so  much  during  each 
month  as  will  probably  be  necessary  to  make  the  total  carried  by  the  Railroad  Com- 
pany equal  to  said  percentage. 

Shortages,  if  not  due  to  short  supply  of  cars,  and  such  excesses  as  may  be  found 
to  have  occurred  in  any  month,  shall  be  adjusted  in  the  following  month,  or  as  soon 
afterwards  as  shall  be  possible. 

Third— It  Is  agreed  that  the  proportion  of  petroleum  which  the  Transit  Com- 
pany Is  to  deliver  under  the  second  section  of  this  agreement,  shall  be  considered, 
as  petroleum  transported  from  Coalgrovo,  Pa.,  via  Milton,  Pa.,  to  the  Atlantic  sea- 
board, and  that  the  Railroad  Company  shall  be  entitled  to  one-half  of  the  current, 
through  rates  theron. 


LEWIS  EMERY.  JR.  SOa- 

It  is  agreed  that  whenever  the  through  rates  shall  be  so  low  that  the  Railroad 
Company  shall  suspend  the  movement  of  oil  by  its  cars  at  other  points  than  Milton, 
the  Transit  Company  shall,  during  such  suspension  not  be  bound  to  deliver  to  the 
Kailroad  Company  ajiy  oil  at  Milton. 

Fourth— All  joint  rates  for  tlie  joint  transportation  of  oil  from  any  delivery  point, 
of  the  local  pipe  division  aforesaid  to  any  refining  or  terminal  point,  shall  be  fixed- 
by  the  Railroad  Company,  subject  to  the  advice  and  concurrence  of  the  Transit  Com- 
pany. 

It  is  agreed  that  said  joint  through  rales  shall  be  uniform  to  all  parties.  The 
Railroad  Company  stipulates  that  it  will  malie  no  discrimination  whatever,  either  in 
rates  or  facilities  against  the  Transit  Company,  or  against  the  oil  which  the  said 
Transit  Company   herein  covenants  to  deliver  to  it. 

It  is  agreed  that  the  joint  through  rates  to  Philadelphia  shall  always  be  five 
cents  less  per  barrel  on  crude  oil  or  its  refined  equivalent,  than  shall  be  currently 
charged  to  New  Yorls  Harbor. 

It  is  agreed  that  the  joint  through  rates,  which  shall  be  so  fixed  from  time  to 
time,  shall  be  as  low  as  shall  be  currently  made  bet  ,veen  same  and  similar  points 
by  rival  carriers  of  petroleum,  and  shall  not  be  higher  than  an  approximate  mileage 
proportion  of  rates  current  on  petroleum  produced  south  of  Oil  City,  nor  than  rates 
from  Olean  and  similar  points. 

It  is  also  agreed  that  rates  on  refined  oil  and  other  products  of  crude  oil  shall 
be  fixed  by  the  Railroad  Company  upon   the  following  basis,  viz: 

From  railroad  stations  in  the  oil  regions  to  which  oil  is  delivered  by  local  pipes, 
the  rate  to  any  point  east  thereof  on  a  barrel  of  refined  oil,  or  other  products,  shall 
be  one  and  three-tenths  (13-10)  times  the  current  rate  on  a  barrel  of  crude  oil  to  the 
same  point. 

From  Pittsburg  the  rate  to  any  poinc  east  thereof  on  a  barrel  of  refined  oil,  or 
other  products,  shall  be  one  and  three-tenths  (1 3-10)  the  rate  currently  charged 
on  crude  oil  to  any  such  eastern  point  from  rail  points  south  of  Oil  City;  Provided, 
that  one  and  three-tenths  times  the  charges  for  moving  a  barrel  of  crude  oil  by  rail 
or  through  pipe  from  the  local  pipe  to  Pittsburg    shall    first    be    deducted    therefrom. 

From  Cleveland  and  Buffalo  the  net  rate  on  a  barrel  of  refined  oil,  or  other  pro- 
ducts, to  any  point  east  thereof,  shall  be  not  less  than  is  currently  charged  to  the 
same   point   from   Pittsburg. 

Fifth— Whenever  the  term  barrel  is  used  herein,  unless  otherwise  specified,  it 
means  45  gallons  of  crude  petroleum,  and  whenever  the  term  oil  is  used  herein, 
unless  otherwise  specified,  it  means  crude  petroleum. 

Sixth— The  Transit  Company  hereby  agrees  that  it  will  not  make  any  more 
favorable  terms  with  any  other  rail  line  connecting  with  any  of  its  pipes  than  the 
terms  which  under  this  agreement  are  given  to  the  Railroad  Company,  or  if  for  any 
reason  it  should  desire  to  do  so,  it  hereby  agrees  to  modify  this  contract  so  as  tO' 
give  the  "said  more  favorable  terms"  to  the  Railroad  Company. 

Sev-enth— All  existing  contracts  between  the  parties  hereto  shall  be  deemed  to 
have  been  accomplished,  and  shall  become  void  and  of  no  effect  upon  the  day  this 
contract  goes  into  operation. 

Eighth— This  contract  shall  take  effect  as  of  the  first  day  of  August,  1SS4,  and 
shall  continue  until  terminated  under  the  provisions  thereof.  It  may  be  terminated 
after  August  1,  1S89,  by  either  party  hereto  giving  90  days'  written  notice  to  the- 
other  of  a  desire  that  it  shall  end,  at  the  expiration  of  which  notice  it  shall  cease  and 
terminate. 

In  witness  whereof,  the  parties  hereto  have  executed  this  agreement  under  their 
corporate  seals  the  day  and  date  above  written. 

THE  PENNSYLVANIA  RAILROAD  COMPANY, 
(L.  S.)         By  FRANK  THOMSON, 

Attest:    JOHN  C.  SIMMS,  JR.,  Second  Vice-President. 

Secretary. 

J.  nil.  NATIONAL    TRANSIT    COMPANY, 

(L.  S.)  By  C.  A.  GRISCOM, 

Attest:    JOHN  BUSHNELL,  President. 
Secretary. 

Memorandum  of  Agreement,  made  this  twenty-second  day  of  August,  1SS4,  be- 
tween the  Pennsylvania  Railroad  Company  hereinafter  designated  the  Railroad  Com- 
pany, and  the  National  Transit  Company,  hereinafter  designated  the  Transit  Com- 
pany. 

Witnesseth:  That  for  considerations  mutually  interchanged  the  parties  hereto- 
hereby  agree  with   each  other  as  follows: 

Whereas,  the  parties  hereto  have  made  an  agreement  of  even  date  herewith,  in 
which  amopg  other  things  it  is  stipulated  that  under  certain  circumstances  the 
Transit  Company  shall  deliver  certain  crude  petroleum  into  cars  furnished  by  the 
Railroad  Company,  at  Milton,  Pa.,  and 


400  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

Whereas,  It  has  been  proposed  that  the  Railroad  Company  shall  contract  with 
the  Transit  Company  to  the  effect  that  the  Transit  Company  shall  transport  through 
its  pipe  lines  the  aforesaid  crude  oil,  which  under  the  o.ther  contract  aforesaid,  it 
has  undertaken  to  deliver  into  the  cars  of  the  Railroad  Company  at  Milton, 

!Nuw,   therefore,   this  agreement  witnesseth: 

First — The  Railroad  Company  agrees  that  instisad  of  delivering  said  crude  oil  to 
raid  cars  at  Milton,  the  Transit  Company  shall  transport  the  same  through  its  pipes 
to  destination,  and  the  Transit  Company  undertakes  and  agrees  to  do  such  transpor- 
tation. It  is  mutually  agreed  that  the  compensation  to  tlie  Transit  Company  for 
doing  said  v/ork  shall  be  as  follows: 

Whenever  the  through  rate  for  transporting  a  barrel  of  crude  petroleum  from 
Olean  to  Philadelphia  shall  be  40  cents,  the  Transit  Company  shall  receive  eight 
cents  per  barrel  as  such  compensation  for  so  much  of  said  oil  as  under  the  provisions 
hereof  shall   be  considered   as   Philadelphia  oil. 

For  each  five  cents  of  increase  or  diminution  in  said  rates  from  Olean  to  Phila- 
delphia, the  said  compensation  on  Philadelphia  oil  shall  be  increased  or  diminished 
one  cent  per  barrel. 

Provided,  however,  that  the  Transit  Company  shall  not  be  obliged  to  accept  less 
than  six  cents  per  barrel,  and  shall  not  receive  mors  then  10  cents  per  barrel  on 
such  Philadelphia  oil. 

It  is  agreed  that  the  said  compensation  on  the  oil,  which  under  the  provisions 
hereof  is  to  be  deemed  New  York  oil,  shall  be  one  cent  per  barrel  greater  than  it 
currently  shall  be  on  Philadelphia  oil. 

Whenever,  from  time  to  time,  as  the  said  joint  through  rates  shall  be  so  low, 
that  the  said  minimum  compensation  to  the  Transit  Company  of  six  cents  per  bar- 
rel, shall  be  as  much  or  more  than  the  Railroad  Company's  share  of  said  joint 
through  rates,  this  contract  may,  at  the  option  of  either  party  hereto,  be  suspended 
during  all  or  any  part  of  the  time  such  low  rates  shall  prevail.  During  such  sus- 
pension the  aforesaid  other  contract  shall  alone  remain  in  force,  but  whenever,  and 
from  time  to  time,  as  said  joint  through  rate  siiall  again  be  high  enough  to  make  the 
said  minimum  compensation,  under  said  sliding  scale,  less  than  the  said  share  of  said 
joint  through  rates,  this  contract  shall  again  resume  its  force  and  effect. 

Second — The  Transit  Company  agrees  to  account  for  and  pay  to  the  Railroad 
Company  on  or  before  the  twentieth  of  each  month  the  latter's  share  of  the  joint 
rates  on  joint  business  via  Milton  (as  provided  in  said  other  contract)  during  the 
next  preceding  month,  first  retaining,  however,  the  proportion  of  such  share,  which 
it  is  liereinbefore  agreed  the  Transit  Company  is  to  have  for  its  services  in  pumping 
said  oil  to  the  seaboard.  ; 

It  is  agreed  that  all  such  joint  business  shall  be  considered  as  having  trans- 
ported from  Coalgrove  via  Milton,  Pa.,  to  the  Atlantic  seaboard,  and  that  it  shall  be 
considered  as  having  gone  either  to  Baltimore,  Philadelphia  or  New  York  or  partly 
to  each.  The  proportion  thereof  which  has  constructively  gone  to  New  York  shall  be 
determined  upon  the  following  basis: 

The  total  amount  of  oil  transported  in  any  month  by  the  Railroad  Company  to 
New  York  shall  be  compared  with  50  per  centum  of  the  total  oil  w'hich  the  Railroad 
Company  is  entitled  to  carry  in  said  month  under  the  aforesaid  other  agreement.  If 
the  amount  which  has  been  in  such  month  carried  by  cars  to  New  York  shall  be  less 
than  50  per  centum  then  the  difference  shall  be  considered  as  having  been  moved  by 
the  pipe  to  New  York  at  New  York  rates,  and  shall  be  accounted  for  accordingly. 
The  remainder  of  the  oil  via  Milton  shall  be  accounted  for  at  Philadelphia  rates. 

This  contract  shall  commence  and  terminate  simultaneously  with  said  other  con- 
tract. 

Witness  the  corporate  seals  of  said  parlies  duly  attested  the  day  and  date 
above  written. 

THE  PENNSYLVANIA  RAILROAD   COMPANY, 
(L.   S.)  By  FRANK  THOMSON, 

Attest:    JOHN    C.    S1>IMS,  Second   Vice-President. 

Secretary. 

THE  NATIONAL    TRANSIT    COMPANY, 

(L.    S.;  By  C.  A.  GRISCOM, 

Attest:    JOHN  BUSHNELL,  President. 
Secretary, 

The  WITNESS.  Mr.  Chairman  and  gentlemen:  According  to  the  pro- 
visions of  this  contract,  first,  the  rate  must  be  maintained  as  established  by 
the  pipe  lines,  which  was  an  open  rate  of  45  cents.  The  contract  was  made 
for  the  purpose  of  maintaining  rates.  The  outside  refinery  was  compelled 
before  the  construction  of  the  United  States  Pipe  Line  to  ship  all  of  its  oil 
by  rail  to  the  sea  for  export.  The  reason  that  this  contract  was  made,  guar- 
anteeing 26  per  cent,  of  the  tonnage  to  the  coast,  was  that  the  rate  should 
be  maintained  according  to  its  provisions.     If  there  was  not  26  per  cent,  of 


LEWIS  EMERY,  JR.  401 

oil  shipped  over  the  roads,  the  Standard  Oil  Company  was  obliged  to  make 
that  up  in  dollars  and  cents  for  the  payment  of  the  freight  at  the  rail  rates. 
Now,  the  point  is  this:  The  cost  of  collecting  oil  from  the  well  to  the  rail- 
road, by  what  we  term  the  gathering  lines,  to  the  storage  tanks,  is  from 
three  to  five  cents  a  barrel.  1  speak  intelligently  upon  that  point,  because  I 
am  a  collector  of  oil  myself  by  a  number  of  hundreds  of  miles  of  line  be- 
longing to  myself — *five  cents  a  barrel  gathering  charge.  The  ruling  charge 
to  New  York,  or  rather  to  a  point  in  New  Jersey,  50  miles  from  New  York 
(and  you  could  carry  it  there  at  the  same  cost  because  we  could  pump 
there),  is  about  five  cents  a  barrel;  or  we  gather  and  deliver  oil  in  New 
York  from  the  wells  at  a  cost  not  exceeding  10  cents  a  barrel  at  the  present 
time.  Now,  then,  if  this  contract  was  out  of  the  way,  as  has  been  held  many 
times,  the  railroads  would  seek  that  freight,  the  same  as  they  go  and  seek 
your  freight  at  present  to  carry  to  Chicago,  as  they  did  a  number  of  per- 
sons. But  this  practically  compels  them  to  keep  the  rate  up,  and  it  compels 
the  outside  refiners  to  pay  this  enormous  rate  of  freight,  if  you  call  it  such, 
while  the  Standard  Oil  Company  deliver  all  their  oil  in  New  York  at  the 
cost  not  to  exceed  10  cents  a  barrel.  By  the  railroad  a  barrel  of  oil  has  to 
pay  45  cents,  and  the  Standard  does  that  by  guaranteeing  26  per  cent,  of 
the  tonnage  to  the  several  railroads,  which  are  classed  as  oil  railroads.  Now, 
then,  the  by-products  of  petroleum  are  just  about  what  this  26  per  cent, 
would  amount  to.  Now,  they  are  not  by-products — there  is  benzine,  and 
there  is  gasoline  and  there  is  tar.  The  by-products  come  from  the  tar.  but 
anyliow  there  is  in  the  neighborhood  of  26  per  cent,  that  they  couldn't  pump 
through,  because  it  consists  of  lubricating  oil  and  tar  and  benzine,  etc.;  but 
the  intent  of  this  is  to  maintain  rates  that  there  may  be  no  competition 
between  the  railroads  and  the  National  Transit  Company  as  a  carrier.  That 
is  what  1  object  to,  and  that  is  what  the  contract  says.  It  is  a  combination 
which  is  illegal. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Then  we  understand  from  your  tes- 
timony that,  having  this  amount  as  by-products,  that  they  ship — benzine,  tar, 
etc. — therefore  they  do  not  ship  any  crude  or  refined  oil  by  rail  in  conse- 
quence of  this  contract?  A.  No,  sir;  the  railroads  would  have  to  have  this 
carrying  anyhow;  they  would  have  to  carry  the  benzine,  and  they  would 
have  to  carry  the  lubricating  oil.  You  can't  pump  it  and  you  can't  pump  the 
wax.  There  is  26  per  cent,  of  oil  that  you  couldn't  get  through  the  pipe  line 
if  you  wanted  to. 

Q.  (By  Mr.  CLARKE.)  Then,  as  I  understand,  you  are  not  complaining 
at  all  as  to  the  percentage  or  apportionment  of  this  freight?    A.    Oh,  no. 

Q.  You  are  finding  fault  that  the  price  is  too  high,  and  that  it  is  an 
agreement  to  maintain  rates?  A.  Oh,  no;  I  am  finding  fault  because  they 
cut  off  this  competition;  they  have  cut  off  every  man  in  the  transportation 
of  oil  products.  The  railroads  have  carried  this  stuff  as  low  as  eight  cents 
a  barrel  *and  they  can  carry  it  and  make  money.  I  paid  for  several  years 
only  33  cents  a  barrel  to  carry  this  stuff  through,  and  at  the  present  time 
the  rate  on  this  product  is  16%  cents  a  hundred,  making  52  9-10  cents  a  barrel 
for  oil  in  bulk.  The  railroads  have  raised  the  rates,  and  then  in  barrels  you 
laave  to  pay  for  the  weight  of  the  barrels,  which  raises  the  total  to  something 
like  66  cents. 

Q.  Then,  you  criticise  this  partly  because  the  rate  is  too  high?  A.  Yes, 
sir;  partly  on  that  ground;  it  has  been  raised  from  the  original  45-cent 
agreement. 

Q.  (By  Mr.  KENNEDY.)  Senator,  that  contract  was  entered  into  three 
years  before  the  passage  of  the  interstate  commerce  law?    A.  Yes,  sir. 

Q.  Have  you  any  evidence  that  it  is  still  in  force?  A.  *Yes,  sir;  the 
evidence — well,  I  have  no  evidence,  only  I  know  it  has  never  been  repealed;  at 
least  I  say  I  know  it;  I  only  know,  well,  I  say.  from  the  admission  of  a  rail- 
road man  who  said  that  it  was.  He  came  to  my  place  and  invited  me  to  go 
to  a  certain  point  and  establish  a  loading  station  to  ship  oil  by  water  to 
New  York.  Well,  it  is  the  Buffalo,  Rochester  &  Pittsburg  Railroad.  I  went 
to  Rochester  and  met  the  gentleman.     I  picked  out  a  location  for  our  station 


♦Black   faced   type  indicates   matter  omitted,  in  ttie  course  of  editing,   from   the 
official  report. 

26 


402  REVIEW  OP   TESTIMONY— INDUSTRIAL  COMMISSION. 

and  made  arrangements  with  him  for  the  transportation  of  my  oil  to  the 
Erie  Canal.  The  station  was  to  be  built  on  their  own  land  with  a  nominal 
rentage,  which  was  agreed  upon,  and  the  transportation  of  that  commodity 
Irom  Bradlord  was  to  go  that  way.  And  he  then  said:  "I  would  like  to  have 
you  build  a  pipe  line  down  to  a  place  called  Irvings,  and  bring  the  oil  down 
to  the  Rochester  &  Pittsburg  Railroad,  and  let  me  draw  it  up  here  to  your 
factory,"  all  of  which  I  agreed  to.  He  said:  "They  don't  see  fit  to  recognize 
us  as  an  oil  road,  and  I  am  going  to  do  some  of  this  business.  "  All  at  once 
he  began  to  be  recognized  as  an  oil  road,  and  he  was  to  get  his  percentage 
under  this  contract.  My  station  was  not  built;  my  pipe  line  was  not  built 
to  bring  the  oil  on  his  road.  That  was  two  years  ago,  and  this  contract  was  in 
existence  at  that  time.  From  this  circumstance  I  believe  it  to  be  in  exist- 
ence now. 

Q.  (By  Mr.  CLARKE.)  Was  that  contract  made  for  a  term  of  years  or 
was  any  limit  named  under  it?  A.  I  don't  know  that  there  is.  *l  did  not 
read  the  articles;  I  did  not  notice  tlie  reading  of  it;  just  let  us  see.  I  think 
it  is  even  perpetual. 

Vice-Chairman  PHILLIPS.  Has  any  gentleman  of  the  commission  any 
ftirther  questions  to  ask  Senator  Emery? 

Mr.  RATCHFORD.  Yes,  sir;  before  he  closes  I  have  a  question  to  ask 
the  Senator. 

Q.  (By  Mr.  FARQUHAR.)  I  would  like  to  clear  up  one  matter  for  the 
benefit  of  the  record  of  the  commission,  and  I  have  no  question  to  ask 
further  than  that.  In  a  part  of  your  testimony,  early  in  this  session,  you. 
read  the  testimony  of  Peter  H.  Watson  in  respect  of  the  South  Improvement 
Company  contracts?     A.  Yes,  sir. 

Q.  And  you  read  from  a  pamphlet  here,  which  of  course  is  not  authority 
for  the  commission.    A.  But  that  was  evidence;  it  was  on  the  files. 

Q.  But  we  want  to  know  where  the  evidence  came  from,  who  took  it,  etc. 
A.  You  will  find  it  in  the  report  of  the  Congressional  investigation  of  1870 
and  1871.     *l  cannot  tell  you  anything  further  about  it. 

Q.  There  is  the  report  of  this  committee,  and  it  seems  this  was  before 
the  sub-committee  on  commerce.     A.     I  don't  know  what  it  was. 

Q.  This  testimony  that  you  have  read — now,  I  want  the  correct  date  of 
this.  This  may  be  an  important  matter.  Your  own  reporters  may  have  come 
here  to  take  that  testimony  here  in  Washington.  They  had  an  interview 
with  the  Congressional  committee  on  the  25th  of  the  month,  at  which  time 
a  sub-committee 

The  WITNESS.     What  year  was  that? 

Mr.  FARQUHAR.  1872;  at  which  time  a  sub-committee  was  appointed 
to  take  the  testimony  which  shotild  be  offered,  and  subpoenas  were  issued 
for  Watson  and  Lockhart.  Of  course,  if  this  is  simply  a  printed  pamphlet 
of  the  official  record  of  Congress,  we  want  to  know  it.  A.  You  have  your 
official  record  here;  you  have  it  in  the  library — the  investigation  of  Con- 
gress.   I  haven't  seen  it,  but  it  is  here,  the  same  as  the  investigation  of  1888; 

Q.  And  this  was  April  5,  1872.  A.  I  say  it  is  the  same  as  the  investiga- 
tion of  1888.  It  should  be  on  file,  because  it  was  an  investigation  by  Con- 
gress which  took  up  that  question. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Is  it  in  the  Hepburn  report?  A. 
No,  sir;  this  was  in  1871,  and  the  Hepburn  report  was  in  1879.  It  was  the 
first  investigation  that  was  ever  instituted. 

Q.  (By  Mr.  KENNEDY.)  You  said  yesterday  that  you  did  not  know 
who  had  taken  the  testimony.  That  is  what  he  wants  to  find  out — what 
house  of  Congress  and  what  committee? 

Q.  (By  Mr.  FARQUHAR.)  That  testimony  ought  to  show  the  commis- 
sion officially  where  it  is  from.  I  merely  suggest  that  to  you.  A.  If  you  will 
give  me  access  to  your  library,  I  will  find  it. 

Vice-Chairman  PHILLIPS.  I  will  ask  Mr.  Boyle  to  make  a  statement 
about  that — simply  for  information  on  this  question. 

Q.  (By  Mr.  P^ARQUHAR.)  As  it  is  presented  here  it  is  unofficial.  A.  I 
refer  you  to  the  library. 


"Black   fuced   type   indicates   matter   omitted,   in  the  course  of  editing,   from   the 
official  report. 


LEWIS  EMERY,  JR.  403 

Vice-chairman  PHILLIPS.     Mr.  Boyle  will  tell  you  about  that. 

Mr.  BOYLE.  I  have  been  searching  for  that  report  all  through  the 
books,  and  I  haven't  been  able  to  locate  it.  But  from  the  newspaper  reports 
at  the  time,  it  was  a  sub-committee  of  Congress. 

Mr.  KENNEDY.    In  the  spring  of  1872? 

Mr.  BOYLE.  Beginning  on  the  last  day  of  March,  in  1872,  and  extend- 
ing at  various  dates  through  April.    I  think  there  were  about  three  hearings. 

Q.  (By  Mr.  FARQUHAR.)  The  chairman  of  the  committee  seems  to 
have  been  a  gentleman  known  to  all  of  us — that  is  C.  W.  Gilfillan.  A.  I 
think  he  was  a  member  of  Congress  at  that  time. 

Q.  And  that  is  the  identification  you  make?  A.  That  is  the  identifica- 
tion that  I  make — a  Congressional  report  that  was  published  at  that  time.  I 
can  read  the  testimony  now  as  I  have  it  here.  I  know  that  it  was  an  investi- 
gation of  Congress,  and  I  suppose  it  is  on  file,  the  same  as  all  other  books 
are  on  file;  it  should  be. 

Q.  (By  Vice-Chairman  PHILLIPS.)  You  do  not  know,  of  your  own 
knowledge,  that  that  is  true;  but  if  it  is  found  by  this  commission  on  file, 
you  want  it  to  be  considered  as  a  part  of  your  evidence?  A.  Yes,  sir;  I  do 
know  that  the  investigation  took  place,  because  I  was  in  Washington  myself 
in  1872,  and  I  know  the  investigation  took  place,  and  I  know  I  read  these 
proceedings,  and  I  know  I  have  a  complete  copy  of  it;  a  paper  file  of  it  at 
home  in  my  scrap  books.  I  think  I  can  produce  the  investigation;  I  think 
I  can  produce  the  book;  I  think  I  can  produce  the  stuff  itself,  and  if  I  can 
I  shall  be  very  glad  to  get  it  here. 

Mr.  FARQUHAR.  I  should  like  to  make  a  statement,  from  Mr.  Gilfil- 
lan's  own  report — that  we  all  know  is  read  everywhere.  It  seems  that  these 
people  took  these  reports  themselves;  they  came  down  here  to  present  this 
matter  to  the  Committee  on  Commerce,  and  they  had  their  own  reporter. 
The  question  is,  was  it  ever  reported  oflicially  by  this  sub-committee. 

The  WITNESS.  Well,  does  a  Congressional  committee  go  into  a  room 
to  make  a  report  without  a  stenographer? 

Mr.  FARQUHAR.     Sometimes,  and  quite  frequently. 

The  WITNESS.     It  is  the  straneest  act  I  ever  heard  of,  then. 

*IVir.  KENNEDY.  Sometimes  they  take  testimony  and  don't  pri it  it 
even. 

The  V/ITNESS.  And  to  have  taken  the  testimony  and  filed  it  and  not 
printed  it!      I  am  talking  from  Congressional  experience. 

Mr.  FARQUHAR.  The  fact  is,  Mr.  Watson's  testimony  is  a  complete 
contradiction  to  other  testimony  in  respect  to  the  South  Improvement  Com- 
pany, and  in  that  way  it  seerr.s  very  valuable.  Now,  the  question  is  the 
other  side's  testimony. 

The  WITNESS.  Can  you  produce  any  testimony  contradicting  him  ex- 
cept what  has  been  given  upon  the  stand? 

Mr.  FARQUHAR.     I  am  not  discussing  where  the  testimony  came  from. 

*The  WITNESS.     Well,  I  would  like  to  know  that,  and  I  will   look  It  up. 

Mr.  FARQUHAR.  I  think  the  origin  of  the  testimony  should  be  ascer- 
tained as  this  is  not  verified. 

The  WITNESS.  Well,  I  rely  upon  that  testimony  as  being  valid,  and  I 
think  the  investigation  can  be  produced.  It  is  dated  from  Washington  and 
I  know  the  investigation  took  place  and  I  know  Mr.  Gilfillan  was  on  the 
commission;  I  don't  know  whether  he  was  here  on  that  day  or  not. 

Q.  (By  Vice-Chairman  PHILLIPS.)  You  said  that  on  your  information 
and  belief,  you  believed  this  testimony  to  be  true— this  transcript  of  it.  A. 
Just  exactly  as  I  believe  my  own  testimony  to  be  true. 

*Q.  (By  Vice-Chairman  PHILLIPS.)  It  will  be  competent  to  receive  it 
on  that  ground;  on  the  ground  that  that  portion  of  your  oath  says  that  from 
information  and  belief,  you  believe  your  testimony  to  be  true.  A.  Yes,  sir. 
It  is  very  unfortunate  that  it  is  not  here.  I  want  to  say  to  you  right  here 
that  of  this  testimony  of  1888,  there  were  several  thousand  volumes  printed, 
and  I  understand  there  are  only  300  of  them  in  circulation  to-day.  I  didn't 
get  one  myself  until  just  fortunately  I  came  across  one  the  other  day  of  a 


♦Black  faced   type  indicates   matter  omitted,  in  the  course  of  editing,   from   the 
ofRcial  report. 


404  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

friend  who  had  two.  Nobody  knows  how  that  evidence  was  spirited  away 
from  here,  but  it  is  gone. 

Q.  (By  Mr.  FARQUHAR.)  1888?  A.  Yes,  sir;  there  are  only  300  vol- 
umes that  are  out.     I  sent  to  Congressman  Stone,  from  our  district,  for  one. 

*Mr.  FARQUHAR.  Well,  I  think  there  are  some  old  booksellers  that  will 
sell  you  any  amount  you  want  of  the  Bacon  volume;  there  is  no  scarcity  of 
that  volume. 

Q.  (By  Mr.  RATCHFORD.)  I  want  to  refer  briefly  to  the  question  of 
rebates  and  discriminations.  We  went  over  that  pretty  fully,  but  we  inter- 
rupted the  Senator  as  little  as  possible.  Referring  to  that  subject.  Senator, 
I  understand  from  your  testimony  that  you  make  the  broad  statement  that 
if  the  books  of  the  railway  company  could  be  brought  into  court  some  of  the 
officials  would  be  sent  to  prison.  A.  If  you  can  send  anybody  to  prison  for 
violating  the  interstate  commerce  act.  I  am  not  positive  whether  there  is  a 
criminal  clause  attached  to  it  or  not. 

Q.  If  you  wish  to  modify  that  statement,  you  can.  A.  I  do  not  wish  to 
modify  it,  if  there  is  any  criminal  clause  in  the  law.  I  will  let  it  stand.  If 
it  is  in  the  law,  I  stick  to  my  statement. 

Q.  Did  I  not  also  understand  in  the  previous  part  of  your  testimony  that 
you  caused  one  or  more  of  these  companies  to  produce  their  books  in  court? 
A.    The  Pennsylvania  Railroad  Company. 

Q.  The  Pennsylvania  Railroad  Company?     A.  That  is  all. 

Q.  And  they  are  in  the  courts  of  Clarion  county?  A.  In  McKean  county, 
where  I  lived. 

Q.  You  said  yourself  that  you  produced  convicting  evidence.  A.  They 
didn't  examine  the  books  at  all. 

Q.  Why?     A.  Because   the   case   was   settled. 

Q.  Why  did  you  settle  it?  A.  Well,  I  told  you  yesterday  that  my  part- 
ners got  tired  of  fighting.  We  had  been  at  it  for  three  or  four  years  and 
$35,000  was  offered  and  we  took  the  money.     The  claim  was  $107,000. 

Q.  And  you   settled   for  $35,000?     A.  And   costs. 

Q.  Now,  I  want  to  ask  you  in  that  connection,  if  the  discrimination 
jiractised  by  railroads  and  rebates  that  are  given  by  railroads  are  so  in- 
jurious to  the  interests  that  you  represent  and  to  all  other  interests,  why  you 
settled  it  for  $35,000;  or  whether  you  believed  yourself  justified  in  settling 
for  any  sum?  A.  *Because  1  was  too  poor  to  carry  it  on.  Onv  ^ssoriation 
was  too  poor  to  carry  it  on.  They  could  have  gone  on  and  could  have  ex- 
tended it  for  ten  years,  *and  kept   it   In  court  all  that  time. 

Q.  And  yet  you  are  satisfied,  and  have  been  satisfied,  that  convicting 
evidence  would  have  been  adduced  in  court  had  the  case  been  investigated? 
A.  We  got  all  the  evidence  that  we  wanted  for  them  to  settle  upon.  You 
imderstand,  we  tried  to  get  the  books  into  court  in  the  early  history  of  the 
trial,  but  we  couldn't  get  an  order  when  it  was  before  the  master,  in  taking 
this  testimony,  because  he  hadn't  the  power,  and  when  we  got  them  before 
the  McKean  county  court,  the  Circuit  Court  judge  having  the  power,  we 
demanded  the  books  and  papers.  He  issued  that  order  and  the  books  came, 
and  if  my  disposition  had  have  been  followed,  even  in  the  depressed  finan- 
cial condition  that  I  was  in,  if  I  had  had  my  way  about  it  I  would  have  ex- 
amined every  single  one  of  those  three  tons  of  books  that  came  in.  But 
I  had  a  partner.  Mr.  Logan,  who  had  lost  every  dollar  he  had  in  the  world 
in  speculation,  and  he  said:  "This  money  will  do  me  good,  and  I  would 
like  to  have  you  let  up." 

Q.  You  assign  then,  as  a  cause  for  settling  the  trouble,  the  fact  that  the 
association  represented  by  you  was  too  poor  to  fight  it?  A,  It  was  the 
dilatory  action  of  the  courts. 

*Q.  Well,  that  covers  the  point.  Now,  there  is  another  matter  that  I  want 
to  call  your  attention  to.  You  made  a  statement  this  morning  that  I  do  not 
believe  you  intended  to  make;  yet  it  is  a  matter  of  record,  and  if  you  did  it 
without  intention  I  want  to  give  you  the  opportunity  to  correct  it.  A.  That 
is  very  kind  of  you  indeed. 


*Rlack   faced   type   indicates   matter  omitted,   in  the  course  of  editing,   from  the 
official  report. 


LEWIS  EMERY,  JR.  405 

Q.  You  stated  that  rebates  had  been  paid  prior  to  1872,  "and  you  ack- 
nowledged it,"  addressing  the  commission.  I  don't  know  whether  you  ad- 
dressed any  member  of  the  commission,  or  whether  you  addressed  the  com- 
mission as  a  whole.  I  want  to  say,  as  one  commissioner,  that  I  make  no 
such   acknowledgement.     A.   I    don't   understand  you,    Mr.   Ratchford. 

Mr.  RATCHFORD.  I  make  no  acknowledgement  that  rebates  were  paid 
prior  to  1872,  and  I  haven't  heard  the  acknowledgement  made  by  any  one  of 
the  commissioners. 

The  WITNESS.  Really,  I  don't  understand  you,  Mr.  Ratchford.  I  can- 
not  understand  what  you   are   getting   at. 

Q.  (By  Mr.  RATCHFORD.)  You  don't  understand  my  question?  A.  No, 
frankly   I   do  not. 

Q.  In  your  testimony  this  morning  you  made  the  statement  that  re- 
bates had  been  paid  up  to  1872;  and  addressing  the  commission,  as  you  did, 
you  stated:  "And  you  acknowledged  that  such  was  the  case."  A.  I  said 
that  rebates  had  been   paid  previous  to   1872. 

Q.   Or  up  to  1872?     A.   Yes,  sir. 

Q.  And  addressing  the  commission,  you  stated  that  "You  acknowledged 
such  to  be  the  case,"  or  words  to  that  effect.  Now,  I  wish  to  give  you  an 
opportunity  at  this  point,  if  you  made  that  statement  without  consideration, 
to  correct  it,  and  to  state,  if  you  please,  for  myself,  as  one  of  the  commis- 
sioners, that  I  want  to  disclaim  any  acknowledgement;  I  want  to  disclaim 
that  I  acknowledged  any  such  thing.  A.  I  don't  know  what  you  are  getting 
at,  I   cannot  understand. 

Q.  Well,  I  will  put  it  in  this  way:  Do  you  admit  having  made  that 
statement?     A.   I   said  that  rebates  were  paid  before  1872. 

Mr.  RATCHFORD.  And  you  stated  to  the  commission  that  they  ack- 
nowledged   it. 

The   WITNESS.     That  who  acknowledged  it? 

Mr.   RATCHFORD.     That  the  commission   acknowledged   it. 

Vice-Chairman    PHILLIPS.      Not   the   commission. 

The  WITNESS.     I  still  don't  understand  what  you  are  driving  at. 

Mr.    RATCHFORD.      Well,    I    can't  talk   any  plainer,    Senator. 

The  WITNESS.  I  do  not  really  understand.  Am  I  so  dumb  that  1  can't 
understand? 

Mr.   RATCHFORD.     Well,    I    cannot  talk   any   plainer. 

The   WITNESS.     Well,   I   don't  know  what  you   mean,  sir. 

Mr.  RATCHFORD.  You  addressed  the  commission  and  you  said  that 
rebates  had  been  paid  prior  to  1872,  "and  you  gentlemen  acknowledge  it." 

Vice-Chairman   PHILLIPS.     The  chair  may  explain   that. 

The   WITNESS.      Weil,    it    is    merely   technical,   anyhow. 

Mr.  RATCHFORD.  Well,  it  may  be  technical,  but  still  I  don't  want  to 
be  put  on  record  that  way. 

The  WITNESS.     Well,   let  them  correct  the  record,  then. 

Mr.  RATCHFORD.  I  want  to  give  you  the  opportunity  to  correct  It,  I 
want  to  say  that  I  make  no  such  acknowledgment  and  make  no  such  ad- 
mission. If  you  were  addressing  a  single  member  of  the  commission  at  that 
point  it  should  be  known,  and  I  want  to  give  you  an  opportunity  of  making 
the  correction;   that  is  my  purpose   in   raising  the  question. 

Mr.  KENNEDY.  I  think  that  if  Mr.  Emery  made  such  a  statement  this 
morning  he  would  perhaps  have  been  justified  in  making  it,  because  at  least 
three  members  of  the  commission  said  in  referring  to  the  testimony  which 
he  was  bringing  out  connected  with  the  rebates,  prior  to  1887,  when  the  inter- 
state commerce  law  was  passed,  that  there  was  no  dispute  as  to  the  practice 
of  giving  rebates  prior  to  that  time.  I  made  that  remark.  Mr.  Livingston 
said  something  of  the  sort  as  well  as  Mr.  Clarke. 

Mr.    RATCHFORD.      That  was   not   acknowledging  they    had    been    paid. 

Mr.  KENNEDY.  That  was  not  acknowledging  they  had  been  paid,  but 
the  commissioners — several  of  them — made  that  remark — that  there  was  no 
dispute  about  the  rebates  having  been  paid  prior  to  1887. 


*Black  faced  type  indicates  matter  omitted,  in  the  course  of  editing,  from  the 
official  report. 


406  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

*The  WITNESS.  I  cannot  understand  yet  what  Commissioner  Ratchford 
is  trying  to  get  at.  I  may  have  used  "the"  and  should  have  used  "an,"  but 
I  cannot  understand  what  you  are  driving  at,  and  I  cannot  see  anything  in 
it  anyhow. 

Mr.  RATCHFORD.  The  position  is  this:  I  will  admit  that  it  is  technical, 
yet  it  might  compromise  this  commission,  and  I,  for  one,  don't  want  to  be 
compromised.  I  have  given  you  the  credit  by  saying  that  I  believed  it  was 
unintentional  on  your  part,  and  I  believe  that  yet;  but  I  simply  want  the 
statement  corrected. 

The  WITNESS.  If  I  made  a  mistake  in  the  language,  I  have  no  objec- 
tion to  correcting  it. 

Mr.  RATCHFORD.  It  is  not  a  matter  of  objection  or  misunderstanding, 
but  just  what  you  said;  and  I  want  to  give  you  the  opportunity  of  correct- 
ing it. 

The  WITNESS.  I  shall  correct  it,  if  you  wish  it;  but  I  cannot  see  that 
I    made  any   mistake. 

Mr.  RATCHFORD.  It  is  not  a  matter  of  my  wishes;  it  is  just  that  this 
commission   has  stated — what  ar;y  member  has  stated. 

The  WITNESS.     Stated  what? 

Mr.  RATCHFORD.  That  we  admitted  that  rebates  had  been  paid  prior 
to   1872. 

Vice-Chairman  PHILLIPS.  If  you  understood  that  the  whole  commis- 
sion acknowledged  it,  Mr.  Ratchford  says  that  he  did  not  acknowledge  it. 

The  WITNESS.  You  knew  just  as  well  as  I  do  that  I  did  not  know  you, 
and  did  not  know  that  you  ever  shipped  a  barrel  of  oil,  and  I  would  not  have 
made  that  remark  for  anything  if  I  had  thought  it  was  objectionable.  By 
Heavens,  it  is  the  furtherest  from  me — and  if  1  did,  it  was  simply  a  slip  of  the 
tongue,  the  same  as  you  would  do,  if  you  were  making  some  remark.  But 
that  is  all   right. 

Mr.  RATCHFORD.  That  will  be  stricken  out — that  the  commission  ack- 
nowledged  it;   because  the  commission  would   not  have  acknowledged   it. 

Vice-Chairman  PHILLIPS.  Without  objection  that  will  be  stricken  from 
the  testimony  if  it  appears  in  that  way.  Is  there  any  other  gentleman  who 
has  any  question  to  ask? 

The  WITNESS.  I  would  like  to  ask,  Mr.  Chairman,  if  the  reporter  has 
got  that?  If  I  did  say  it,  it  was  unintentional.  I  cannot  see  wherein  I  have 
brought  any  reproach  upon  the  commission.  It  is  the  furtherest  thing  from 
me  in  the  world. 

Vice-Chairman  PHILLIPS.  Mr.  Ratchford  simply  stated  that  you  had 
said  that  the  whole  commission  had  acknowledged  this.  Somebody,  per- 
haps, said  there  was  no  dispute  as  to  that. 

The  WITNESS.     On  the  payment  of  rebates. 

Vice-Chairman  PHILLIPS.  But  Mr.  Ratchford  and  a  number  of  others 
have  no  knowledge  one  way  or  another,  and  would  not  say  that  they  had 
admitted  it.  Now,  is  there  any  other  gentleman  who  has  any  further  ques- 
tions to  ask? 

Q.  (By  Mr.  CLARKE.)  Just  one  question  if  he  can  answer  it  in  a  sen- 
tence, otherwise  he  need  not  answer  it.  Are  you  able  to  state  whether  the 
condition  of  the  oil  business  generally  is  more  or  less  prosperous  now  than 
it  was  two  years  ago?  A.  I  think  it  is  more  prosperous  now,  from  the  fact 
that  all  the  refineries  in  the  country  are  running;  there  is  an  enormous  de- 
mand for  goods  and  the  production  of  oil  is  not  adequate,  at  the  present 
time  in  New  York  and  Pennsylvania,  to  the  demand.  That  is  one  more  rea- 
son for  the  advance  in  the  profits  of  petroleum.  Every  factory  and  every 
spindle  is  running  and  every  coal  mine  and  every  iron  mine;  there  Is  an 
enormous  demand  for  goods.  We  could  sell  from  my  factory  five  times  as 
much  as  I  can  make,  if  T  had  it,  and  at   good   profits. t 

Q.  (By  Mr.  FARQUTTAR.)  *Now,  Senator,  you  can  answer  this  or  not, 
just  as  you   please.      I   would    like   you   to   answer  just  one   question.     Have 


'Black  faced  type  Indicates  matter  omitted,  In  the  course  of  editing,  from  tlio 
official  report. 

tThis  statement  indicated  that  Mr.  Kmery  was  not  suffering  from  any  restric- 
tion of  his  market  In  the  sale  of  refined  oil. 


LEWIS  EMERY,  JR.  407 

you  frequently,  in  your  own  business,  enjoyed  rebates?  A.  Never.  Now, 
let  me  modify  that  where  I  say  never.  In  my  business,  previous  to  1872,  in 
the  refinery  at  Titusville,  Pennsylvania,  rebates  were  a  common  thing;  but 
we  were  young  and  new  in  the  commercial  world,  and  the  fellows  in  Cleve- 
land and  Pittsburg  had  been  in  it  longer.  We  had  had  very  little  experience, 
and  we  didn't  seem  to  make  very  much  money  and  we  were  running  full 
tilt  with  other  wells  and  other  shippers,  and  everything,  and  we  began  to 
look  about  to  see  what  was  the  matter.  We  went  to  Pittsburg,  and  we 
learned,  to  our  astonishment,  that  certain  concerns  were  getting  25  cents  a 
barrel,  and  we,  being  large  shippers,  demanded  that  it  be  granted  to  us — 
away  back  in  1870 — and  we  were  granted  25  cents  a  barrel,  and  still  we 
got  on  to  the  fact  that  some  refiners  were  receiving  75  cents  and  some  other 
refiners  were  receiving  50  cents  a  barrel  right  at  that  time.  The  rate  at 
that  time  was  in  the  neighborhood  of  $1.50,  and  oil  can  be  carried  at  a  profit 
to-day  at  25  cents;  but  from  that  time  to  this,  no. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Following  that  up,  have  you  in 
recent  years  received  rebates?    A.  No,  sir;  none. 

Q.  (By  Vice-Chairman  PHILLIPS.)  For  how  many  years?  A.  No,  sir; 
not  since  1872;   except  the  rebates  we  got  on  oil  by  law. 

Q.  (By  Vice-chairman  PHILLIPS.)  Not  since  1872?  A.  And  I  state 
here  that  the  president  of  the  Pennsylvania  denies  giving  any  and  the  gen- 
eral freight  agent  denied  giving  any,  but  the  auditor  and  the  bookkeeper  ad- 
mitted it. 

Q.  (By  Vice-Chairman  PHILLIPS.)  I  have  been  requested  to  ask  Sena- 
tor Emery  a  question.  Mr.  Logan  was  one  of  the  parties  to  the  South  Im- 
provement   Company,    I    believe?     A.  Yes,    sir. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Now,  is  he  the  same  Logan  who 
was  a  partner  of  yours  in  Philadelphia  in  recent  years?  A.  No,  sir;  Al.  H. 
Logan  was  my  partner,  and  the  two  Logans  that  were  connected  with  the 
South  Improvement  Company  were  William  P.  and  John  B.  Logan,  both  of 
whom  are,  at  the  present  time,  living;   but  Alfred,  my  old  partner,  is  dead. 

Q.  (By  Vice-Chairman  PHILLIPS.)  We  have  been  in  the  habit  of  asking 
persons  here  whether  they  have  any  remedial  legislation  to  propose  along 
the  lines  of  the  inquiry.  If  you  have  anything  to  propose  to  the  commission 
in  the  way  of  remedial  legislation  to  meet  these  problems  we  would  be  glad 
to  hear  from  you.  A.  I  will  simply  state  very  briefly,  because  I  don't  want 
to  go  into  it  at  length.  *While  I  had  expected  to  go  into  some  argument  on 
that  point,  I  will  not;  I  am  too  tired,  and  you  have  gotten  tired  of  my  face; 
and  1  will  simply  say  this:  That  I  am  an  absolute  believer  in  the  govern- 
ment ownership  of  all  transportation  facilities,  and  especially  of  railroads.  I 
*have  laid  awake  at  nights,  and  thought  this  matter  over,  and  was  anxious 
that,  when  the  United  States  government  had  the  opportunity  of  taking  in 
the  Central  Pacific  Railroad,  they  would  do  it.  All  the  roads  of  Germany 
excepting  two  in  the  south  are  owned  by  the  government,  and  discrimination 
is  not  known;  nor  is  there  any  dissatisfaction  or  trouble  there.  They  haven't 
gone  so  far  in  that  country  as  to  take  the  canals,  but  everything  is  free. 
If  the  water  ways  and  the  railroads  can  be  put  under  government  control, 
gentlemen,  you  will  do  away  with  all  of  the  difficulties  that  exist  to-day, 
because.  I  say  right  here,  that  the  prime  movers  of  all  these  troubles  are 
the  railroads,  through  giving  discriminating  rates,  or  giving  rates  to  favorite 
shippers  that  are  lower  than  they  give  to  the  general  public.  I  know  of  no 
better  remedy,  and  the  time  has  come  when  it  is  necessary,  because  these 
conditions  have  been  forced  upon  you,  to  call  a  halt  to  the  present  condi- 
tion of  things.  If  you  would  make  an  example  of  these  men.  if  there  is  a 
criminal  clause  in  the  interstate  commerce  law,  and  put  them  behind  the 
bars,  I  think  there  would  be  a  stop  put  to  these  things.  I  recollect  that 
owning  a  large  flour  mill  in  Southern  Michigan  and  being  quite  a  large 
wheat  grower  in  Northern  Dakota,  I  desired  to  ship  some  of  that  most  ex- 
cellent hard  wheat  down  to  Three  Rivers,  Michigan,  to  manufacture  it.  and 
I  wanted  a  transit  rate.  It  was  given  me  previous  to  the  Interstate  Com- 
merce Commission  by  the  then  manager  of  the  road.     I  went  back  the  next 


♦Black   faced   type  indicates  matter  omitted,   ia  the  course  of  editing,   from   the 
official  report. 


408  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

year  and  he  said:  "I  can't  do  by  you  as  I  did  last  year;  the  criminal  amend- 
ment to  the  interstate  commerce  act  is  such  that  if  I  violate  it  I  am  liable  to 
go  behind  the  bars,"  and  he  said:  "I  am  afraid  of  that,  and  therefore  I  can't 
make  you  the  rate  by  which  you  can  ship  your  wheat  from  North  Dakota 
to  your  place  and  manufacture  it."*  fThat  was  his  version  of  the  law.  Now, 
I  say,  Mr.  Chairman  and  gentlemen,  that  this  question  has  got  to  be  met 
in  some  way  in  order  to  cut  off  the  rebate  and  drawback  practices  of  the 
railroads,  because  the  masses  of  the  people  of  this  country  are  incensed 
and  that  dissatisfaction  is  reaching  to  the  minds  of  men,  many  of  whom  are 
way  above  par.  You  will  find  that  class  of  men  dissatisfied  with  the  present 
condition,  and  I  am  firmly  a  believer  that  if  the  government  would  take 
charge  of  the  railroads  of  this  country,  as  they  take  charge  of  the  transpor- 
tation of  the  mails  (which  is  acknowledged  by  all  the  people  of  the  earth 
to  be  the  best  in  the  world)  these  conditions  can  be  improved.  They  can  as 
well  control  the  railroads  and  water  ways  of  this  country  as  they  can, 
manage  and  control  the  transportation  of  the  mails.  The  example  of  Ger- 
many is  before  you;  the  example  of  Norway  and  Sweden  is  before  you; 
and  I  desire  to  call  them  to  the  attention  of  the  commission  at  this  moment. 

If  I  recollect  right  in  reading  about  the  railway  systems  of  Norway  and 
Sweden,  18  years  ago  the  kingdom  of  Norway  and  Sweden  didn't  own  a 
mile  of  railroad  in  that  country.  Poor  as  she  was  as  a  nation  she  saw  that 
English  capital  was  coming  into  that  country  and  building  the  railroads 
north  and  south  up  to  the  great  Bessemer  mines  in  the  northern  part  of 
Sweden,  and  their  own  manufacturers  were  unable  to  compete,  shipping 
from  the  same  mines,  over  the  same  lines  of  road.  Complaint  was  made  to 
their  Congress,  or  whatever  they  call  it,  and  they  at  once  adopted  a  measure 
and  said:  "We  will  own  these  roads  ourselves;"  and  then  they  bought  them 
from  the  English  capitalists.  When  I  was  in  Norway  and  Sweden  three 
years  ago  the  government  took  in  the  roads,  and  they  own  to-day  the  roads 
running  north  and  south  through  both  of  those  countries,  not  particularly 
bothering  with  the  lateral  lines  to  the  east  and  west,  but  they  make  a  rate 
from  the  common  points  on  these  lateral  lines  to  the  water  front,  and  they 
pro-rate  with  the  lateral  line  belonging  to  the  smaller  companies.  They 
have  brought  back  in  the  market  their  own  manufactures  and  they  are 
to-day  a  happy  people,  because  the  government  has  taken  hold  and  made  the 
roads  equal  to  everybody — the  Englishman,  Frenchman  and  the  German, 
and  to  everybody  else.  We  distribute  oil  in  those  countries  and  we  have 
no  discrimination.  We  go  all  through  them.  Government  ownership  is  my 
remedy.  You  have  upon  the  statute  books  to-day  one  of  the  best  laws  that 
was  ever  written,  known  as  the  Federal  Act,  or  the  Sherman  Act,  passed  in 
1890.  The  ditficulty  in  this  country  is  that  you  can't  enforce  the  laws,  or 
at  least  you  don't.  Complaints  were  made  during  the  Cleveland  admin- 
istration, to  the  attorney-general  of  the  United  States,  and  no  answer  was 
made  by  the  recipient  of  the  letter,  tit  was  pigeon-holed.  Complaint  was 
made  to  the  present  administration  eight  months  ago;  tno  acknowledgement 
of  the  letter;  pigeon-holed.  In  the  State  of  Pennsylvania  we  have  asked  the 
aid  of  the  Commonwealth  by  application  to  the  Governor,  since  the  suit 
that  I  have  mentioned,  and  have  received  no  answer  to  the  letter;  pigeon- 
holed.    tDoes  that  look  like  an  enforcement  of  the  laws? 

The  power  of  these  monopolies  and  combinations  is  such  that  they 
nominate  and  elect  their  own  men  to  serve  in  the  Legislature — tor  many 
of  them  to  serve  in  the  Legislatures  of  the  several  States  of  this  Union. 
They  make  their  own  nominations  a  year  ahead  all  the  time,  and  he  is 
schooled  to  know  their  wants  first  and  the  people's  wants  second.  I  say 
that  if  our  courts  of  the  States,  our  Attorneys-General  of  the  States  and 
our  Attorney-General  of  the  United  States  would  put  forth  the  strona:  arm 
of  the  government  under  the  laws  that  are  passed,  they  can  stop  this  en- 
croachment upon  the  rights  of  the  people.  I  say  if  they  will  not  do  it, 
you  must  get  the  control  of  these  great  transportation  lines  that  are  causing 


*No  one  asked  the  witness  the  direct  que.stion  whether  he  had  received  a  r.Tte 
in  violation  of  the  law  in  the  previous  year  to  which  he  referred. 

;T?lac'k  faced  type  indicates  matter  omitted,  in  the  course  of  editing,  from  tlie 
official  report. 


LEWIS  EMERY,  JR.  409^ 

all  this  trouble,  and  that  by  government  ownership.  And  I  simply  say  ta 
you  that  I  have  traveled  this  world  over;  I  have  been  a  traveler  in  every 
part  of  the  world  that  I  can  reach  by  water  or  rail  and  this  country  is 
advertised  from  China  and  the  islands  of  the  East  as  being  a  country  that 
is  bound  and  tied  hand  and  foot — the  people  in  it — by  corporate  power. 
*You  can't  step  upon  a  train  of  cars  without  hearing  a  man  in  front  or  back 
of  you  speaking  of  the  unfair  advantage  the  commercial  industries  of  this 
country  that  hire  men,  take  of  them;  and  using  harsh  and  rough  language 
against  their  government — blaming  it  because  it  don't  give  them  relief; 
and  as  I  told  you  yesterday,  we  came  to  Congress,  as  you  saw  here,  in  1872, 
and  we  came  here  time  and  time  again.  We  have  been  to  work  here  before 
the  Attorney-General  of  the  United  States  half  a  dozen  times  without  result, 
and  it  seems  to  me  that  the  courts  are  approached  in  the  same  way.  Any- 
how, there  is  delay  in  getting  the  litigation  settled  before  the  courts.  The 
corporations  come  along  when  they  please,  *and  when  they  do  come  In  they 
don't  come  to  testify.  They  defy  the  courts  under  the  plea  that  they  will 
criminate  themselves  if  they  give  evidence.  What  are  you  going  to  do  about 
it?  If  the  arm  of  the  government  would  be  stretched  out  and  take  these 
men  and  say:  "Answer  these  questions  or  go  to  prison  for  contempt  of 
court,"  they  would  answer  them. 

Now,  I  say,  government  ownership  of  railroads  would  be  my  remedy 
unless  we  can  get  the  Attorneys-General  of  the  United  States  and  of  these 
several  States  to  enforce  the  laws. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Suppose  that  the  government  did 
own  the  railroads  to-day,  would  not  this  great  corporate  wealth — giant  cor- 
porations or  monopolies  or  trusts,  as  they  are  sometimes  called — still  have 
the  power  to  follow  the  small  merchants  into  other  States  and  towns  and 
sell  oil  or  any  other  merchandise  very  low?  With  that  great  accumulation 
of  wealth,  can  they  not  still  prevent  the  small  corporation  from  doing  busi- 
ness— the  merchants  from  handling  these  goods  or  selling  these  goods  in 
various  markets?  A.  Well,  for  that  difficulty  you  would  want  a  law  like 
the  one  I  spoke  of  yesterday,  such  as  I  think  has  been  adopted  in  Germany, 
Intended  to  prohibit  unfair  trading.  You  have  got  to  take  care  of  the  inter- 
ests of  the  common  people  of  this  country.  If  you  don't,  you  are  going  to 
have  trouble,  *and  I  am  afraid  I  will  not  live  long  enough  to  be  in  the  front 
ranks  of  that  fight. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Any  other  question  by  any  gentle- 
man of  the  commission?  Now,  have  you  any  statement  to  make  or  anything 
to  add  to  your  testimony.  Senator  Emery?  A.  No,  I  guess  not.  I  only  want 
to  know  if  the  commission  wants  any  of  my  papers  before  I  quit.  I  will  be 
very  glad  to  assist  you  in  any  way  that  I. can.  I  said  to  Mr.  Farquhar  that 
I  have  this  copy  of  the  report  of  the  1872  investigation  and  I  will  find  out 
about  that. 

Q.  (By  Mr.  FARQUHAR.)  As  I  stated,  it  seems  to  me  to  be  unverified, 
because  it  seems  to  have  been  taken  by  outside  reporters.  A.  It  was  done 
by  Congress.     Isn't  that  official? 

Mr.  FARQUHAR.  Well,  the  matter  was  referred  to  a  sub-committee, 
and  it  was  done  before  them,  if  it  was  done. 

The  WITNESS.  Well,  gentlemen,  I  am  certainly  under  very  many 
obligations  to  you  for  your  kindness,  and  I  am  only  sorry  that  yesterday 
morning,  when  I  started  in,  I  did  not  fully  understand  your  views  and  wishes. 
Certainly  I  had  rather  not  have  said  as  much  as  I  have.  I  am  pretty  nearly 
a  sick  man,  but  I  feel  that  what  I  have  said  and  done  is  consistent  with  my 
conscience,  and,  therefore,  I  do  not  regret  anything. 

Vice-Chairman  PHILLIPS.  I  will  state,  Senator  Emery,  that  the  chair 
is  authorized  by  the  commission  to  express  to  you  our  thanks  for  appearing 
before  us  and  giving  us  this  full  and  clear  statement  in  regard  to  the 
petroleum  industry. 

The  commission  then  adjourned  until  the  following  morning  at  10  o'clock. 

*Black  faced  type  indicates  matter  omitted.  In  the  course  of  editing,  from  the 
ofRcial  report. 


410  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

CHAPTER  XVIL 

TESTIMONY  OF  MR.  W.  H.  CLARK,  OF  NEWARK,  OHIO, 

DISCHARGED  EMPLOYE  OF  THE  STANDARD 

OIL  COMPANY. 


The  remarkable  statements  offered  as  testimony  before  the  Industrial 
Commission  by  Mr.  W.  H.  Clark,  of  Newark,  Ohio,  who,  as  shown  by  the 
testimony  of  other  witnesses,  was  discharged  from  the  employ  of  the  Stand- 
ard Oil  Company  because  he  was  short  in  his  accounts,  forms  but  a  single 
chapter  of  the  studied  attempts  to  bring  that  company  into  disrepute.  Mr. 
Clark  was  previously  a  witness  in  the  case  of  the  State  of  Ohio  vs.  the 
Standard  Oil  Company  of  Ohio. 

This  man  went  before  the  commission  on  June  8th,  1899,  and  confessed 
to  a  disgraceful  career  and  endeavored  to  implicate  in  it  other  employes  of 
the  Standard  Oil  Company  who  are  men  of  character  and  standing  in  the 
communities  in  which  they  live.  His  evidence  was  refuted  in  the  most  com- 
plete manner.  His  statements  were  sent  broadcast  over  the  land,  being 
widely  published  as  the  confessions  of  a  Standard  Oil  Company  official  who 
might  be  regarded  as  giving  way  the  real  methods  of  business  of  that  com- 
pany. These  were  striking  statements,  and  as  they  made  much  more  inter- 
esting reading  than  the  denials,  told  in  moderate  language  by  means  of 
affidavits,  they  naturally  received  wider  circulation  and  were  read  with 
greater  interest,  as  infamous  charges  appeal  to  the  imagination  much  more 
strongly,  because  of  their  sensational  garb,  than  do  denials  of  such  charges. 

Mr.  W.  H.  Clark  was  hired  when  a  youth  by  the  Standard  Oil  Company 
to  work  at  Marietta,  Ohio,  as  office  and  warehouse  boy  and  was  promoted 
in  position  and   salary  until  he  was  made  local  agent  at  Newark. 

Mr.  B.  A.  Mathews,  a  manager  of  the  Standard  Oil  Company,  with  an 
office  at  Columbus,  Ohio,  testified  that,  while  at  Newark,  Clark  became 
short  in  his  accounts.  This  fact  was  discovered  and  Clark  was  discharged, 
which  was  the  only  incentive  Mr.  Mathews  knew  for  "the  series  of  un- 
truths and  malicious  statements  made  by  Clark  before  the  commission." 

When  Mr.  Mathews  was  on  the  stand  he  referred  to  Mr.  Clark's  state- 
ments seriatum.  and  produced  numerous  affidavits  which  proved  the  true 
character  of  the  witness.  Clark's  testimony  was  shown  to  be  inaccurate 
even  as  to  immaterial  statements. 

The  witness  was  introduced  by  Mr.  Phillips,  who  said:  "I  will  state 
to  the  members  of  the  commission  that  Mr.  Clark,  of  Newark,  Ohio,  who 
has  been  a  long  time  in  the  employ  of  the  Standard  Oil  Company  in  handling 
especially  the  refined  and  lubricating  oils  for  the  company,  is  before  us  this 
afternoon  to  give  us  some  information  in  regard  to  the  methods  of  the 
Standard  Oil  Company  in  doing  business." 

Representative  LIVINGSTON.     In  what  capacity  was  he  employed? 

Vice-Chairman  PHILLIPS.  He  will  state  that  he  was  in  the  habit  of 
selling  refined  oil  and  lubricating  oil,  as  I  understand  it.  He  will  make  a 
very  full  statement,  if  he  is  called  upon.  Professor  Jenks  will  take  the  lead 
in  examining  Mr.  Clark.  I  am  pleased  to  present  Mr.  Clark  to  the  com- 
mission. 

Mr.  Clark  said  he  began  work  for  the  Standard  Oil  Company  in  1892 
and  was  promoted  to  be  warehouse  man  or  cooper  while  working  at  Marietta, 
Ohio,  at  which  place  and  time  the  Standard  Oil  Company  uad  four  com- 
petitors, these  being  the  Producers'  Refining  Company,  the  Argand  Refining 
Company,  The  George  Rice  Oil  Company,  and  The  Marietta  Oil  Works.  An 
old  tank  wagon  driver  named  Mr.  Curtis  was  selling  oil  for  the  Argand 
Company,  and  the  Standard  Oil  Company  secured  the  service  of  Mr.  Frank 
Davis,  for  whom  a  tank  wagon  was  bought,  and  through  him  oil  was  sold  at 
a  price  cheaper  than  the  Argand  Oil  Company  could  manufacture  it. 


W.  H.  CLARK.  411 

Q.  (By  Professor  JENKS.)  Was  Mr.  Davis  an  oil  dealer  before  you  got 
him?  A.  No,  sir;  we  hired  him  by  the  week.  He  went  on  quite  a  while  and 
finally  Mr.  Curtis  began  to  get  tired  of  his  business,  so  he  came  to  us  and 
told  us  if  we  would  make  some  arrangement  by  which  he  could  buy  his  oil 
of  the  Standard  Oil  Company  he  would  buy  of  us.  So  we  made  an  arrange- 
ment and  we  had  a  mortgage  on  Mr.  Davis'  wagon.  We  put  up  a  bluff,  closed 
in  on  the  mortgage  and  let  him  go. 

Q.  As  soon  as  Mr.  Curtis  came  to  terms  with  you,  did  you  stop  the  busi- 
ness of  Mr.  Davis?    A.  Yes,  sir;  and  the  price  went  up. 

Q.  Can  you  tell  us  about  the  price  at  which  you  sold  while  Mr.  Curtis 
was  selling  the  oil  of  the  competing  company  and  what  price  was  made  after- 
wards? A.  The  oil  was  7  cents  while  Mr.  Davis  was  selling,  and  as  soon 
as  he  quit  it  went  to  12  cents. 

Curtis  kept  up  his  competition  for  three  or  four  months  before  he  yield- 
ed the  first  time.  After  the  oil  was  put  up  to  12  cents  a  gallon  by  the 
Standard  he  again  began  buying  from  the  Argand  Company  when  Mr. 
Ebright  was  sent  by  Mr.  B.  A.  Mathews,  a  manager  of  the  Standard,  from 
Columbus    to    again    compete    with    them.      Speaking    of  Ebright,    he    said: 

"He  came  down  there  and  we  played  the  farmer  racket  with  him;  went 
out  and  got  a  big  cart  and  put  a  barrel  in  with  a  faucet  and  he  went  around 
selling  oil  cheap." 

At  Marietta,  he  said,  they  had  two  storage  tanks  and  from  them  sold 
eight  grades  of  oil,  at  eight  different  prices,  beside  selling  gasoline.  There 
was  about  half  a  cent  difference  between  the  prices.  They  gave  the  cus- 
tom.er  whatever  grade  of  oil  he  wanted,  the  prices  being  from  six  to  10% 
cents  a  gallon.  He  said  that  Mr.  Hollingsworth  and  Mr.  Mathews  gave  him 
orders  to  sell  oil  in  that  way.  He  said  they  also  put  three  or  four  gallons  of 
gasoline  in  a  barrel  of  turpentine,  the  gasoline  worth  seven  cents  and  the 
turpentine  40  cents,  and  sell  it  as  turpentine  to  druggists.  He  said  Mr. 
Mathews  had  taught  him  "this  trick  in  turpentine."  They  had  sold  it  in  that 
way  to  Siler  Bros.,  druggists. 

Mr.  Clark  went  to  Springfield  and  took  charge  of  a  country  tank  wagon, 
operating  in  21  towns  outside  of  Springfield.  The  business  there  was  in- 
creased so  that  the  company  had  to  put  on  another  wagon  in  his  district,  in 
charge  of  George  Blazer.  Mr.  Cragin,  a  brother-in-law  of  Mr.  Mathews,  told 
the  witness  to  explain  to  Blazer  how  to  sell  different  grades  of  oil  out  of  the 
same  tank.  Mr.  Foley,  the  agent  at  Springfield,  wanted  Mr.  Cragin  to  tell 
Blazer  about  this.  Blazer  said  that  if  he  could  not  work  for  an  honest  com- 
pany he  would  quit,  and  he  did  quit  that  day. 

While  at  Springfield,  the  witness  continued  to  sell  as  many  as  four 
grades  of  oil  at  different  prices  out  of  the  same  tank.  They  gave  rebates  to 
some  customers,  but  not  to  others.  They  would  sell  as  low  as  four  cents  a 
gallon  to  some  customers  and  would  charge  others  as  much  as  seven  cents 
a  gallon.  At  Springfield,  the  Charles  Ludlow  Oil  Company  was  selling  oil  in 
competition  with  the  Standard. 

Mr.  Clark  said  he  was  engaged  in  selling  different  grades  of  oil  out  of 
the  same  tank  for  about  seven  years. 

Q.  (By  Mr.  KENNEDY.)  Did  you  feel  that  you  were  engaged  in  a  dis- 
honest work  while  you  were  doing  that?  A.  Why,  I  spoke  to  them  about  it, 
but  they  said  it  was  not  for  me  to  say  what  to  do,  but  to  do  what  they  said. 
That  is  the  reply  they  gave  me. 

He  said  that  while  at  Springfield  he  got  $35  a  month,  went  to  work  at  4 
o'clock  in  the  morning  and  many  a  night  worked  as  late  as  10  or  11  o'clock. 

The  witness  explained,  in  reply  to  a  question  by  Mr.  Farquhar.  that 
they  had  but  one  grade  of  oil  in  the  tank  from  which  they  were  selling  oil 
under  different  names,  and  at  different  prices.  He  said  the  Standard  Oil 
Company,  to  his  knowledge,  made  three  grades  of  oil,  the  Diamond  White, 
the  Water  White  and  Eocene.  He  had  never  known  them  to  make  more 
than  that,  yet  he  had  seen  a  dozen  grades  at  different  stations,  with 
from  one-half  to  one-fourth  of  a  cent  difference  in  the  price.  They  sold  oil 
under  about  eight  different  names  at  each  station.  At  Columbus  and 
Urbana,  they  would  drop  the  Southern  names  and  put  in  new  names. 


412  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

Mr.  Phillips  asked  the  witness  if  he  could  tell  what  distinguished  the 
three  grades  of  oil  he  said  the  Standard  Oil  Company  made.     He  replied: 

"Diamond  White  stands  150°  open  cup  and  120°  closed  cup;  120°  is  the 
State  test  and  150°  closed  cup  is  our  test.  There  is  about  10°  difference  in 
each  test,  except  the  fire  test,  the  test  of  the  State,  which  will  run  about  120° 
on  each  one.  Of  course  the  cheaper  the  oil  the  lower  the  fire  test;  the  better 
the  oil  is  the  harder  it  is  to  ignite." 

From  his  position  at  Springfield,  Mr.  Mathews  promoted  him  and  gave 
him  an  increased  salary  as  cashier  of  the  Standard  Oil  Company  at  Colum- 
bus, at  the  oil  works,  where  he  received  $40  a  month.  At  that  place  he  said 
he  had  charge  of  the  work,  looked  after  the  shipments,  took  care  of  the 
money  and  sent  out  bills.  He  also  kept  stock  for  compounding  different 
oils.  They  mixed  two  barrels  of  miner's  stock  with  three  barrels  of  cotton 
seed  oil  to  make  miner's  oil.  By  mixing  the  oils  they  could  furnish  a  cus- 
tomer anything  he  called  for,  and  they  charged  him  for  it  accordingly.  They 
never  had  the  genuine  oil  of  the  special  grades  called  for.  They  mixed 
Japanned  dryer  and  linseed  oil,  the  result  being  a  product  of  a  dark  color, 
which  passed  off  as  boiled  linseed  oil.  This  was  not  as  valuable  as  boiled 
linseed  oil,  but  by  resorting  to  this  process,  instead  of  boiling  the  oil,  he 
thought  they  saved  five  or  six  cents  a  gallon.  They  followed  a  custom  of 
branding  the  barrel  to  suit  the  customer.  The  price  of  miner's  oil,  the  wit- 
ness said,  varied  from  22  to  34  cents. 

Mr.  Clark,  referring  to  the  method  of  the  Standard  Oil  Company  at 
Columbus,  said  they  received  all  their  oil  from  Cleveland  in  barrels  with 
blank  heads.  If  a  person  wanted  oil  to  rub  furniture,  light  rubbing  or  dark 
rubbing,  ozone  parafRne,  diamond  paraffine,  golden  machinery  or  a  good 
straight  machinery  oil,  they  turned  it  out  to  him  and  charged  him  a  price  ac- 
cordingly. 

He  did  not  do  the  mixing  he  had  described,  but  he  furnished  the  slock 
with  which  it  was  done,  to  Paulus,  who  was  the  mixer.  He  furnished  reports  of 
what  he  did  to  the  general  office  at  Columbus.  He  knew  nothing  about  com- 
pounding oil  beyond  his  experience  with  the  Standard  Oil  Company.  They 
always  sold  oil  about  a  cent  cheaper  per  gallon  at  Columbus  than  they  sold 
it  in  other  towns,  on  account  of  the  Cleveland  Refining  Company  being  there 
as  a  competitor.  Finally,  he  said,  the  Standard  Oil  Company  hired  E.  M. 
Shoemaker  to  start  the  E.  M.  Shoemaker  Oil  Company.  Shoemaker's  wagon 
was  loaded  at  the  Standard  oil  station  and  was  run  in  the  name  of  the  Shoe- 
maker Oil  Company.  From  Shoemaker's  wagon  oil  was  sold  at  reduced 
prices.  This  was  done  because  people  believed  that  while  buying  from  the 
Shoemaker  Company  they  were  buying  from  a  rival  of  the  Standard.  He 
said  that  Shoemaker  drew  a  straight  salary  from  the  Standard,  as  did  Mr. 
Clarence  Toland,  Shoemaker's  bookkeeper.  The  Standard's  business  at 
Columbus  "lots  of  days"  was  $700  or  $800  a  day.  He  had  seen  Mose  Grad- 
wohl's  wagon  alone  take  in  as  high  as  $200  a  day. 

The  witness  said  that  the  Standard  Oil  Company  at  Columbus  watched 
their  competitors  to  see  how  much  oil  they  shipped  out  each  morning,  and 
they  sent  a  report  of  this  to  Cleveland.  They  had  a  boy  whom  they  paid 
$15  a  month  to  report  every  tank  car  that  came  in  for  their  competitors. 
When  they  found  a  man  buying  from  a  competitor  they  went  to  him  and  did 
everything  to  get  his  trade.  He  did  not  know  that  the  competitors  of  the 
Standard  Oil  Company  at  Columbus  deceived  the  public  in  regard  to  the 
quality  of  oil  they  sold  as  he  did. 

At  Columbus,  the  Standard  Oil  Company  cut  the  prices,  he  said,  so  that 
their  competitors  were  finally  forced  to  make  an  arrangement  with  them  to 
"hold  the  pri(;e"  for  a  certain  time.  When  the  Standard  Oil  Company  tele- 
phoned their  competitors  to  raise  the  price,  the  price  was  raised. 

Their  competitors  handled  but  three  grades,  Penoline,  Safety  Oil  and 
Electric  Light. 

The  Standard  Oil  Company  would  sometimes  get  trade  by  buying  empty 
barrels  of  the  retailers  and  paying  more  than  the  regular  price  for  them. 

Mr.  Clark  read  letters  signed  by  Mr.  B.  A.  Mathews,  general  manager, 
inclosing  what  was  termed  a  competition  sheet,  which  he  was  asked  to  fill 
out  and  give  full  information  with  reference  to  parties  on  the  list,  and  to 


W.  H.  CLARK.  413 

add  other  names  to  it  if  he  knew  of  people  buying  outside  of  the  Standard. 
These  letters  were  dated  May  and  July  of  1896.  He  filled  out  these  competi- 
tive blanks  regularly.  He  was  at  Columbus  from  March  20  to  December  16, 
1896.  He  was  promoted  and  removed  from  Columbus  to  be  manager  of  the 
Standard  Oil  Company  at  Urbana,  Ohio,  and  in  the  following  March  his 
salary  was  increased  $15  a  month. 

At  Urbana,  he  said,  he  had  full  charge  of  all  the  business  and  received 
his  instructions  directly  from  Mr.  Mathews.  They  did  not  have  much  com- 
petition at  Urbana.  William  Helmick  became  their  competitor.  Helmick 
had  inherited  some  money  and  invested  it  in  the  oil  business.  H.  S.  Hollings- 
worth,  of  Columbus,  came  down  to  Urbana  and  with  the  witness  went  to 
Helmick's  house  and  tried  to  scare  him  out  of  the  business,  telling  him  they 
would  cut  prices  on  him.  Finally  Mr.  Welsh,  another  employe  of  the  Stand- 
ard Oil  Company,  came  there  from  Springfield,  and  all  three  of  them  talked 
to  Helmick  of  selling  out  his  oil  business  at  the  price  he  paid  for  it.  They 
cut  the  prices  of  oil  on  him  at  a  few  places,  and  threatened  to  cut  still 
further.  He  put  up  a  building  outside  of  town  for  storing  his  oil,  which, 
because  of  its  isolated  location,  made  necessary  by  an  ordinance  of  the  City 
Council,  was  a  total  loss  to  him  after  he  left  the  oil  business.  Finally  Hel- 
mick quit  the  business  and  went  to  the  poor  house,  from  which  his  sister  in 
Iowa  took  him.  Helmick's  father  had  been  in  the  oil  business  for  20  years 
and  Helmick  had  driven  a  tank  wagon  for  his  father.  After  his  father's 
death  he  bought  a  farm  with  the  money  he  inherited  and,  as  he  could  make 
nothing  out  of  it.  went  back  to  Urbana  and  started  in  the  oil  business.  At 
Urbana.  the  business  amounted  to  forty  or  fifty  thousand  gallons  a  month. 

In  the  following  fall,  the  witness  went  to  Newark,  Ohio,  where  he  was 
paid  $2.25  a  day  as  manager.  Newark  being  a  lareer  station  than  Urbana. 
The  Newark  business  amounted  to  about  80.000  gallons  a  month.  The  work 
at  Newark  was  harder  than  it  was  at  Urbana,  because,  the  witness  said, 
they  had  about  25  prices.  They  had  a  special  price  for  different  people, 
and  sometimes  rebates  for  some  of  them.  They  charged  J.  P.  Lamb  &  Co. 
seven  cents  for  gasoline,  and  J.  M.  Brown,  opposite  him.  nine  and  one-half 
cents.  They  charged  Mr.  Rankin  six  cents  for  oil  and  Showman  Bros,  seven 
and  one-half  cents.  He  m.ade  Hagmeier's  ticket  the  same  as  the  others,  but 
always  rebated  him  one  cent  for  gasoline  and  two  cents  for  oil.  He  could 
not  change  the  price  for  anyone  without  authority  from  Mr.  Mathews.  If  a 
customer  should  buy  oil  of  a  competitor,  the  witness  would  report  the  case 
to  Mr.  Mathews  and  get  authority  to  change  the  price.  He  said  their  price 
for  ea'^oline  ranged  from  seven  to  nine  and  a  half  cents  a  gallon. 

Mr.  Al.  Donaldson  started  in  the  oil  business  at  Newark  for  Scofield, 
Shurmer  &  Teagle,  in  a  leased  building.  The  witness  had  the  owner  of  the 
land  pi?n  a  contract  that  no  oil  should  go  on  that  lot,  and  then  he  hired  a 
Mr.  Rodbury  and  the  two  went  down  and  threw  out  the  tanks  of  their  com- 
petitor and  left  the  building  empty.  Donaldson  then  got  "scared"  and  sold 
his  oil  and  his  wagon  to  the  Standard.  The  witness  said  he  had  been  told 
by  Mr.  Hollingsworth  if  he  would  get  Donaldson  out  of  the  business  inside 
of  two  v,'eeks  he  would  be  given  a  two  weeks'  vacation  on  salary.  He  suc- 
ceeded in  doina:  this  at  a  cost  of  $2.50,  which  the  Standard  Oil  Company 
paid  for  the  building,  which  was  a  mere  shed.  When  Donaldson  returned  to 
the  city,  he  found  his  building  gone.  The  witness  said  he  was  compli- 
mented by  Mr.  Mathews  for  the  way  he  had  got  this  competitor  out  of  the 
business. 

The  witness  went  back  as  manager  at  Urbana,  staying  there  six  weeks, 
after  which  he  again  was  sent  to  Newark,  where  he  remained  about  two 
years. 

He  said  that  through  the  influence  of  a  man  named  King,  who  had  been 
an  employe  of  the  Standard  Oil  Company  for  a  year  and  a  half  or  two  years, 
the  tank  wagon  men  at  Newark  got  to  selling  any  kind  of  oil  a  person  wnnted. 
If  a  man  wanted  15  cent  oil,  he  could  get  it,  and  if  he  wanted  a  10  cent  oil 
he  could  2:et  that. 

He  told  how  he  came  to  leave  the  Standard  Oil  Company.  One  evening 
Mr.  E.  C.  Lockwood.  a  Standard  Oil  manager  from  Cleveland,  came  to 
inspect  his  staition.  and  the  witness  did  not  know  who  he  was.     Mr.  Lock- 


414  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

wood  undertook  to  give  the  witness  instructions  in  regard  to  his  work  and 
they  got  into  a  controversy.  The  result  was  that  the  witness  was  laid  off 
by  Mr.  Mathews,  in  order  that  the  business  of  the  station  might  be  checked 
up.  They  had  tried  to  re-employ  him,  he  said,  through  Mr.  Fonts.  The  wit- 
ness said  he  did  not  want  to  work  for  them  any  more,  as  any  losses  resulting 
from  errors  at  his  station  were  deducted  from  his  pay,  no  matter  who  made 
the  mistakes. 

Mr.  Clark  said  that  the  Standard  Oil  Company  always  kept  their  price 
below  that  of  their  competitors,  but  that  some  of  the  independent  dealers 
could  sell  oil  at  a  price  higher  than  the  Standard  could  get,  because  the 
people  disliked  the  Standard.  These  competitors  sold  Pennsylvania  oil, 
while  the  Standard's  oil  was  from  Ohio,  the  former  being  the  better  oil.  The 
witness  said  they  had  two  lamps  in  which  they  tested  Ohio  and  Pennsyl- 
vania oil  and  that,  by  a  trick  in  turning  the  wick,  they  were  able  to  disguise 
the  smell  of  sulphur  in  the  Ohio  oil.  He  said  he  was  instructed  by  Mr. 
Mathews  to  do  this,  his  instructions  being  verbal.  He  had  no  letters  nor 
any  written  instructions  to  pursue  the  methods  he  had  referred  to. 

He  had  furnished  the  Baltimore  &  Ohio  Railroad  with  refined  oil  and 
made  out  the  bills,  showing  the  number  of  gallons,  after  which  the  bill  was 
sent  to  Columbus,  where  the  price  was  put  on  it.  He  knew  nothing  about 
the  prices  charged  for  lubricating  oil.  They  sold  from  60  to  80  barrels  a 
month  in  the  summer  and  as  much  as  1.50  barrels  in  the  winter  of  Water 
White  to  the  Baltimore  &  Ohio  Railroad.  That  company  bought  its  lubri- 
cating oil  from  the  Atlantic  Refining  Company  at  Pittsburg,  which,  he 
thought,  was  not  connected  with  the  Standard  Oil  Company. 

He  at  first  said  he  could  not  give  any  names  of  men  who  could  come 
before  the  commission  and  corroborate  his  testimony,  thoush  he  said: 
"They  would  all  tell  you  just  the  same;  they  could  not  tell  you  anything 
different."  He  finally  gave  the  names  of  W.  W.  Hughes,  H.  A.  Day,  tank 
wagon  driver  at  Newark;  James  King,  Will  Donaldson  and  Frank  Hurst  as 
men  who  could  corroborate  his  testimony. 

In  reply  to  a  question  by  Mr.  Ratchford,  the  witness  said  that  they  sold 
only  "to  the  trade"  and  not  to  the  consumer.  Notwithstanding  the  unequal 
price  at  which  they  sold  to  the  stores,  he  said  that  most  of  the  stores  sold  at 
the  same  price.  Some  of  the  stores  would  charee  the  same  price  for  a 
cheap  grade  of  oil  as  other  stores  would  for  a  hich  grade. 

When  they  succeeded  in  driving  out  competition,  they  put  oil  back  at  the 
old  price.  In  towns  where  there  was  competition,  oil  was  cheaper  than 
where  there  was  no  competition. 

When  asked  by  Representative  Livingston  whether  there  had  been  any 
litigation  in  regard  to  the  matters  of  which  he  testified,  the  witness  said  he 
did  not  know  of  any  such  litigation. 


CHAPTER  XVIIL 

TESTIMONY  OF  MR.  B.  A.  MATHEWS,  MANAGER  OF 

THE  STANDARD  OIL  COMPANY  FOR  CENTRAL 

AND  SOUTHERN  OHIO. 

Mr.  B.  A.  Mathews,  so  frequently  referred  to  in  W.  H.  Clark's  statement 
in  the  preceding  chapter,  went  before  the  commission  on  September  7.  1899. 
He  stated  that  he  had  charge  of  marketing  the  products  of  the  Standard 
Oil  Company  in  a  portion  of  Ohio,  having  managed  the  business  for  Central 
and  Southern  Ohio  for  six  years  and  having  been  engaged  as  manager  in 
other  departments  previously  to  that. 

In  contradicting  the  statements  of  Mr.  Clark,  Mr.  Mathews  submitted 
a  large  number  of  affidavits  from  men  who  had  personal  knowledge  of  the 
facts  concerning  the  matters  testified  to  l)y  Clark.     These  affidavits  corrobo- 


B.   A.   MATHEWS.  415 

rated  Mr.  Mathews'  statements  in  every  detail.  The  affidavits  are  all  pub- 
lished in  connection  with  Mr.  Mathews'  testimony  in  the  official  report  of 
the  commission.  They  are  merely  referred  to  in  the  summary  of  testimony 
contained  in  this  chapter. 

Mr.  Clark  had  testified  that  he  went  to  work  for  the  Standard  Oil  Com- 
pany in  1892,  whereas  Mr.  Mathews,  speaking  from  the  record,  said  he  went 
to  work  in  1893.* 

"Mr.  W.  H.  Clark,  of  Newark,  Ohio,  who  has  given  testimony  before 
this  commission,"  said  Mr.  Mathews,  "was  hired,  when  a  youth,  to  work  at 
Marietta  as  office  and  warehouse  boy,  at  a  salary  of  $15  per  month  to  learn 
the  business,  and  as  fast  as  he  became  proficient  in  the  work  was  promoted 
in  salary  and  position  until  he  became  local  agent  at  Newark,  at  a  salary 
of  $2.25  per  day.  While  at  Newark  he  became  short  in  his  accounts,  was 
discovered  and  discharged,  which  is  the  only  incentive  that  I  can  discover 
for  the  series  of  untrue  and  malicious  statements  made  by  him  before  the 
commission. 

"His  statements  about  competition  and  variation  in  prices  at  Marie  ta 
are  untrue,"  said  Mr.  Mathews.  "His  position  as  office  and  warehouse  boy 
did  not  bring  him  in  contact  with  the  trade.  He  could  not  be  intormed  and, 
therefore,  would  know  nothing  about  methods  of  marketing  oil  or  prices. 
Davis,  the  peddler  referred  to,  has  never  been  in  the  employ  of  the  com- 
pany, and  the  'farmer  story'  has  been  refuted  by  Mr.  Ebright." 

Mr.  Mathews  submitted  a  certified  transcript  of  portions  of  testimony 
of  William  Ebright,  taken  in  the  case  of  the  State  of  Ohio  ex  rel.  F.'S.  Mon- 
nett  vs.  the  Standard  Oil  Company.  Ebright  denied  that  he  sold  oil  as  an 
independent  dealer,  and  as  a  "farmer,"  or  that  he  had  cut  the  prices.  He 
was  not  there  to  run  out  Curtis  and  he  sold  out  to  another  man.  He  did  not 
even  know  Curtis. 

Mr.  MATHEWS.  "His  statements  that  we  marketed  eight  grades  of  oil 
at  eight  different  prices  from  two  storage  tanks  at  Marietta,  and  that  the 
manager  (meaning  me)  gave  him  such  instrtictions  are  false.  Not  being 
agent,  no  instructions  would  be  given  him  concerning  prices.  The  facts  are- 
We  have  three  grades  of  oil  at  Marietta,  and  eight  names.  Ohio  State  Test 
and  Prime  White  are  two  names  for  the  same  grade  of  oil,  and  both  are  sold 
at  the  same  price.  Ohio  State  Test  is  a  brand  adopted  by  some  of  the  trade 
when  Ohio  passed  its  inspection  law.  while  others  adhered  to  the  previously 
well-known  trade  name  of  Prime  White,  thus  creating  two  brands  for  the 
same  oil.  Water  White,  Red  Star  Water  White,  Silver  Light  and  Crystal 
are  four  names,  for  the  same  grade  of  oil,  which  are  sold  at  the  same  price. 
These  four  brands  are  trade  names,  having  been  established  by  ctistom  in 
different  localities  to  meet  the  requirements  of  the  local  demands.  Eocene 
and  Hyperion  are  not  the  same  oil,  but  are  two  different  grades  of  oil. 
Eocene  is  manufactured  in  Cleveland,  and  Hyperion  at  Parkersburg,  Eocene 
being  sold  at  one-half  cent  per  gallon  above  the  price  of  Hyperion,  and  is 
kept  in  storage  at  Marietta,  while  Hyperion  is  shipped  direct  to  the  trade 
from  the  Parkersburg  refinery.  There  are  but  a  few  places  near  Marietta 
where  it  pays  better,  on  account  of  saving  in  freight,  to  give  the  buyer 
Eocene  (a  better  oil)  under  the  Hyperion  brand,  rather  than  make  the  ship- 
ment of  Hyperion  from  Parkersburg  at  a  lower  cost  for  the  oil.  Water 
White  was  furnished  to  one  of  the  jobbers  at  Marietta  under  the  brand  of 
'Crystal  Oil'  (and  sold  to  them  at  the  Water  White  market),  which  was  his 
trade  mark  brand. 

"Clark's  statement  about  mixing  gasoline  with  turpentine  is  absolutely 
false  and  malicious.  Instructions  to  all  my  people  have  been  to  give  the  pur- 
chaser what  he  buys,  both  quality  and  quantity.  The  officers  of  the  com- 
pany have  always  impressed  me  with  the  importance  of  this  principle; 
further,  a  buyer  can  determine  adulteration  of  the  turpentine  with  gasoline 
instantly  by  the  use  of  an  ordinary  hydrometer,  which  all  druggists  keep. 
The  falsity  of  Clark's  statement  about  the  alleged  'trick'  I  taught  him  is 
emphasized  by  the  position  he  held  of  warehouse  and  office  boy,  the  agent 


•111  the  cfflcial  report  of  testimony,  Clark's  statement  is  made  to  show  that  he 
began  work  in  isy3. 


416  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

l)eing  the  only  one  who  received  instructions.  I  have  the  affidavit  of  W.  A. 
Reed,  local  agent  at  Marietta  at  the  time  Clark  was  there,  which  I  submit." 

In  his  affidavit  Mr.  Reed  said  that  Mr.  Frank  Davis  was  never  in  the 
employment  of  the  Standard  Oil  Company,  but  he  wished  to  go  in  the  oil 
peddling  business,  and  they  sold  him  a  wagon  and  sold  him  oil  outright  at 
the  ruling  market  prices,  he  selling  it  at  prices  fixed  by  himself  in  competi- 
tion v.'ith  other  peddlers  and  retail  grocers  at  Marietta.  The  Standard  Oil 
Company  had  nothing  whatever  to  do  with  regulating  his  retail  price.  The 
affidavit  of  Mr.  Reed  continued: 

"Davis  continued  this  business  until  his  death,  when  his  father  sold  the 
wagon  to  a  man  named  Twiggs,  who  soon  after  sold  it  to  the  Producers' 
Refining  Company,  which  ran  the  wagon  until  it  discontinued  business. 

"Curtis  was  also  a  peddler,  buying  and  selling  oil  in  the  same  way  a.t 
Marietta.  It  is  not  true  that  he  purchased  his  supplies  from  the  Argand 
Refining  Company.  He  bought  his  supplies  from  the  Producers'  and  the  Rice 
Companies  until  those  companies  shut  down,  after  which  he  purchased  his 
oil  from  the  Standard  Oil  Company. 

"It  is  not  true  that  we  played  the  'farmer'  or  any  other  racket  with  Mr. 
Ebright.  Ebright  was  another  peddler,  who  bought  and  paid  for  his  oil  sup- 
plies the  same  way  as  any  other  peddler,  and  sold  the  oil  thus  purchased  at 
retail  in  Marietta.  I  had  nothing  whatever  to  do  with  retail  prices  of  oil  in 
Marietta,  which  were  regulated  entirely  by  the  competition  between  the 
peddlers  and  the  retail  grocers  of  that  city. 

"The  statement  is  absolutely  false  that  we  sold  oil  from  the  same  tank 
at  different  prices,  representing  it  to  be  of  different  grades,  or  that  we  mixed 
gasoline  with  turpentine,  or  practiced  any  deception  of  any  kind  whatever 
with  regard  to  the  quality  of  our  products  in  selling  the  same." 

Mr.  Mathews  submitted  certified  transcripts  of  testimony  of  William 
Ebright  taken  in  the  case  of  the  State  of  Ohio  ex  rel.  F.  S.  Monnett,  vs.  the 
Standard  Oil  Company  of  Ohio,  in  which  Ebright  denied  that  he  had  ever 
sold  oil  to  dealers  as  a  farmer. 

Affidavits  of  C.  W.  Foley,  local  agent  of  the  Standard  Oil  Company  at 
Springfield,  Ohio,  and  R.  A.  Fonts,  of  Marietta,  Ohio,  were  submitted  in 
relation  to  Clark's  statement  that  George  Blazer  was  instructed  to  seil  dif- 
ferent grades  of  oil  out  of  the  same  tank.  Mr.  Foley  said  he  had  never  had 
any  conversation  with  Mr.  Cragin,  now  dead,  or  any  one  else  about  drawing 
different  grades  of  oil  from  the  same  tank  and  charging  different  prices  for 
it.     It  was  not  true  that  they  ever  sold  any  oil  at  that  station  in  that  manner. 

"All  our  grades  of  oil,"  said  Mr.  Foley,  "were  sold  for  precisely  what 
they  were,  and  no  deception  of  any  kind  was  practiced  upon  our  customers 
as  to  the  quality  or  price  of  the  oil  furnished  them.  It  is  not  true  that  Blazer 
quit  the  employment  of  the  company  because  he  was  required  by  that 
employment  to  deceive  customers  as  to  the  quality  or  price  of  the  oil  sold. 
The  only  reason  given  by  Mr.  Blazer  when  he  quit  was  that  the  work  was 
too  hard  for  him." 

The  affidavit  of  Mr.  R.  A.  Fonts  stated  that  he  went  to  Springfield  and 
had  an  interview  with  George  Blazer. 

Mr.  Fonts  in  his  affidavit  said: 

"He  (Blazer)  stated  that  he  resides  at  Springfield,  Ohio,  and  worked 
for  a  short  time  for  the  Standard  Oil  Company,  while  W.  H.  Clark  was  there. 
He  stated  that  he  never  said  to  Mr.  Clark  or  anyone  else  that  if  he  could  not 
work  for  an  honest  company  he  would  quit,  and  for  that  reason  must  leave 
the  Standard  Oil  Company's  employment,  or  that  he  was  leaving  or  had  left 
the  Standard  Oil  Company's  employment  because  he  could  not  conscien- 
tiously draw  different  grades  of  oil  from^  the  same  tank.  He  also  stated  he 
left  the  employment  of  the  Standard  Oil  Company  because  he  did  not  like 
the  tank  wagon  work,  and  for  no  other  reason.  He  made  the  above  state- 
ment to  me,  but  declined  to  make  affidavit." 

Mr.  MATHEWS.  "His  statement  that  we  drew  four  different  grades  of 
oil  out  of  the  same  tank,  and  charged  four  different  prices,  is  absolutely 
false.  Mr.  Clark,  as  well  as  all  other  tank  wagon  drivers,  was  not  allowed 
to  discriminnte  between  one  buyer  and  another,  but  charged  all  customers 
the  same  price  for  the  same  grade  of  oil.     In  proof  of  this,  in  making  his 


B.   A.   MATHEWS.  417 

returns  at  night  to  the  cashier  his  total  sales  had  to  be  accounted  for  on  the 
basis  of  the  ruling  market.  Therefore,  he  could  not  cut  the  price  to  any 
buyer  without  paying  it  out  of  his  own  pocket,  and  it  goes  without  saying 
that  no  retailer  would  pay  more  than  the  market.  I  have  the  affidavits  of 
Mr.  Toland  and  Mr.  McMahon,  both  tank  wagon  drivers  at  the  time  Clark 
was  at  Springfield,  the  only  two  men  who  were  doing  the  same  kind  of  work 
that  Clark  did  at  Springfield,  showing  their  method  of  conducting  the  busi- 
ness, which  I  submit." 

The  affidavits  of  W.  W.  McMahon  and  C.  M.  Toland  flatly  denied  Clark's 
statements  in  regard  to  selling  oil  from  the  same  tank  as  of  different  grades 
and  at  different  prices. 

Mr.  MATHEWS.  "His' statement  with  reference  to  rebates  at  Spring- 
field is  untrue.  We  did  not  allow  Mr.  Clark,  while  at  Springfield,  to  make 
rebates. 

"His  statement  concerning  hours  of  labor  is  misleading  and  untrue. 
Our  tank  wagon  work  is  planned  with  the  view  of  a  day's  work  constituting 
10  hours.  In  making  drives  to  country  towns,  from  eight  to  14  miles,  it  is 
understood  that  when  a  driver  returns  his  day's  work  is  completed. 

"His  statements  about  fire  test  governing  the  quality  of  oils  are  not 
true.  One  hundred  and  twenty  (120)  degrees  of  fire  test,  by  Ohio  law,  is 
the  equivalent  of  one  hundred  and  fifty  (150)  degrees  by  the  Tagliabue  open 
cup.  Concerning  our  three  grades,  there  is  no  difference  in  the  fire  test  of 
the  same.  His  statement  that  there  is  10°  difference  is  false.  They  are  all 
150°  fire  test  by  the  Tagliabue  open  cup,  or  120°  fire  test  by  the  Ohio  State 
test,  Foster  cup,  which  is  the  State  test  required  by  Ohio. 

"The  fire  test  of  oil  required  by  Ohio  statutes  does  not  represent  quality, 
but  simply  safety.  Oil  may  be  exactly  the  same  fire  test  but  different  in 
illuminating  power.  The  quality  of  an  oil  is  distinguished  by  its  illuminat- 
ing quality. 

"His  statement  that  he  was  promoted  to  the  position  of  cashier  at 
Columbus  and  had  charge  of  the  work  around  the  warehouse  is  false  and 
absurd,  for  the  reason  that  his  position  was  simply  shipping  clerk,  under  a 
superintendent,  who  had  entire  charge  of  everything  around  the  works. 

"His  statement  concerning  boiled  linseed  oil  is  false  and  malicious.  The 
dryer  used  in  boiling  was  a  pure  linseed  oil  dryer,  which  cost  10  cents  per 
gallon  more  than  linseed  oil  and  increased  the  cost  instead  of  decreasing  it, 
and  improved  the  quality,  instead  of  adulterating  it,  as  testified  by  Clark. 

"His  statement  that  miners'  oil  is  made  by  compounding  cotton  seed  oil 
with  40  per  cent,  petroleum  is  false  and  malicious,  because  the  Ohio  law 
prohibits  such  a  large  percentage  of  petroleum  being  used.  The  law  is  rig- 
idly enforced  on  gravity  and  smoke  qualifications,  which  would  absolutely 
prevent  more  than  14  per  cent,  of  petroleum.  Miners'  oil  is  known  to  the 
Ohio  State  officials  to  be  cotton  seed  oil,  compounded  with  petroleum.  The 
price  of  miners'  oil  is  regulated  by  the  price  of  cotton  seed  oil,  and  sells 
about  two  cents  per  gallon  below.  It  was  malicious  for  Clark  to  state  that  a 
dealer  would  pay  34  cents  for  miners'  oil,  when  the  dealer  could  buy  cotton 
seed  oil  for  24  cents. 

"His  statement  that  lubricating  oil  is  received  in  blank  heads  at  Colum- 
bus, and  shipped  out  to  meet  the  requirements  of  the  trade,  without  regard 
to  contents,  is  untrue  and  absurd,  because  if  the  barrels  came  unbranded  it 
would  be  impossible  for  the  warehouse  man  to  tell  the  contents,  and  an 
order  for  cylinder  oil  might  be  filled  with  a  barrel  of  sewing  machine  oil,  or 
vice  versa,  if  Clark's  statement  were  true.  I  have  the  affidavit  of  Adam 
Paulus,  referred  to  by  Clark  as  'mixer.'  which  I  submit." 

The  affidavit  of  Adam  Paulus,  who  did  the  mixing  of  linseed  and  cotton 
seed  oil,  referred  to  by  Clark,  was  submitted.  It  corroborated  Mr.  Mathews' 
testimony. 

Mr.  MATHEWS.  "In  reference  to  his  statement  concerning  cut  prices 
and  rebates  at  Columbus,  as  he  was  only  a  shipping  clerk  (and  absolutely 
without  knowledge  regarding  marketing  matters)  his  statements  are  purely 
malicious.  On  the  general  question  of  competition  we  always  seek  to  pro- 
tect our  trade,  and  when  any  competitor  makes  a  cut  price  for  the  purpose 
of  taking  our  business  away  from  us  (quality  considered)  we  do  not  hesi- 
tate to  meet  it." 

27 


418  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

The  affidavit  of  Moses  K.  Gradwohl  denied  that  he  had  ever  taken  in 
$200  a  day  from  his  wagon,  as  stated  by  Clark.  He  said  his  average  daily 
deliveries  were  about  $50.  The  largest  daily  delivery  he  ever  made  was 
$100. 

Mr.  MATHEWS.  "His  statement  with  reference  to  having  an  arrange- 
ment with  competitors  to  advance  markets  at  Columbus,  is  false.  Strong^ 
competition  still  exists,  which  in  itself  contradicts  his  statement.  He  had 
no  knowledge  on  the  subject,  being  only  shipping  clerk  at  the  works,  located 
a  mile  and  a  half  away.  Therefore  he  would  know  nothing  of  what  was 
going  on  in  the  office. 

"His  statement  naming  competitive  brands  of  oil  at  Columbus  is  untrue. 
Their  brands  being  Ohio  State  Test.  Prime  White,  People's  Headlight,  Sun- 
cene,  Water  White,  and  Diamond  Light — not  Penoline,  Safety  Light,  and 
Electric  Light,  as  stated  by  him.  Ohio  State  Test,  Prime  White  and  Peo- 
ple's Headlight  cover  one  grade  of  oil;  Suncene  and  Water  White  another; 
Diamond  Light  a  third,  showing  clearly  their  trade  requirements. 

"His  statements  concerning  the  hiring  of  a  boy  to  watch  tank  cars  and 
being  paid  by  him  are  false. 

"His  statement  that  we  took  empty  barrels  at  an  exorbitant  price,  in 
order  to  hold  trade  on  oil,  is  false.  He  had  nothing  to  do  with  purchasing 
or  handling  of  empty  barrels,  and  had  no  knowledge  whatever  about  empty 
barrel  prices.  Our  price  at  Columbus  is  strictly  uniform  on  empty  barrels 
to  all  customers. 

"His  statement  that  he  was  manager  at  Urbana  is  untrue.  His  position 
was  simply  local  agent,  three-quarters  of  his  time  being  occupied  in  driving 
a  tank  wagon.     He  did  not  have  full  charge  of  all  the  business,  as  stated. 

"His  statement  about  William  Helmick  at  Urbana  is  untrue.  Mr.  Hel- 
mick  bought  only  one  carload  of  competitive  oil,  and,  after  he  had  sold 
about  half  the  car,  he  became  satisfied  that  he  would  lose  money  on  account 
of  leakage  and  poor  quality.  We  helped  him  out  by  purchasing  the  other 
half  of  the  car.  and  he  discontinued  jobbing  oil,  but  remained  in  the  oil 
business  as  a  peddler  for  about  two  years  thereafter.  We  did  not  at  any 
time  drop  the  price  while  he  was  in  the  business;  on  the  contrary,  what 
little  oil  Helmick  marketed  was  sold  by  him  at  a  cut  price.  No  threats  were 
made  by  Mr.  Hollings worth  or  Mr.  Welsh,  as  stated  by  Clark.  I  have  their 
affidavits,  which  I  submit,  and  also  the  affidavit  of  W.  H.  Hurley. 

"Helmick's  so-called  warehouse,  that  Clark  refers  to.  was  simply  a 
temporary  shed  made  of  refuse  old  car  lumber.  It  had  no  value  except  for 
kindling  wood,  and  Helmick  afterwards  used  it  for  that  purpose."     *     *     * 

"Mr.  Helmick  did  not  lose  any  money  during  the  few  days  he  was  try- 
ing to  wholesale  oil:  therefore  it  is  absurd  and  malicious  for  Clark  to  state 
that  any  action  of  ours  drove  Helmick  to  the  poorhouse.  The  loss  of  his 
money  was  due  to  an  entirely  different  cause." 

Affidavits  of  H.  S.  Hollingsworth.  William  Welsh.  W.  H.  Hurley,  Thomas 
Powers  and  N.  P.  Cone  were  submitted  utterly  refuting  Clark's  testimony 
on  the  several  matters  referred  to  in  the  above  testimony  of  Mr.  Mathews. 

The  affidavit  of  N.  P.  Cone  stated  that  William  Helmick's  destitution 
resulted  from  the  extravagance  of  his  family  and  other  domestic  troubles 
complained  of  by  him.  and  was  due  to  no  other  cause. 

Mr.  MATHEWS.  "His  statement  that  the  business  at  Urbana  ran 
about  40.000  to  .50,000  gallons  per  month  is  false,  the  average  being  only 
about  one-half. 

"His  statement  that  he  held  the  position  of  manager  at  Newark  is  false. 
His  position  was  that  of  local  agent,  same  as  at  Urbana,  three-quarters  of 
his  time  beine:  occupied  in  driving  tank  wagon  and  dray. 

"His  statement  that  the  average  monthly  output  at  Newark  was  80.000 
gallons  is  not  true,  the  correct  figures  being  less  than  one-half  that  amount. 

"With  reference  to  variation  in  prices  at  Newark  on  stove  gasoline,  the 
same  situation  was  true  elsewhere,  on  account  of  the  marked  advance  in 
prico  of  easoline.  Many  dealers  at  the  time  of  the  advance  were  under 
contract  for  a  period  of  time;  consequently  the  advance  only  applied  to 
those  who  were  not  under  contract.  But  as  contracts  expired  the  advance 
in  price  was  charged  to  them,  as  well  as  others. 


B.   A.   MATHEWS.  419 

"Answering  the  general  statements  made  by  Clark  relative  to  selling 
refined  oil  at  cut  prices  at  Newark:  All  dealers  were  treated  alike.  His 
statement  that  at  Newark  we  charged  Mr.  Rankin  six  cents  for  oil  and 
Showman  Bros,  seven  and  a  half  cents  is  false.  The  facts  are:  Showman 
Bros,  bought  their  oil  in  bulk  from  the  tank  wagon,  while  C.  C.  Rankin 
bought  oil  in  barrels  and  paid  one  and  a  half  cents  per  gallon  more  than 
Showman  Bros,  paid  for  the  same  oil,  but  we  allowed  Rankin  75  cents  when 
he  returned  the  empty  barrel,  the  equivalent  of  one  and  a  half  cents  per 
gallon,  which  made  the  net  cost  to  both  dealers  the  same. 

"His  statement  that  Hagmeier,  a  dealer  at  Newark,  was  rebated  one 
cent  per  gallon  on  gasoline  and  two  cents  on  oil,  is  false.  Clark  was  given 
special  permission  to  pay  a  rebate  which  was  one-half  cent  per  gallon  on 
both  oil  and  gasoline,  under  a  contract.  Mr.  Clark  paid  the  one-half  cent 
himself  and  then  testified  here  that  he  paid  one  and  two  cents.  He  also 
presented  a  letter  from  George  J.  Hagmeier  stating  that  he  had  received 
rebates  and  I  have  an  affidavit  from  Mr.  Hagmeier  showing  how  that  letter 
was  procured." 

The  affidavit  of  George  J.  Hagmeier  stated  that  under  a  contract  for  a 
large  quantity  of  oil  he  had  received  a  rebate  of  one-half  cent  per  gallon  on 
both  oil  and  gasoline.  He  said  it  was  not  true  that  he  had  ever  received  a 
rebate  of  one  cent  per  gallon  on  gasoline  and  two  cents  per  gallon  on  oil. 
He  had  never  received  more  than  the  one-half  cent  per  gallon,  as  per  his  con- 
tract. 

In  regard  to  the  note  or  statement,  signed  by  Mr.  Hagmeier,  and  read 
by  Clark  before  the  Industrial  Commission  in  regard  to  rebates  on  goods, 
Hagmeier  stated  in  his  affidavit  that  he  had  signed  some  such  statement  in 
order  to  assist  Clark  in  straightening  out  his  accounts  with  the  company, 
as  Clark  had  stated  that  his  shortage  had  been  occasioned  in  part  by  the 
payment  of  rebates. 

Mr.  Mathews  said  that  Clark's  statement  in  regard  to  a  trick  he  alleged 
the  witness  had  taught  him  in  making  lamp  tests  by  turning  the  wick  in  a 
way  that  sulphur  could  not  be  smelled  when  Ohio  oil  was  used,  was  untrue. 
He  said  it  was  the  height  of  folly  for  any  man  to  say  that  the  people  could 
be  humbugged  by  the  turning  up  of  one  flame  higher  than  the  other. 

The  witness  submitted  affidavits  of  D.  J.  Hull,  H.  S.  Hollingsworth,  E. 
G.  Mathews,  W.  W.  Hughes  and  W.  A.  Reed  (the  last  named  not  being  in 
the  employ  of  the  Standard  Oil  Company  when  Clark  or  the  witness  testi- 
fied) which  characterized  Clark's  statement  about  the  trick  of  turning  the 
wick  as  utterly  false.  The  names  of  Hull,  Hollingsworth,  Mathews,  Hu2:hes 
and  Reed  had  been  given  by  Clark,  who  said  they  had  knoweldge  of  these 
frauds  being  used  in  making  lamp  tests.  All  of  these  witnesses  testified 
that  when  Ohio  and  Pennsylvania  oils  are  tested  lamps  of  the  same  size, 
burners  of  the  same  kind,  wicks  of  the  same  make  and  chimneys  of  the 
same  make  are  always  used,  and  at  the  beginning  of  the  test  the  height  of 
the  flame  in  each  lamp  is  precisely  the  same.  They  all  said  that  they  had 
never  known  of  any  deception  being  used  in  these  tests. 

The  witness  said  that  in  order  that  the  commission  might  fully  under- 
stand the  falsity  of  the  statements  made  by  Clark  in  relation  to  the  drawing 
of  seven  different  grades  of  oil  from  one  tank  by  a  "twist  of  the  wrist," 
that  he  would  state  that  the  Standard  Oil  Company  had  a  tank  wagon  at 
Newark  with  three  compartments,  showing  conclusively  that  they  carry 
three  grades  of  goods. 

.  Mr.  MATHEWS.  "Concerning  his  general  statement  on  lubricating 
oils:  He  refers  to  our  trade  mark  brands  on  which  there  is  no  competition, 
and  for  which  we  have  a  regular  schedule,  the  price  varying  only  in  accord- 
ance with  the  quantity  used  and  the  cost  of  delivering  same  to  the  con- 
sumers. Inasmuch  as  no  competitor  can  sell  these  oils,  there  is  no  neces- 
sity for  our  making  any  different  price  other  than  our  schedule. 

"His  statements  concerning  the  purchase  and  removal  of  the  alleged 
warehouse  at  Newark,  in  order  to  drive  out  a  competitor,  are  false.  After 
the  so-called  warehouse  was  purchased.  Donaldson,  the  person  whom  Clark 
claimed  we  drove  out  of  business  by  the  purchase  of  a  shed  from  its  owner 
(without  Donaldson's  knowledge),  continued  in  business  by  renting  a  barn. 


420  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

"Further,  Clark  purchased  the  shed  unknown  to  and  unauthorized  by 
me  or  Mr.  Hollingsworth,  and  moved  the  building  to  his  (Clark  s)  own  pri- 
vate lot,  for  his  own  private  use,  and  paid  for  by  him  and  not  by/us. 

"We  derived  no  benefit  from  the  transaction  and  I  criticised  Clark 
severely  when  the  subject  came  to  my  notice.  This  so-called  warehouse, 
emphasized  so  largely  by  Clark,  was  only  an  old  shed,  about  lour  leet  by 
four  feet,  with  capacity  for  simply  one  barrel  of  oil.  I  have  photograph  of 
shed  and  Mr.  Hollingsworth's  affidavit,  which  I  submit." 

The  affidavit  of  Mr.  Hollingsworth  corroborated  the  above  statements  of 
Mr.  Mathews.  He  said  that  the  first  he  knew  of  the  transaction  in  regard 
to  Donaldson's  warehouse,  Clark  had  purchased  the  building  for  $2.50  and 
moved  it  on  his  private  lot,  stating  to  him  that  he  bought  the  shed  because 
he  needed  it  for  an  out-house.  The  so-called  "warehouse"  was  about  four 
feet  by  four  feet,  with  a  capacity  for  storing  a  single  barrel  of  oil,  and  in 
the  judgment  of  Mr.  Hollingsworth,  $2.50  was  an  excessive  price  for  it.  He 
said  that  the  purchase  of  the  shed  did  not  drive  Donaldson  out  of  the  busi- 
ness, as  he  rented  a  barn  afterwards  and  stored  his  barreled  oil  in  it. 

Mr.  MATHEWS.  "His  statement  concerning  Mr.  King  and  others  at 
Newark,  running  tank  wagons,  is  very  misleading,  because  the  term  gener- 
ally applies  to  our  method  of  delivery  to  the  retail  trade,  whereas  they  were 
peddlers  who  ran  their  own  wagons,  bought  their  oil  from  us  and  made 
whatever  price  to  the  consumer  they  desired  and  were  practically  regulated 
by  the  price  made  by  retail  stores.  We  had  nothing  to  do  with  fixing  such 
prices — these  peddlers  all  working  for  themselves. 

"Mr.  Lockwood  was  not  a  manager,  nor  a  special  inspector,  but  simply 
a  traveling  auditor,  whose  duty  it  was  to  visit  stations,  check  up  stocks, 
balance  cash,  check  accounts  and  see  that  our  agents  were  conducting  the 
business  honestly.  Mr.  Clark's  reports  were  not  received  regularly,  and 
after  I  had  requested  him  repeatedly  to  give  the  matter  prompt  attention 
(and  he  having  failed  to  do  so),  at  my  request  Mr.  Lockwood  was  sent  to 
Newark  to  check  Clark  up.  He  did  so,  and  after  balancing  the  cash  (which 
is  the  first  thing  an  auditor  does)  he  found  it  short.  This  was  reported  to 
me  and  I  suspended  Clark  until  Mr.  Lockwood  had  completed  his  examina- 
tion. Further  investigation  disclosed  the  fact  that  collections  had  been 
made  by  Clark  and  not  reported. 

"Some  of  these  items  were  made  good  by  Clark  from  day  to  day  by  pay- 
ments to  Mr.  Lockwood  on  the  theory  that  they  were  errors.  They,  how- 
ever, became  so  numerous  that  Mr.  Lockwood  finally  refused  to  receive  any 
more  payments  until  he  had  completed  his  examination,  when,  according  to 
custom,  he  would  make  a  final  report,  and  leave  the  adjustment  to  the 
officers  of  the  company. 

"From  the  time  that  I  suspected  him  up  to  date.  I  have  never  tried  to 
re-engage  him,  directly  or  indirectly,  through  Mr.  Fouts  or  anyone  else.  I 
submit  Mr.  Fonts'  affidavit  showing  that  he  has  not." 

The  affidavit  of  Mr.  Fouts  stated  that  he  had  never  had  any  talk  of  any 
kind  whatever  with  Mr.  Clark  upon  the  subject  of  his  re-employment  by  the 
Standard  Oil  Company;  also  that  he  was  a  traveling  man  and  had  no  author- 
ity to  employ  anyone  for  the  company. 

Mr.  Mathews  denied  the  truth  of  Clark's  statement  that  the  Standard 
Oil  Company  deducted  from  his  salary  errors  which  others  had  made. 

Mr.  Mathews  said:  "The  final  report  of  our  auditor  showed  Mr.  Clark's 
shortage  to  be  $23L57.  He  made  good  $121.93.  The  balance,  $109.64.  was  paid 
in  full  by  his  bonding  company  after  they  had  examined  the  report  and 
found  it  to  be  correct. 

"He  was  finally  arrested  by  the  bonding  company  who  had  signed  his 
bond  as  agent." 

Q.  (By  Vice-Chairman  PHILLIPS.)  What  became  of  him  after  his 
arrest?  A.  He  was  arrested  on  the  charge  of  embezzling  $109.64,  which  is  a 
sum  largely  in  excess  of  the  amount,  $35,  required  under  the  Ohio  laws  to 
constitute  a  felony.  He  was  bound  over  by  the  examining  magistrate.  It 
appeared  that  the  aggregate  was  taken  in  small  sums  and  at  different 
times;  no  one  sum  amounting  to  $35,  or  sufficient  to  constitute  a  felony 
under   the   Ohio   statutes.     Therefore   the   grand   jury   failed   to   indict   him, 


GEORGE  RICE.  421 

on  the  ground  that  the  offenses  could  not  be  joined  together,  and  that  no 
felony  had  been  committed;   only  petty  larceny. 

Mr.  Mathews  said  that  occasionally  his  company  had  a  contract  with  a 
dealer  who  would  buy  all  of  his  oil  from  them  for  a  half  cent  a  gallon  off 
the  price.  Such  contracts  were  very  rare  when  he  testified.  The  amount 
off  never  exceeded  half  a  cent.  The  consideration  for  that  concession  was 
that  the  dealer  should  purchase  all  of  his  oil  from  them,  such  contracts 
usually  being  for  a  year.     Such  contracts  related  solely  to  illuminating  oil. 

The  witness  said  he  had  nothing  to  do  with  railroad  oils  and  had  no 
knowledge  on  that  subject. 

He  said  that  as  a  rule  it  was  not  their  custom  to  put  down  the  price  of 
oil  in  a  locality  where  there  was  competition  unless  the  competitor  should 
cut  the  price  first,  and  if  the  quality  was  the  same,  they  did  not  hesitate  to 
meet  the  price  in  such  cases  in  order  to  hold  their  business. 

He  said  that  about  three-fourths  of  the  affidavits  he  had  presented  to 
the  commission  to  sustain  his  reply  to  the  charges  made  by  Mr.  Clark  were 
from  people  who  were  connected  with  the  Standard  Oil  Company.  These  af- 
fidavits had  been  given  voluntarily  and  no  one  who  had  been  shown  Clark's 
testimony,  and  who  had  personal  knowledge  of  the  matters  testified  to  by 
him,  had  declined  to  make  affidavit. 


CHAPTER  XIX. 

TESTIMONY  OF  MR.  GEORGE  RICE,  OF  MARIETTA, 
OHIO,  PRODUCER  AND  REFINER  OF  OIL. 

For  many  years  Mr.  George  Rice,  of  Marietta,  Ohio,  has  been  one  of  the 
most  picturesque  men  among  those  who  have  gained  prominence  throughout 
the  country  because  of  their  failure  to  attain  success  as  producers  or  refiners 
of  oil.  Most  men  achieve  lame  by  their  successes  in  life,  but  Mr.  Rice  has 
secured  either  fame  or  notoriety,  according  to  the  point  of  view  one  may  take 
of  the  course  he  has  pursued,  by  his  failures  in  life.  Of  course  he  has  held 
the  Standard  Oil  Company  responsible  for  every  failure  of  his  life. 

Mr.  Rice  went  into  the  oil  business  when  it  yielded  large  profits  and  be- 
fore competition  had  placed  it  on  a  level  with  other  business  enterprises.  It 
did  not  require  a  great  deal  of  business  ability  for  a  man  to  succeed  at  that 
time,  provided  he  was  fortunate  enough  to  get  hold  of  paying  properties, 
iviature  was  lavish  in  yielding  up  the  wealth  stored  in  the  earth  and  little 
ingenuity  was  required  to  develop  the  wells.  The  development  of  the  oil 
btisiness  ran  in  parallel  lines  with  every  other  new  enterprise  that  is  based 
on  a  wide-spread  demand  and  a  limited  source  of  supply.  The  large  profits 
attracted  both  capital  and  men  of  ingenuity.  In  the  field  of  competition, 
which  was  entered  by  more  men  than  could  make  a  success  in  it,  the  same 
restilts  were  shown  as  will  always  be  found  under  similar  conditions,  what- 
ever the  branch  of  industry  may  be.  Those  of  least  business  ability  and  with 
small  capital  had  to  get  out  of  the  btisiness  wherever  ingenuity  and  large 
capital  were  absolutely  necessary  for  success.  The  production  of  oil  offered 
a  field  for  those  who  liad  but  a  small  stock  of  these  necessary  requisities  be- 
catise  everything  attending  that  branch  of  the  btisiness  was  quite  simple 
when  once  paying  oil  property  had  been  secured. 

It  was  quite  another  matter  in  the  refining  of  oil.  In  order  that  oil  could 
be  refined  on  the  most  economical  basis,  it  was  necessary  to  do  btisiness  on 
a  large  scale,  and  above  all  to  find  a  market  for  the  finished  product.  The 
marketing  facilities  involved  the  construction  of  pipe  lines  and  an  organiza- 
tion of  superior  character. 

Mr.  Rice  was  a  jovial  and  sanguine  man  in  the  early  days  of  the  oil  de- 
velopment. It  was  in  1865  that  he  located  at  Pithole,  Pennsylvania,  and  he 
remained  there  until  1870.  He  was  a  producer  and  a  speculator  in  oils,  lands 
and  leases.  He  was  fairly  successful  and  drew  from  the  land  of  many  a 
struggling  farmer,  in  periods  of  a  few  months,  more  wealth  than  that  farmer 


422  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

had  been  able  to  secure  by  tilling  the  soil  during  a  lifetime.  About  1870  he 
located  at  Marietta,  Ohio,  near  what  was  commonly  known  as  the  "West 
Virginia  field."  At  that  time  oil  was  bringing  good  prices.  From  1870  to 
1872  it  sold  on  an  average  for  from  $3  to  $4  a  barrel.  At  the  end  of  that 
period,  or  in  1872-73,  an  association  was  formed  and  a  compact  was  made 
with  the  refiners  to  fix  stable  prices  for  crude  oil,  which  was  done  by  the 
adoption  of  a  sliding  scale.  When  refined  oil  on  the  market  advanced  one 
cent  per  gallon,  crude  oil  was  advanced  25  cents  per  barrel.  This  ratio  con- 
tinued for  three  or  four  years.  Mr.  Rice  made  money  and  might  have  con- 
tinued to  do  so  uninterruptedly  had  he  continued  to  be  a  producer,  for  which 
his  talents  fitted  him.  He  became  ambitious  to  be  a  refiner,  and,  as  both  pro- 
ducer and  refiner,  naturally  expected  to  receive  a  double  advantage  through 
the  operation  of  the  sliding  scale.  This  sliding  scale  was  operated  on  what 
was  known  as  the  West  Virginia  plan,  and  it  was  thought  that  it  would  ex- 
tend throughout  the  country.  Under  its  operation  Mr.  Rice  started  a  refinery 
with  a  capacity  of  500  barrels  a  week.  In  this  new  field  of  industry  a  very 
different  class  of  talent  was  demanded  of  him,  and  he  had  to  market  a  small 
quantity  of  oil  in  an  economical  way.  His  task  would  have  been  a  difficult 
one  had  he  been  operating  on  a  larger  scale,  but  he  was  met  with  one  of  those 
exigencies  that  are  unfortunate  for  any  business  man. 

The  high  prices  of  oil  had  stimulated  men  of  brains,  energy  and  capital 
in  the  development  of  oil  fields.  The  result  was  an  over-production  in  oil 
and  an  immense  development  in  the  Pennsylvania  field,  which  had  the  nat- 
ural effect  of  reducing  the  value  of  that  commodity  in  the  markets.  This 
over-production  caused  the  destruction  of  the  sliding  scale  system,  which 
had  acted  as  a  strong  stimulant  in  maintaining  and  equalizing  the  prices  of 
crude  and  refined  petroleum.  Refiners  had  turned  their  attention  to  the 
Pennsylvania  fields,  where  the  energy  of  ex-Representative  Thomas  W. 
Phillips,  vice-chairman  of  the  Industrial  Commission,  contributed  largely  to 
over-production  and  the  falling  of  prices.  Undoubtedly  the  large  production 
secured  by  Mr.  Phillips  tended  materially  to  wreck  the  fortunes  of  Mr.  Rice. 
Mr.  Rice  was  continuing  to  produce  and  to  refine  oil,  and  having  to  rely 
upon  his  own  resources  sought  nearby  markets  in  the  State  of  Ohio,  and  for 
his  small  shipments  was  obliged  to  pay  heavy  rates.  He  was  struggling 
along  when  his  whole  enterprise  received  a  terrible  blow  through  an  act  of 
Congress  passed  in  1879.  That  act  prohibited  the  carrying  of  crude  or  refined 
petroleum  on  passenger  steamboats  as  freight.  He  had  been  shipping  his 
oil  in  barrels  by  means  of  river  transportation,  which  was  cut  off  from  his 
tise  by  reason  of  that  act.  Refining  centers  changed  rapidly.  Some  had 
been  moved  to  Pittsburg  where  advantage  could  be  taken  of  the  cheaper 
prices  that  v/ere  reigning,  and  where  water  transportation  was  frequently 
available.  The  bulk  of  the  l)usiness  done  by  Mr.  Rice  was  not  large  enough 
to  permit  him  to  ship  his  refined  oil  by  barges  and  he  was  obliged  to  depend 
entirely  upon  the  railroads  to  transport  his  oil.  In  that  day  railroad  rates 
were  not  published  and  the  amount  of  freight  charged  on  every  shipment  was 
the  result  of  a  special  contract  relating  to  it.  Mr.  Rice  struggled  for  a  time 
against  the  inevitable,  but  was  finally  obliged  to  give  up  the  contest,  and 
from  that  day  until  this  he  has  occupied  himself  by  carrying  on  a  persistent 
fight  against  railroads  and  the  Standard  Oil  Company.  He  fought  the  rail- 
roads because  he  argued  that  had  they  co-operated  with  him  in  his  business, 
and  given  him  the  lates  he  desired,  he  might  not  have  failed.  He  fought  the 
Standard  Oil  Company  because  that  company,  managed  on  a  larger  scale 
than  his  own  business,  and  enabled  to  lake  advantage  of  a  hundred  econo- 
mies that  were  beyond  his  reach,  continued  in  business  by  adapting  itself 
from  time  to  time  to  changing  conditions,  the  men  connected  with  it  m.eet- 
ing  prosperity  instead  of  adversity  which  was  the  portion  of  Mr.  Rico.  Had 
Mr.  Rice  continued  as  a  producer  of  crude  oil  he  would  probably  have  re- 
mained a  prosperous  man  and  perhaps  would  have  become  a  millionaire,  as 
did  some  other  producers  who  were  wise  enough  to  remain  in  a  business 
which  tliey  understood  and  lor  which  their  talents  fitted  them.  He  testified 
that  no  obstacle  was  thrown  in  his  way  as  a  ])roducer  of  oil. 

Mr.  Rice  appeared  before  the  commission  on  NovcMuber  in.  ISft!*.  to  give 
his  testimony,  but  did  not  go  on  the  stand  until  the  following  day,  when  he 
consumed  nearly  five  hours  in  presenting  his  case.     His  suggestion  of  legis- 


GEORGE   RICE.  423 

lation  to  prevent  the  alleged  injustice  which  he  claimed,  was  altogether 
■unique.  It  was  summed  up  in  his  recommendation  that  the  railroads  of  the 
United  States  be  owned  by  the  government,  that  the  800,000  employes  on 
these  roads  be  disfranchised,  that  railroad  and  trust  officials  be  shot  as  a  last 
recourse,  and  that  the  protective  tariff  be  taken  off  of  goods  manufactured 
ty  trusts. 

Mr.  Rice's  appearance  at  the  rooms  of  the  commission  caused  quite  a 
commotion  because  of  the  manner  in  which  he  proposed  to  place  his  state- 
ments before  the  commission.  He  had  prepared  and  printed  a  pamphlet  of 
77  pages  which  contained  a  very  exhaustive  review  of  the  testimony  he  had 
given  on  numerous  occasions  during  a  number  of  years.  He  had  entitled  his 
pamphlet  "The  testimony  of  George  Rice,  given  before  the  Industrial  Com- 
mission, at  Washington,  D.  C."  For  some  reason,  known  only  to  himself,  he 
liad  copyrighted  his  statement. 

Of  course  neither  Mr.  Rice  nor  anyone  else  could  be  warranted  in  copy- 
righting testimony  which  would  naturally  be  the  property  of  the  government, 
and  his  statements  could  not  become  testimony  until  they  had  actually  been 
given.  The  commission  took  exception  to  his  method,  and  after  the  com- 
missioners had  examined  the  pamphlet  and  found  that  it  contained  attacks 
on  a  number  of  government  officials,  including  President  McKinley  and  two 
ex-Presidents  of  the  United  States,  refused  to  recognize  the  little  book  and 
criticised  the  method  adopted  by  its  author  who  announced  that  it  was  his 
purpose  to  use  the  document  for  campaign  purposes. 

Mr.  Rice  saw  that  he  had  committed  a  serious  error  in  the  course  he 
had  pursued,  and  promptly  took  steps  to  change  the  copyright  name  of  his 
pamphlet,  calling  it  "The  proposed  testimony  of  George  Rice  to  be  given 
before  the  Industrial  Commission."  He  was  told  that  the  purpose  of  the 
commission  was  to  secure  information  and  that  it  would  not  lend  itself  to 
any  attempt  to  attack  the  character  of  individuals  by  the  making  of  mere 
declamatory  statements.  It  was  agreed  that  Mr.  Rice  should  rearrange  his 
printed  statement  in  accordance  with  this  decision,  which  did  not  involve 
any  change  in  his  very  extravagant  and  unwarranted  language  used  in 
referiing  to  the  Standard  Oil  Company  and  those  connected  with  it. 

All  this  had  taken  up  so  much  time  that  Mr.  Rice  could  not  go  on  the 
stand  until  the  next  day,  when  he  proceeded  to  recount  the  old  story  of  his 
failure  to  succeed  in  business  ascribing  all  his  misfortunes  to  the  Standard 
Oil  Company.  He  was  like  a  sick  man  who  attributed  his  ailments  to 
some  imaginary  disease,  being  unable  to  diagnose  his  own  own  case  in  a 
rational  manner.  At  no  time  did  he  doubt  that  he  had  conducted  his  busi- 
ness with  all  that  ability  that  is  necessary  to  insure  success  and  he  was  con- 
vinced that  he  had  always  been  pursued  by  a  relentless  Nemesis  under  the 
name  of  the  Standard  Oil  Company. 

Mr.  Rice  began  his  testimony  by  a  long  review  of  his  business  troubles, 
tracing  to  the  railroads  of  the  country  and  to  the  Standard  Oil  Company 
every  misfortune  of  his  life.  Before  he  was  permitted  to  begin  his  testi- 
mony he  was  questioned  by  members  of  the  commission  in  order  that  it 
might  be  shown  that  the  pamphlet  he  had  prepared  and  had  at  first  entitled 
"Testimony  given  before  the  Industrial  Commission."  was  not  the  result  of 
any  questions  submitted  to  him  by  anyone  connected  with  the  commission, 
and  that  in  no  way  could  it  be  connected  with  that  body.  This  course  was 
taken  by  the  commission  in  order  that  Mr.  Rice  should  not  be  able  to  attach 
any  responsibility  to  the  commission  for  those  portions  of  his  pamphlet 
which  he  was  told  he  would  not  be  permitted  to  bring  before  the  commis- 
sion. The  portions  of  this  pamphlet  which  he  was  not  permitted  to  intro- 
duce as  evidence  follow: 

"Section  6  of  the  interstate  commerce  act  provides  that  all  original 
tariff  sheets: 

"Shall  also  state  separately  the  terminal  charfjes  and  any  i-uJcs  or  resulation.s 
which  in  any  wise  change,  affect  or  d*>termine  any  part  or  the  aggregate  of  snt-li 
aforesaid  rates  and  fares  and  charges. 

"The  railroads,  in  gross  violation  of  this  section,  issue  and  file  with 
the  commission,  general  rate  tariff  sheets  for  public  use,  and  then  side- 
track these  by  the  issuance  of  innumerable  supplements,  special  oil  tariffs, 
special  circulars,  commodity  rates,  etc.,  that  are  often  and  indiscriminately 


424  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

filed,  as  substitutes  to  change,  cancel  and  amend  the  original  tariffs,  and  to 
such  an  extent  is  this  done  that  in  reality  there  is  no  head  nor  tail  left  to  it, 
very  little  of  the  body,  but  it  stands  inviolate  for  public  use. 

"The  query  is:  Why  is  it  that  for  12  years  the  Interstate  Commerce 
Commission  have  neglected  their  duty  and  not  corrected  this  gross  evasion 
of  the  law,  and  allowed  such  special  tariffs  to  be  filed,  and  why  is  it  that  all 
general  tariffs  omit  this  wise  provision  of  the  law,  and  why  is  it  that  rail- 
roads do  not  comply  with  the  law  in  any  of  its  essentials,  nor  forced 
thereto? 

"The  interstate  commerce  act  provided  a  penalty  on  carrier  officials, 
and,  by  amendment,  on  the  shippers,  of  $5,000  fine  and  two  years  in  the 
penitentiary  for  each  and  every  offense,  and  with  such  stringent  measures 
no  deterrent  effect  is  had  on  rail  or  trust  officials.  The  same  old  unbroken 
line  of  freight  discriminations  for  27  years  in  the  form  of  'secret  rates, 
drawbacks,  rebates  and  other  devices,'  have  continued  to  exist  up  to  date 
without  a  break,  and  for  the  reason  that  not  a  violator  of  the  act  has  yet 
been  sent  to  the  penitentiary  to  atone  for  his  misdeeds;  for  when  the 
doors  have  nearly  been  reached  a  pardon  from  the  President  has  annulled 
the  act  and  set  the  convict  free.  All  this,  in  very  truth,  has  so  far  made 
the  statute  but  a  farce  instead  of  a  very  solemn  Congressional  enactment 
intended  for  the  benefit  of  the  people.  And  those  who  are  charged  with 
its  proper  administration  and  execution  should  blush  for  shame  to  know 
that  those  who  have  been  and  are  so  monstrously  and  recklessly  defiant  of 
It  should  go  so  long  unwhipped  of  justice. 

"It  costs  $200,000  per  annum  to  run  the  Interstate  Commerce  Commis- 
sion, or  two  and  a  half  millions  already  expended  since  its  inception,  and 
what  do  the  people  get  in  return?  Nothing.  No  relief  whatsoever,  with  12 
years'  trial  of  the  act.  from  the  gross  rebates  or  freight  discriminations, 
W'holly  in  the  interest  of  the  exclusive  few,  and  the  question  of  the  hour  is: 
How  much  longer  will  the  people  stand  those  highwaymanlike  tactics  and 
piratical  assaults  upon  their  sacred  rights  of  eminent  domain? 

"The  State  exercises  its  right  of  eminent  domain  to  give  the  right  of 
way  to  railroads:  the  people  thus  part  with  their  property  to  these  corpora- 
tions on  the  faith  that  they  shall  exercise  the  franchises  thus  granted  hon- 
estly and  with  an  equal  hand. 

"It  is  a  burning  shame  that  these  rights  and  franchises,  the  gifts  of  the 
State,  should  be  administered  by  railroad  magnates  to  the  impoverishment 
and  slavery  of  the  people. 

"If  the  Federal  anti-trust  act  had  been  immediately  and  properly  en- 
forced by  the  Attorney-General,  as  is  specifically  required,  all  the  then 
existing  trusts  would  have  long  since  been  destroyed  and  no  more  would 
have  been  formed,  and  the  present  epidemic  of  trusts  unknown. 

"The  Congress,  on  demand  of  the  people,  passed  certain  special  laws  for 
their  relief,  but  because  of  their  non-enforcement  by  certain  delegated 
officials,  the  act  becomes  a  nullity,  by  the  non-action  of  one  man,  a  sworn 
government  official,  who  seems  to  use  his  power  to  do  or  not  to  do. 

"Eleven  years  ago  (1888)  there  was  an  exhaustive  investigation  by  Con- 
gress of  trusts,  which  resulted  in  the  enactment  in  1890  of  this  broad,  most 
comprehensive  and  important  of  all  acts,  for  the  well-being  and  commercial 
relief  of  the  citizen,  and  if  said  act  had  been  enforced  at  an  early  date  by 
the  Department  of  .lustice,  through  its  Attorney-General,  as  the  act  specifi- 
cally requires  him  to  do,  the  then  existing  unlawful  trusts  and  combinations 
would  have  long  ere  this  ceased  to  exist,  no  more  would  have  been  formed, 
and  the  present  epidemic  of  trusts  would  be  unknown. 

'If  trust  and  rail  officials  had  complied  with  the  anti-trust  act,  as  it 
■was  their  duty  to  do,  or  been  forced  thereto,  there  would  not  now  exist  that 
great  unrest  and  discontent  that  at  present  pervades  the  land  and  there 
would  have  been  no  cause  for  the  creation  and  appointment  of  this  commis- 
sion. To  the  great  credit  of  the  United  States  Supreme  Court,  they  have 
taken  a  broad  and  liberal  view  of  the  Sherman  anti-trust  act.  and  decided 
that  it  'applies  to  and  covers  common  carriers  by  railroads'  which  adds 
vital  importance  to  the  act. 


GEORGE  RICE.  425 

"By  the  Official  Railway  Guide  of  September,  1899,  there  exists  to-day 
44  separate  and  distinctly  illegal  combinations,  composed  of  joint  railroad, 
lake  and  ocean  steamship  lines,  thus  precluding  excuse  for  water  competition. 

"These  several  pooled  traffic  associations  and  freight  committees  (latter 
new  term)  represent  all  the  principal  railroads  and  water  lines  in  the 
United  States,  including  some  of  the  Canadian  railways,  working  unitedly 
and  in  unison  for  the  unlawful  maintenance  of  joint  freight  rates,  both 
rail  and  water,  which  is  in  'restraint  of  trade'  as  forbidden  by  the  Federal 
anti-trust  act  and  confirmed  by  the  Supreme  Court. 

"Section  5  of  the  interstate  commerce  act  reads  as  follows: 
"  'That  it  shall  be  unlawful  for  any  common  carrier  subject  to  the  provisions  of 
this  act  to  enter  into  any  contract,  agreement,  or  combination  with  any  other  com- 
mon carrier  or  carriers  for  the  pooling  of  freights  of  different  and  competing  rail- 
roads or  to  divide  between  them  the  aggregate  or  net  proceeds  of  the  earnings  of 
such  railroads,  or  any  portion  thereof;  and  in  any  case  of  an  agreement  for  the 
pooling  of  freights  as  aforesaid,  each  day  of  its  continuance  shall  be  deemed  a 
separate    offence.' 

"And  why  Is  it  that  the  Interstate  Commerce  Commission  for  12  years 
have  not  entered  complaint  against  these  unlawful  combines  as  required 
so  to  do,  under  section  12  of  the  act? 

"This  act  was  passed  during  the  administration  of  President  Benjamin 
Harrison,  in  the  second  year  of  his  term,  who  signed  it,  and  who  was  finally 
cognizant  of  its  terms,  and  whose  sworn  duty  it  was  to  have  directed  his 
own  appointed  attorney-general  to  vigorously  execute  the  same,  and  who 
becomes  the  most  responsible  for  its  non-enforcement,  and  the  enormous 
attendant  evils  resulting  therefrom. 

"His  successor,  Grover  Cleveland,  did  no  better,  and  our  President, 
William  McKinley,  follows  in  their  foot-steps.  Is  this  not  an  appalling  ex- 
posure of  the  dereliction  of  official  duty,  a  dishonored  and  prostituted  ad- 
ministration of  the  solemn  laws  of  our  land. 

"Trusts  continue  to  fatten  and  spread  their  spawn,  and  the  law  is  im- 
potent, made  so  by  reason  of  its  non-enforcement  by  public  officials  sworn 
to  enforce  it.  Years  of  pleading  and  appeal  by  the  people  to  their  repre- 
sentatives in  Congress  for  the  passage  of  an  ideal  act  like  this,  the  prompt 
enforcement  of  which  would  have  relieved  them  of  their  great  burdens  and 
of  the  increasing  pressure  and  oppression  of  these  gigantic  and  unlawful 
trusts  and  combinations  which  are  now  making  them  serfs  and  vassals  to 
the  piratical  schemes  of  a  few  men,  who,  in  bold  defiance  of  our  laws,  un- 
lawfully exact  from  off  the  honest  labor  and  toil  of  the  masses  hundreds  of 
millions  of  dollars,  have  proved  unavailing. 

"A  century  ago  the  American  colonies,  goaded  to  despair  by  long-con- 
tinued injuries,  insults  and  exactions,  broke  the  fetters  that  had  bound  them 
for  many  years,  and  appealing  to  the  Supreme  Judge  of  the  world  for  the 
rectitude  of  their  intentions,  'assumed  amongst  the  powers  of  the  earth  the 
separate  and  equal  station  to  which  the  laws  of  nature  and  of  nature's  God 
entitled  them.'  In  that  renowned  Declaration  of  Independence  our  fore- 
fathers asserted  'that  when  a  long  train  of  abuses  and  usurpations,  pursuing 
invariably  the  same  object,  evinces  a  design  to  reduce  them  under  absolute 
despotism,  it  is  their  right,  it  is  their  duty,  to  throw  off  their  oppressors  and 
provide  new  guards  for  future  security.' 

"The  last  resort  is  for  the  people  to  retake  into  their  own  hands  the 
power  that  has  been  delegated  and  abused.  Vigilance  committees  have  more 
than  once  had  a  purifying  influence.  There  may  be  conditions  which  will 
again  render  them  a  necessity.  There  is  a  limit  to  human  forbearance. 
Has  that  limit  yet  been  reached? 

"I  am  free  to  assert  that  unless  some  drastic  measures  are  soon  taken 
to  do  justice  for  the  people  the  end  will  come  in  an  ugly  shape.  The  colossal 
fortunes  that  have  been  piled  up  as  a  result  of  the  advantages  enjoyed  by 
the  few  and  denied  to  the  many,  represent  just  that  much  money  coined 
from  the  blood  sweat  of  the  masses.  I  do  not  believe  any  system  will  be 
permitted  to  exist  which  allows  one  man  to  accumulate  a  fortune  of  four  or 
five  hundred  millions  of  dollars,  while  millions  of  his  fellow  creatures  are 
suffering  for  the  bare  necessities  of  life. 


426  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

"Every  great  wrong  of  the  people  can  be  traced  back  to  the  greed  and 
selfishness  of  the  men  who  have  cornered  the  resources  of  the  earth,  who 
keep  the  'corner'  Intact  by  reason  of  an  illicit  power  bestowed  upon  them 
by  corrupt  officials  who  for  the  time  being  constituted  the  State.  These 
criminal  monopolies  would  be  impossible  if  officials  who  administered  the 
laws  performed  their  sworn  duty  to  the  people.  But  they  persistently  re- 
fuse to  do  this.  Men  may  impoverish  themselves  in  an  effort  to  secure 
rights  which  the  constitution  gives  to  them,  but  for  want  of  an  official  execu- 
tion these  rights  are  denied  them.  This  is  a  condition  wholly  incompatible 
with  the  principles  upon  which  our  government  is  founded,  and  should  not 
continue.  The  people  will  soon  throw  off  the  yoke  if  relief  does  not  come 
soon.  They  have  a  right  to  life  and  some  of  its  enjoyments.  They  have 
the  former,  but  only  because  it  is  necessary  to  the  furtherance  of  the  ends 
of  the  selfish  rich.  As  to  the  enjoyment  of  life,  look  for  them  in  the  poverty 
of  the  common  people  and  find  them  not.  The  people  of  this  country  are  its 
sovereigns,  and  it  is  not  only  a  crime,  but  a  monstrous  crime,  to  rob  them 
so   flagrantly   and   with   so   much   persistence. 

"The  voice  of  genius  has  sent  a  trumpet  blast  in  response  to  the  cry  of 
the  oppressed.  The  dawn  of  emancipation  should  be  near  at  hand.  There  is 
a  rebellious  spirit  stirring  within  the  people  which  may  burst  into  a  whirl- 
wind of  wrath.  'The  man  with  the  hoe,'  whose  terrible  aspect  Professor 
Markham  has  so  powerfully  portrayed,  may  yet  hoe  his  row,  throw  off  his 
burden  and  deliver  his  fellowman  from  the  toils  of  the  down-trodden  and 
oppressed." 

The  story  of  Mr.  Rice's  unfortunate  business  experience  has  been  told 
so  often  that  it  is  well  known.  It  deals  with  past  decades,  and  can  have  no 
bearing  on  present  conditions  in  the  petroleum  industry.  He  has  been  be- 
fore numerous  investigating  committees,  and  over  and  over  again  has  re- 
counted his  failures. 

Mr.  Rice  appeared  before  the  commission  on  November  11,  1899.  His 
testimony,  as  actually  given,  contained  a  number  of  statements  that  were 
not  permitted  by  someone  to  appear  in  the  official  record.  On  the  other 
hand,  the  official  report  of  the  testimony  contains  much  material  from  Mr. 
Rice's  book  which  is  not  in  the  stenographic  report.  His  declaration  that 
railroad  officials  who  are  interested  in  freight  rate  discriminations  should 
be  shot  was  stricken  out.  What  Mr.  Rice  said  on  this  subject,  when  talking 
about  alleged  freight  rate  discriminations  made  against  him,  the  basis  of 
which  consisted  chiefly  of  surmises,  follows: 

STENOGRAPHIC  REPORT.  OFFICIAL  REPORT   (p.  748). 

A.  *  *  *  There  is  no  question  *  *  There  is  not  any  question 
in  regard  to  it  v,-hatever,  that  they  in  regard  to  it  whatever.  There  is 
raised  the  rates  on  me,  50  per  cent,  not  any  question  that  they  raised  the 
within  five  days  under  that  letter,  rates  on  me  50  per  cent,  within  five 
What  have  you  to  say  to  that?  That  days.  I  have  had  men  tell  me  that 
man  ought  to  be  shot.  Do  you  know  they  would  shoot  such  a  man  as  that, 
that?  I  have  had  men  tell  me  that  There  is  not  language  strong  enough 
they  would  shoot  such  a  man  as  to  express  a  man's  disgust  at  the 
that;  he  is  an  arrant  f^coundrel.  Of  execution  of  our  laws.  How  any  man 
course  I  don't  like  (o  use  epithets,  can  excuse  such  men  or  have  any 
but  any  man  that  will  do  that  Avill  belief  in  them  I  can't  understand. 
do  most  anything  under  the  light  of  that  will  do  such  outrageous  things, 
the  sun.  By  God,  it  is  awful.  Think  Q.  (By  Mr.  CLARKE.)  Do  you 
of  it!  Any  railroad  man  ought  to  recommend  shooting  as  a  I'emedy? 
be  shot  that  would  do  such  a  thing  A.  T  think  it  will  come  to  something 
as  that;  it  is  outrageous  to  violate  of  that  kind  if  you  cannot  get  relief, 
the  laws  of  this  country  in  this  way.  What  did  our  colonists  do  over  in 
You  know  there  isn't  language  Boston?  They  threw  the  tea  over- 
enough  to  express  a  man's  disgust  board,  did  they  not,  because  of  op- 
at  the  execution  of  our  laws.  How  pression?  We  are  just  as  much  op- 
anybody  can  excuse  such  mon  or  pressed  to-day  as  they  were,  and 
have  any  belief  in  them.  I  cannot  m.ore  so. 
understand,    any    men    that   will    do 


GEORGE  RICE.  427 

such  outrageous  things;  they  ought 
to  be  wiped  off  the  face  of  the  earth. 
Q.  (By  Mr.  CLARKE.)  Do  you 
recommend  shooting  as  a  remedy? 
A.  Oh,  God,  I  think  it  will  come  to 
something  of  that  kind,  Mr.  Clarke, 
if  we  cannot  get  relief.  What  did  our 
colonists  do  over  in  Boston  there? 
They  threw  the  tea  overboard,  didn't 
they,  because  of  oppression.  We  are 
just  as  much  oppressed  to-day  as 
they  were,  and  more  so.  Hundreds 
of  millions  of  dollars  are  involved, 
and  there  was  only  a  few  thousand 
there;  that  is  what  they  did  over 
there;  they  put  on  masks  and  went 
aboard  like  Indians  and  threw  the  tea 
overboard  because  of  a  little  extra 
tax,  threw  it  overboard.  Don't  you 
think  that  some  of  these  railroad 
men  ought  to  be  thrown  overboard? 
I  do.  I  will  tell  you  what  it  is,  peo- 
ple are  getting  tired  of  this  thing,  I 
think. 

The  following  testimony  does  not  appear  in  the  official  report: 
"I  think  it  is  ridiculous  and  foolish,  all  this  thing;  the  idea  of  a  great 
institution  like  the  Standard  Oil  Trust  charging  an  individual  with  being 
a  blackmailer,  why  it  is  so  ridiculous,  you  know,  on  the  face  of  it.  when 
they  are  getting  these  extraordinary,  outrageous  freight  discriminations 
from  the  railroads,  robbing  the  stockholders  of  the  roads  out  of  hundreds 
of  millions  of  dollars,  and  because  somebody  has  asked  more  for  their 
property  than  they  think  it  is  worth  he  is  a  blackmailer,  and  they  get 
their  organs  to  publish  it  all  over  the  country,  you  know,  that  is  what 
they  do." 

Another   example   of  the   striking  of  extravagant   statements  from    Mr. 
Rice's  testimony  follows: 

STENOGRAPHIC  REPORT.  OFFICIAL  REPORT   (p.  755). 

Q.  (By  Mr.  CLARKE.)  Do  you  Q.  (By  Mr.  CLARKE.)  Do  you 
not  think  freight  discriminations  can  not  think  that  discriminations  can 
be  provided  against  effectively  with-  be  provided  against  effectively  with- 
out government  ownership  of  the  out  government  ownership  of  rail- 
railroads?  A.  No;  I  don't  know  how;'  roads?  A.  No;  I  do  not  Icnow  how 
I  don't  know  kow  it  could  be  done,  it  can  be.  They  pay  no  attention  to 
because  in  the  experience  we  have  this  severe  penalty  clause;  and  as 
had  for  the  past  12  years,  with  this  everything  ^-hows,  discriminations 
severe  penalty  clause  which  they  put  are  about  as  bad  today  as  ever; 
in  for  the  violation  of  the  law,  but  of  course,  they  are  more  covered 
everything  shows  the  discrimina-  up,  and  you  do  not  get  on  to  the 
tions  are  about  as  bad  to-day  worst  of  it.  There  vas  nn  expert 
as  ever.  Of  course,  they  are  that  was  employed  on  the  books 
more  covered  up,  and  you  don't  of  the  Atchison,  Topeka  &  Santa  Fe 
get  at  the  worst  of  it  to-day.  when  that  $7,000,000  of  rebates  was 
A  friend  of  "line  told  me  lately — he  discovered  five  years  ago.  This  rail- 
was  the  expert  on  (he  books  of  the  road  expert  told  a  friend  of  mine — 
Atchison.  Topeka  &  Santa  Fe  Com-  this  expert  who  was  put  on  the 
pany,  in  which  that  $7,000,000  of  re-  books — that  he  was  .iust  getting  into 
hates  was  discovered  three  or  four  the  "meat"  of  it.  and  discovering  this 
years  aeo — and  that  expert  told  a  discrimination,  and  he  had  got  on  to 
friend  of  mine  within  a  few  davs —  it  through  a  certain  key.  of  a  pencil 
this  railroad  expert  who  was  put  on  mark  on  the  books,  which  turned  out 
the  books — that  he   was  .iust  getting  to  be  the  secret.     He  was  just  get- 


428 


REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 


ting  into  it  when  he  was  shut  off, 
after  he  had  discovered  rebates  to 
the  extent  of  $7,000,000;  and  he  said 
he  thought  more  could  have  been 
discovered  if  he  had  had  time  lo 
worlc  it  out.  This  was  told  to  me  by 
friends  on  whom  I  can  rely — that 
the  expert  told  him,  and  I  have  no 
doubt  that  it  is  so. 


into  the  "meat"  of  it,  and  had  discov- 
ered these  discriminations,  and  had 
got  on  to  it  through  sn  entry  of  a 
pencil  mark  which  is  put  upon  the 
books.  This  pencil  mark  turned  out 
to  be  a  secret  mark  which  he  finally 
demonstrated  to  be  the  key  which  led 
him  up  to  get  into  where  he  could 
find  out  where  the  rebates  v  ere.  He 
was  just  getting  into  it  when  he  was 
shut  off,  after  he  had  discovered  re- 
bates to  the  extent  of  $7,000,000,  and 
he  said  he  thought  there  were  some 
$20,000,000  or  $30,000,000  of  rebates 
which  could  have  been  discovered, 
if  he  had  had  more  time  to  work  it 
out.  A  friend  of  mine  told  me  that 
the  expart  told  him  this  und  I  have 
no  doubt  it  is  so. 

The  following  is  another  example  of  the  liberty  taken  in  the  prepara- 
tion of  the  testimony  for  official   publication: 


OFFICIAL  REPORT    (p.  74,5). 

The  WITNESS.  And  you  can  get 
rid  of  this  political  bugbear,  centrali- 
zation, and  all  that.  Just  disfran- 
chise the  railroad  employes.  There 
are  only  about  800,000  of  them,  and 
there  are  1,000,000  men  to-day  that 
do  not  vote.  Then  you  would  get  rid 
of  all  the  political  end  of  it. 


STENOGRAPHIC  REPORT. 

Q.  (By  Representative  LIVINGS- 
TON.) Suppose  the  government 
owned  all  the  railroads  and  built  up 
a  protective  tariff,  then  what  would 
you  do?  A.  I  don't  believe  there  is 
anything  else  that  would  break  it  up 
in  any  manner,  shape  or  form. 

Q.  Then  you  mean  that  your  rem- 
edy would  be  to  draw  off  all  the  pro- 
tection, and  own  the  railroads;  is 
that  your  suggestion?  A.  Yes,  sir; 
take  off  all  protection  on  any  trust  or 
combinations. 

Q.  And  then  own  the  railroads?  A. 
Yes,  sir;  I  do;  and  you  can  get  rid  of 
this  political  bugbear  that  they  may 
say  may  make  centralization,  and  all 
of  this  and  that.  Why,  just  disfran- 
chise the  employes  of  the  railroad, 
and  what  does  that  amount  to? 
There  are  only  about  800.000  em- 
ployes, and  there  are  1,000,000  men 
to-day  that  don't  vote;  if  you  would 
disfranchise  them  then  you  would 
get  rid  of  all  the  political  end  of  it. 

While  Mr.  Rice  was  explaining  his  theory  that  railroads  should  be 
owned  by  the  government  and  that  railroad  employes  should  be  disfran- 
chised, he  remarked:  "We  gain  .3,50,000  to  400.000  voters  every  year.  We 
have  more  voters  now  than  we  need."  This  foolish  remark  was  eliminated 
from   the  edited   testimony. 

When  asked  by  Mr.  Clarke  whether  he  had  any  remedy  othe'-  than  the 
government  ownership  of  railroads  to  recommend,  in  order  to  prevent  rail- 
way freight  discriminations,  he  said  he  had  not.  and  remarked  (all  of 
which  is  eliminated  from  the  official  report):  "If  these  men  have  robbed 
in  thp  nast  by  means  of  thepc  discriminations,  as  T  have  shown  here,  and 
they  Fo  on.  I  don't  know  what  they  won't  do;  and  unless  you  can  get  these 
men  behind  the  bars  in  the  penitentiary  they  will  never  stop  freight  dis- 
criminations." 


GEORGE   RICE.  429 

The  witness  was  questioned  by  Mr.  Clarke  and  made  statements  which 
relieved  the  commission  of  all  responsibility  for  the  pamphlet  he  had  pre- 
pared and  printed  as  his  testimony. 

Q.  (By  Mr.  CLARKE.)  Mr.  Rice,  have  you  prepared,  printed,  copy- 
righted and  published  a  pamphlet  which  purports  to  be  testimony  given,  or 
to  be  given,  by  you  before  this  commission?     A.  I  have. 

Q.  Were  you   under   oath   when   it  was  prepared?     A.  No,    sir. 

Q.  Was  it  known  to  any  officer  of  this  commission  that  such  a  pamphlet 
was  being  prepared?  A.  Yes,  sir,  it  was.  I  notified  Professor  Jenks,  and  also 
the  secretary,  that  I  was  getting  up  such  a  pamphlet  of  my  tegtiraony,  to 
be  put  in  pamphlet  shape,  and  I  was  also  directed  to  send  two  copies  here 
two  days  before  the  time  that  I  should  appear,  which  I  did. 

Q.  Were  any  questions  asked  of  you  or  answered  by  you  in  the  prepara- 
tion of  this  pamphlet? 

The  WITNESS.     In  what  way? 

Mr.  CLARKE.    By  members  of  the  commission. 

The  WITNESS.  No,  sir;  not  any  members  of  the  commission  that  I 
know  of  have  asked  me  anything  in  regard  to  the  preparation  of  it;   no,  sir. 

♦Representative  LIVINGSTON.  Ask  him  if  there  was  a  schedule  of  the 
questions  sent  him   by  the  commission. 

Mr.  CLARKE.  *That  is  what  I  was  about  to  inquire.  Was  any  schedule 
of  questions  sent  you?     A.  No,  sir;    nothing  of  the  kind. 

Q.  Do  you  claim,  then,  any  right  to  issue  that  pamphlet  as  in  any  sense 
authorized  by  this  commission?  A.  Why,  no,  sir;  I  do  not  claim  that  they 
have  authorized  me  in  any  shape  or  manner  to  issue  a  pamphlet  of  any 
kind;  I  have  issued  it  or  published  it  and  copyrighted  it  on  my  own  re- 
sponsibility. 

Q.  Did  any  member  of  the  commission  know  or  have  any  notice  of  the 
contents,  or  the  proposed  contents,  of  that  pamphlet  before  you  printed 
and  published  it?     A.  Not  that  I  know  of.  no,  sir. 

Q.  You  do  not  claim,  therefore,  that  you  have  any  right  in  any  way 
to  authenticate  that  by  the  use  of  the  name  of  this  commission?  A.  Why, 
no,  sir;  I  do  not  claim  any  authority  from  the  commission  for  the  use  of  it; 
I  have  not  been  authorized  in  any  manner,  shape  or  form. 

Mr.  Rice  then  began  a  review  of  his  own  career  as  a  producer  and 
refiner  of  oil.  He  said  he  had  been  a  producer  of  oil  for  more  than  30  years 
and  a  refiner  for  20  years,  but  his  refinery  had  been  shut  down  during  the 
past  three  years,  owing,  he  said,  "to  the  powerful  and  all-prevailing  machina- 
tions of  the  Standard  Oil  Trust,  in  criminal  collusion  and  conspiracy  with 
the  railroads  to  destroy  my  business  of  20  years  of  patient  industry,  toil 
and  money  in  building  up,  wholly  by  and  through  unlawful  freight  dis- 
criminations. I  have  been  driven  from  pillar  to  post,  from  one  railway 
line  to  another,  for  20  years,  in  the  absolutely  vain  endeavor  to  get  equal 
and  just  freight  rates  with  the  Standard  Oil  Trust,  so  as  to  be  able  to  run 
my  refinery  at  anything  approaching  a  profit,  but  which  I  have  been  utterly 
unable  to  do.  I  have  had  to  consequently  shut  down,  with  my  business 
absolutely  ruined  and  my  refinery  idle.  This  has  been  a  very  sad.  bitter  and 
ruinous  experience  for  me  to  endure,  but  I  have  endeavored  to  the  best  of 
my  circumstances  and  ability  to  combat  it  the  utmost  I  could,  for  many  a 
long,  waiting  year,  expecting  relief  through  the  honest  and  proper  execu- 
tion of  our  laws,  which  have  as  yet,  however,  never  come.  But  I  am  still 
living  in  hope,  though  I  may  die  in  despair." 

The  witness  spoke  of  the  magnitude  of  the  petroleum  industry,  saying 
the  total  production  of  oil  in  the  United  States,  from  its  discovery  in  1859, 
had  been  886,442,759  barrels  of  42  gallons  each,  about  one-third  of  the  total 
having  been  produced  from  1894  to  1898  inclusive.  The  total  average  annual 
exports  in  value  for  the  years  1897-98  being  990,389,183  gallons,  valued  at 
$55,804,277.     The  total  value  of  exports  from  1864  to  1898  was  $1,445,941,156. 

The  WITNESS  (Reading).  "The  combined  wealth  of  the  railroads  and 
trusts  are  jointly  owned  and  used  by  railway  and  trust  officials  to  absolutely 
control  the  internal  commerce  of  this  great  Nation  and  absorb  unto  them- 


*Black  faced  type  Indicates  matter  omitted,  in  the  course  of  editing,  from  the 
official  report. 


430  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

selves  for  their  own  private  gain,  the  immense  profits  to  arise  from  off  all- 
producing  interests  and  manufactured  products,  by  higher  rates  of  freight 
through  unlawful  rebates  or  freight  discriminations,  to  be  increased  as  they 
see  fit,  through  compulsory  railway  tariff  exactions,  under-hand  secret  tribute 
and  demands,  that  must  absolutely  be  complied  with  if  shipments  are  made. 

"The  Standard  Oil  Trust  officials,  presidents  and  directors  in  one-fifth 
total  railway  mileage  of  the  United  States. 

"I  shall  be  able  to  fully  prove  to  this  commission  a  living  and  prominent 
example  thei-eof,  as  embodied  in  the  Standard  Oil  Trust  which  has  thus 
achieved  its  great  wealth  and  power  by  dishonest  and  criminal  methods  in 
the  unlawful  use  of  our  public  highways,  and  through  this  means  have  be- 
come the  largest  owners  in  railway  bonds  and  stocks,  and  to-day  its  officials 
are  presidents  and  directors  in  one-fifth  of  the  total  railway  mileage  of  the 
United  States,  all  accomplished  since  1S72.  This  state  of  affairs  is  abso- 
lutely startling  to  contemplate;  appalling  indeed,  and  as  monstrous  as  it  is 
infamous.  This  could  not  have  been  done  except  through  one  source,  the 
railroads,  whose  officials  have  criminally  conspired  with  Standard  Oil  offi- 
cials, for  the  past  27  years,  to  give  them  their  great  power  and  unlawful, 
ill-gotten  wealth.* 

"Railway  freight  discrimination  is  the  father  and  breeder  of  trusts. 

"I  understand  Mr.  Havemeyer  says  that  'the  tariff  is  the  mother  of 
trusts,'  while  I  assert  that  railway  freight  discrimination  is  the  father  of 
them,  the  breeder  of  trusts,  from  which  the  greatest  commercial  evil  of  the 
present  day  arises.  Although  the  tariff  has  its  material  effect,  it  is  in  no 
wise  at  all  commensurate  with  the  frightful  freight  discriminations;  promi- 
nent example — the  Standard  Oil  Trust. 

"Under  the  tariff  it  is  not  questioned,  but  that  everyone  pays  the  same 
duty,  which  is  not  the  case  in  the  payment  of  railway  freights,  for  all  com- 
petitors of  the  trust  must  pay  the  enforced  full  tariff  rates  jointly  made  by 
trust  and  rail  ofl[icials,  while  trust  freights  are  carried  for  nothing — one- 
fourth  and  one-half  of  the  regular  established  rates,  as  is  easily  proved  in 
the  case  of  the  Standard  Oil  Trust.  There  is  no  question  in  my  mind  but 
all  recent  formation  of  trusts  and  combinations,  and  in  which  Standard  offi- 
cials are  largely  interested,  are  based  upon  and  permeated  with  the  same 
general  plans,  and  investors  therein  privately  advised,  that  necessarily 
great  advantages  will  accrue  and  larger  dividends  declared  on  watered 
stocks  through  freight  discriminations  in  the  concentration  of  freight. 

"The  Standard  Oil  Trust  was  the  first  industrial  trust  organized  in  this 
country,  the  originator  and  father  of  them  all,  from  which  all  the  rest  have 
been  bred.  It  is  directly  responsible  for  the  formation  of  many  subsequent 
trusts,  because  at  an  early  date  it  lent  its  aid  and  support  in  the  organiza- 
tion of  other  trusts,  receiving  therefrom  large  sums  of  money,  to  the  extent 
of  $2.50,000  from  some  of  them  (Cottonseed  Oil  Trust)  for  a  copy  of  the 
secret  unlawful  trust  agreement,  decided  illegal  by  two  States,  Ohio  and 
New  York,  consequently  all  subsequent  acts  and  resolutions,  changing  into 
corporate  form,  etc.,  are  regarded  illegal." 

He  said  he  would  file  with  the  commission  exhibits  to  show  that  since 
their  "pretence  of  a  dissolution."  in  March,  1892,  the  Standard  Oil  Trust  had 
paid  out  in  dividends  $170,730,279;  also  that  the  trustees  of  the  Standard 
Oil  Trust  testified,  in  1879,  that  they  controlled  9.5  per  cent,  of  the  oil  in- 
dustry, whereas  seven  years  previously  they  had  only  5  per  cent,  of  that 
trade. 

He  also  filed  an  exhibit  which  he  claimed  showed  that  a  combination 
of  railways  forced  the  independent  pipe  lines  of  the  oil  region  to  sell  out  to 
the  "Standard  Oil  Monopoly  at  the  price  of  old  junk,"  and  gave  them  ad- 
ditional discrimination  in  the  shipment  of  refined  oil  in  gross  violation  of 
the  agreement  of  March  25,  1872. 

Mr.  Rice  also  filed  exhibits  on  the  following  subjects: 


*The  following  appears  In  the  official  ippnrt  though  it  is  not  in  the  stenographic 
report:  "In  1887  the  interstate  commerce  act  was  passed  to  stop  these  criminal 
conspiracies,  hut   with  12  years'   trial  it  has  proved  absolutely  abortive." 


GEORGE    RICE.  431 

"1877-78 — Attack  by  the  rail  lines  upon  the  Empire  Transportation  Com- 
pany by  which  its  refineries,  pipe  lines,  1.000  tank  cars  and  400  rack  cars 
were  forced  into  the  hands  of  the  Standard  Oil  Company  at  a  ruinous 
price.  Freight  rates  cut  to  eight  cents  per  barrel  less  than  nothing  during 
the  fight,  and  when  ended,  competitors  of  the  Standard  Oil  Company  were 
charged  $1.90  per  barrel,  while  Standard  oil  was  carried  at  11  cents  per 
barrel  net  in  tank  cars,  lump  sum,  regardless  of  weight.  Sixteen  hundred 
per  cent  discrimination." 

"1879 — Attack  by  the  rail  lines  upon  the  Tidewater  Pipe  Company  to 
crush  and  destroy  it  in  the  interest  of  the  Standard  Oil  Company.  The 
trunk  lines  of  railway  against  the  Philadelphia  &  Reading  Railroad  Com- 
pany bj"  which  rail  rates  were  reduced  to  one-sixth  of  a  cent  per  ton  per 
mile,  and  'barely  yielded  the  cost  of  the  fuel  for  the  engines.'  " 

"This  ought  to  be  sufficient,"  said  Mr.  Rice,  "to  briefly  summarize  how 
the  Standard  Oil  Company  acquired  its  monopoly  of  the  petroleum  industry, 
and  still  holds  it  with  a  bull-dog  grip,  and  by  its  actions  considers  all  com- 
petitors as  interlopers  or  outlaws." 

The  witness  submitted  to  the  commission  the  authorized  Official  Rail- 
way Guide  of  the  United  States  for  September,  1899. 

The  WITNESS.  You  will  also  perceive  on  the  front  page  of  said  guide. 
an  advertisement  of  the  Galena  Oil  Company,  the  Standard  Oil  Trust,  in 
which  this  trust  advertises  its  goods  as  follows: 

"Galena  oils  are  used  on  nineteen-twentieths  of  the  total  railway  mileage 
of  the  United  States,  Canada  and  Mexico,  and  are  being  introduced  in 
Europe." 

That  is  to  say,  the  Standard  Oil  Trust  here  admit  that  they  furnish 
their  lubricating  oils  to  95  per  cent,  of  all  the  railways  in  the  United  States, 
Canada  and  Mexico,  and  portions  of  Europe.  That  is  to  say,  this  trust  fur- 
nishes 95  per  cent,  of  all  such  oils  as  used  by  the  railways  mentioned,  for 
no  railway  would  use  trust  and  competitive  oils  in  conjunction.  These  oils 
are  taken  by  the  railroads  at  most  extraordinary  prices,  ranging  from  25  to 
75  cents  a  gallon,  and  here  comes  another  species  of  favored  freight  dis- 
criminations, and  in  this  connection  I  would  like  to  read 

Q.  (By  Mr.  FARQUHAR.)  That  seems  to  be  quite  a  large  claim  in 
respect  to  the  Standard  Oil  Company  in  the  matter  of  Galena  oils.  What  is 
the  character  of  Galena  oils  in  the  market  among  railroad  men  and  among 
buyers?  A.  Well,  I  know  from  hearsay  that  they  furnish  different  grades 
of  lubricating  petroleum  running  anywhere  from  25  cents  up  to  cylinder 
stock.  All  high  grades  of  lubricating  oil  are  generally  cylinder  stock — 
cylinder  goods. 

Q.  Has  it  not  been  a  fact  that  the  Galena  oil  held  the  American  market 
for  years  as  one  of  the  best  standard  oils  that  has  ever  been  manufactured? 
A.     I  don't  know  anything  about  their  quality. 

Q.  Is  it  not  a  fact  that  their  Headlight  oil  is  the  best  in  the  world?  A. 
I  don't  know  it  to  be  a  fact. 

Q.  Is  not  its  general  use  a  good  reason  to  think  that  that  is  so?  A.  I 
suppose  they  would  have  to  make  a  pretty  good  quality  of  oil  to  get  good 
prices,  but  at  the  same  time  they  get  greater  prices  than  any  competitor 
can  get  and  a  competitor  can  hardly  get  any  chance.  I  know  that  on  general 
hearsay.  The  parties  that  have  told  me  have  tried  and  cannot  sell  the  rail- 
roads of  the  country  lubricating  oils,  because  if  they  did  the  Standard  Oil 
Trust  would  not  give  them  any  freight,  you  know^ 

Q.  Do  you  know  whether  it  is  a  fact  or  not  that  the  Standard  Oil  Com- 
pany paid  what  would  be  called  an  exorbitant  price  for  the  Galena  formula? 
A.  No,  sir;   I  don't  know  anything  about  that. 

Q.  Have  you  ever  sold  any  oil  in  competition  with  Galena  oil  any- 
where? A.  No;  I  have  sold  some,  but  I  am  not  in  that  market.  I  have 
never  manufactured  any  fancy  brands  of  lubricants.  I  only  manufacture 
the  ordinary  brands,  the  ordinary  oils,  the  ordinary  lubricants — a  cheap 
grade. 

Q.  (By  Professor  JENKS.)  You  spoke  a  moment  ago  about  the  high 
prices  the  Standard  Oil  Company  received  from  the  railroads  for  this  lubri- 
cating oil.     Were  you  going  to  support  that  statement  by  the  specific  prices 


432  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

that  had  been  paid?  A.  No,  I  cannot  support  that  by  specific  prices,  except 
by  what  I  have  been  told  by  persons  that  knew  about  it,  persons  who  have 
tried  to  sell  to  the  railroads  and  have  been  told  this.  It  is  only  hearsay 
evidence  as  far  as  that  is  concerned. 

Q.  (By  Senator  KYLE.)  What  is  paid  for  this  kind  of  oil?  A.  From 
25  to  75  cents  a  gallon.  There  is  some  lubricating  oil  that  sells  as  high  as 
$1   a  gallon. 

Q.  Is  that  statement  on  the  authority  of  any  of  the  Standard  or  railroad 
officials?     A.  No,  sir. 

Mr.  Rice  presented  a  letter  from  James  W.  M.  Newlin,  of  Philadelphia, 
who  was  attorney  for  Fenaille  &  Despeaux,  in  their  case  against  the 
Pennsylvania  Railroad  Company  for  alleged  freight  discriminations  which 
were  said  to  have  occurred  in  1882  and  1883.  These  cases,  he  said,  were  tried 
last  year.  He  said  that  Mr.  Newlin  had  suggested  that  he  (the  witness) 
could  put  his  letter  in  his  testimony.  Mr.  Rice  said  this  letter  referred  to 
important  contracts  made  by  the  Standard  Oil  Company  and  the  Standard 
Oil  Trust,  with  the  National  Transit  Company  and  the  Pennsylvania  Rail- 
road, by  which  the  Standard  Oil  Trust,  through  the  National  Transit  Com- 
pany was  to  pay  to  the  Pennsylvania  Railroad  Company,  26  per  cent,  of  all 
the  petroleum  freights  carried  from  the  oil  region  to  the  seaboard  at  the 
tariff  rates.     Mr.  Newlin's  letter  follows: 

Philadelphia,  Pa.,  November  2,  1899. 

Dear  Mr.  Rice— Referring  to  your  request  for  information  as  to  the  facts  devel- 
op-^d  in  the  taking  of  testimony,  in  the  case  of  Fenaille  &  Despeaux  vs.  Pennsyl- 
vania Railroad  Company,  in  the  Circuit  Court  of  the  United  States  for  the  Eastern 
district  of  Pennsylvania,  and  In  the  case  of  Ladenburg,  Thalmann  &  Co.  vs.  the 
Pennsylvania  Railroad  Company,  in  the  Court  of  Common  Pleas  No.  4  of  Philadel- 
phia county   (both   of  which   cases  are  still  pending)  I  beg  to  say  as  follows: 

In  the  Fenaille  &  Despeaux  case  it  was  shown  that  the  plaintiff  paid  local  pipage 
20  cents  per  barrel  to  Foxburg  and  other  points  in  that  region  on  crude  oil,  and  that 
in  addition  thereto  the  plaintiff  paid  to  the  Pennsylvania  Railroad  Company  48  cents 
per  barrel  for  its  carriage,  all  rail,  from  Foxburg  to  Communipaw  during  the  years 
1881,  1882  and  1883.  It  was  also  shown  that  the  Pennsylvania  Railroad  Company  at 
the  same  time  and  between  the  same  points  carried  crude  oil  for  the  Standard  Oil 
Company  of  New  York  at  a  reduction  of  22%  cents  per  barrel. 

It  was  further  shown  in  the  same  case  that  the  plaintiff  paid  20  cents  local 
pipage  on  crude  oil  to  McCalmont  and  other  points  in  the  same  regions,  and  that  the 
Pennsylvania  Railroad  Company  then  carried  it  to  Communipaw  and  charged  the 
plaintiff  3.3  cents  per  barrel. 

At  the  same  time  the  Pennsylvania  Railroad  Company  was  carrying  crude  oil 
between  the  same  points  for  the  Standard  Company  of  New  York  FOR  19.875  CENTS 
PER  BARREL. 

THE  REDUCTION  IN  FAVOR  OF  THE  STANDARD  OIL  COMPANY  OF 
NEW  YORK  WAS*  proven  in  this  way: 

On  May  6,  1881,  the  National  Transit  Company  made  an  agreement  with  the 
Pennsylvania  Railroad  Company  concerning  the  shipments  of  crude  oil  to  the  sea- 
board under  which  these  reductions  in  favor  of  the  Standard  Oil  Company  of  New 
York  were  affected.     I   have  furnished  you  a  copy  of  this  agreement. 

It  was  shown  on  the  trial  of  the  Fenaille  &  Despeaux  case  that  at  the  time 
named  a  majority  of  the  stock  of  the  National  Transit  Company  was  deposited, 
with  other  corporation  stock,  with  the  Standard  Oil  trustees,  who  also  held  practi- 
cally all  of  the  stock  of  the  Standard  Oil  Company  of  New  York,  and  that,  upon  tiie 
basis  of  the  stockholdings  of  the  trust,  the  Standard  Oil  Trust  certificates  were 
issued. 

The  agreement  between  the  National  Transit  Company  provides  for  a  division 
of  the  through  rale  on  crude  oil  from  the  wells  to  the  seaboard  between  the  National 
Transit  Company  and  the  Pennsylvania  Railroad  Company.  The  clauses  of  the  con- 
tract particularly  referring  to  this  are  paragraphs  4  and  8  thereof. 

Now,  taking  Foxburg  to  Communipaw,  the  local  pipage  being  20  cents  and  the 
all  rail  carriage  48  cents  to  68  cents,  and  the  evidence  showing  that  the  Transit  Com- 
pany under  this  agreement  delivered  large  amounts  of  oil  to  the  Railroad  Company 
at  Foxburg,  which  oil  it  was  shown  by  the  Transit  Company's  secretary,  Mr.  John 
Bushnell,  belonged  to  the  Standard  Oil  Company  of  New  York;  this  particular  oil 
was  paid  for  on  the  following  basis: 


♦The    lines   in    capitals    are    not    in    the    official    report,    probably    being    omitted 
through  a  clerical  error. 


GEORGE   RICE.  433 

Starting  with  6S  cents  as  the  through  rate  from  the  wells  to  Communipaw,  via 
Foxburg,  one-fourth  of  68  cents,  viz.  17  cents,  went  to  the  local  pipe  line  (i.  e.  the 
Transit  Company)  "and  one-half  of  the  difference  between  this  one-fourth  (1.  e.  11 
cents)  and  the  said  public  rate  (i.  e.  68  cents)  shall  be  considered  as  due  and  to  be 
paid  to  the  railroad."    The  charge  is  worked  out  thus: 

Cents. 

Local  to  Foxbug 20 

Through  to  Communipaw  (New  York) 48 

68 
One-fourth  to  local  pipe 17 

This  leaves  balance  of  51 

One-half  of  this  balance  to  Railroad  Company  is  25V4 

The  amount  paid  Railroad  Company  by  Fenaille  &  Despeaux  was  48 

Amount  paid  by  Standard  to  Railroad  Company  25V^ 

Rebate  to  Standard  Oil  Company  equals 22Vi 

In  other  words,  whilst  the  word  "rebate"  nowhere  occurs  in  the  agreement  be- 
tween the  Transit  Company  and  the  Railroad  Company,  all  the  Railroad  Company 
received  was  the  25^^  cents  per  barrel. 

See  paragraph  8  of  the  contract  of  May  6,  1881.  It  is  to  be  observed  that  this  par- 
agraph in  terms  only  applies  to  cases  "where  the  through  rate  from  the  exit  point  of 
fathering  pipe  shall  be  less  than  40  cents." 

This  is  the  only  provision  in  the  contract  and  in  terms  would  only  apply  to  Mc- 
Calmont  and  similar  shipments,  which  were  33  cents  per  barrel,  but  not  only  is  this 
the  cnl>'  provision  in  the  contract  for  the  division  cf  the  through  rate  between  the 
Transit  Company  and  the  Railroad  Company,  but  in  addition  thereto  the  officers  of 
both  the  Railroad  Company  and  the  Transit  Company  stated  in  evidence  that  the 
Railroad  Company  received  payment  from  the  Standard  Oil  Company  of  New  York 
on  the  rail  shipment  from  Foxburg  to  Communipaw  under  this  contract  and  received 
what  the  contract  called  for.  It  was  further  testified  by  these  officials  that  what 
the  Railruad  Company  got  it  collected  directly  from  the  Standard  Oil  Company  of 
New  York,  and  that  the  Railroad  Company  received  no  money  from  the  Transit 
Company  on  these  shipments. 

The  evidence  was  to  the  same  effect  as  to  all  rail  shipments  between  McCalmont 
and  Communipaw,  Fenaille  &  Despeaux  paying  20  cents  local  pipage  and  33  cents 
open  rail  rate  to  Communipaw,  making  53  cents  in  all. 

The  evidence  further  was  that  the  Transit  Company  furnished  to  the  Railroad 
Company  crude  oil  of  the  Standard  Oil  Company  of  New  York  for  carriage  between 
McCalmont  and  Communipaw,  for  which  the  Railroad  Company  was  paid  directly 
by  the  Standard  Oil  Company,  the  amount  called  for  by  this  agreement  of  May  6, 
ISSl. 

Hence  the  Railroad  Company  charged  Fenaille  &  Despeaux  between  McCal- 
mont and  Communipaw,  N.  Y.,  33  cents  and  charged  the  Standard  Oil  Company 
19.875  cents  a  barrel.    This  is  worked  out  thus: 

Cents. 

Local  pipe  rate  20 

Open  rate  rail  McCalmont  to  Communipaw 3-'5 

Through  rate   53 

One-fourth  local  pipe  13.25 

39.75 
One-half  of  this  balance  paid  by  the  Standard  Oil  Company  of  New  York  to  the 

Railroad  Company  19.S75 

Tender  the  contract  of  May  6,  1881,  the  Railroad  Company  was  to  be  guaranteed 
one-third  of  the  total  movement  of  oil  to  New  York. 

TTndpr  a  subsequent  contract  between  the  National  Transit  Company  and  the 
Pennsylvania  Railroad  Company,  dated  August  22,  1SS4,  of  which  I  have  furni.'^hed 
you  a  copy,  the  Railroad  Company  was  to  be  guaranteed  26  per  centum  of  the  total 
movement  of  oil  to  the  Atlantic  seaboard,  which  would  include  Baltimore,  Phila- 
delphia, New   York  and  Boston. 

Prior  to  1884,  the  railroad  rates  to  seaboard,  1.  e.  New  York,  were:  From  Fox- 
burg 48  cents,  and  from  McCalmont  33  cents. 

There  was  a  difference  in  favor  of  Philadelphia  of  five  cents  per  barrel. 

From  1884  to  18S7  the  rail  rate  between  Foxburg  and  similar  points  and  Communi- 
paw was  55  cents  per  barrel  and  between  Clarendon  and  Kane  and  similar  points  and 
Communipaw  was  45  cents  per  barrel.  There  was  a  difference  in  favor  of  Philadel- 
phia of  five  cents  per  barrel. 

It  was  in  evidence  in  the  case  of  T/idcnburg,  Thalmann  &  Co.  vs.  the  Pennsyl- 
vania Railroad  Company  as  to  shipninnts  made  between  1SS4  and  1S87,  under  the  con- 
tract of  August  22,  1884,  between  the  National  Transit  Comrany  and  the  Pennsyl- 
vania Railroad  Company,  that  monthly  settlements  v,ere  made  between  the  Transit 

28 


434  REVIEW   OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

Company  and  the  Railroad  Company  showing  the  total  movement  of  oil  to  seaboard 
and  rhe  amount  carried  by  the  Pennsylvania  Raihuad  Company  on  account  of  its  2S 
per  centum  allowance  and  then  the  deficiency  on  the  2U  per  centum  (and  there  wa3 
always  a  deficiency)  was  settled  between  the  Transit  Company  and  the  Railroad 
Company  in  this  way: 

I  take  for  illustration  the  settlement  made  for  the  month  ending  September  30, 
1884,  as  sliown  by  a  copy  of  the  settlement  certified  to  be  correct  by  John  Bushnell, 
comptroller  of  the  National  Transit  Company: 

Total  number  of  barrels  so  transported 1,574,961 

Railroad  Company's  share 409,490 

Amount  carried  bv  railroad 325,59& 

Deficiency   83,894 

On  this  deficiency  the  Railroad  Company  was  allowed  on  New  Yorlt  oil  "at 
one-half  of  the  current  through  rate,  45  cents"  equals  22i/.  cents  per  bar- 
rel on  43.665  barrels $  9,824.63 

Less  compensation  allowed  Transit  Company  for  pumping  tlie  same  at  nine 

cents   3,929.35 

Total $  5,S94.7S 

The  Railroad  Companj-  was  allowed  on  Philadelphia   oil,    for  40,229  barrels   at 

one-half  current  through  rate,  40  cents,  equals  20  cents  per  barrel $  8,045.80 

Less  allowed  National  Transit  Company  for  pumping  same  at  eight  cents...    3,218.32 

Total    • $  4,827.48 

Total  payment  hy  the  National  Transit  Company  to  the  Pennsylvania  Rail- 
road Company  for  deficiencies  for  the  month  ending  September  30,  1884.  .$10,722.28 
In  tlie  Fenaille  &  Despeaux  tliere  are  two  cases  against  the  Pennsylvania  Rail- 
road Company,  one  for  $10,722.26  and  the  other  for  $104,220.03.  This  is  exclusive  of 
Interest  and  treble  damages.  In  the  smaller  case  the  treble  damages  were  remitted 
in  order  to  allow  the  plaintiff  to  call  the  oflicers  of  the  defendant  company  as  wit- 
nesses. 

In  the  case  of  Ladenburg,  Thalmann  &  Co.  against  the  Pennsylvania  Railroad 
Company,  the  amount  claimed  is  $172,832.46,  with  interest  and  treble  the  amount  of 
the  claim,  for  damages,  also  with  interest. 

lieferring  generally  to  tlie  contract  of  August  22,  1884,  that  contract  was  for 
the  purpose  of  keeping  up  the  freiglU  charges  by  making  the  rail  rates  and  pipe  rates 
the  same. 

Ycu  will  obser^•e,  however,  that  if  the  Standard  Oil  Company  of  New  York,  on 
its  sliipm-jnts,  went  through  the  form  of  pa>ing  the  full  rates,  inasmuch  as  practi- 
cally all  of  the  stock  of  the  National  Transit  Company  (viz.  96  per  centum)  belonged 
to  the  Standard  Oil  Trust,  >t  all  came  tjack  again  e.xcept  the  actual  cost  of  pumping, 
and  then  .vou  will  observe  that  in  the  case  of  the  Railroad  Company  it  was  only 
allowed  one-half  the  current  rates  which  were  open  to  the  public  in  the  settlement 
made  between  it  and  the  National  Transit  Company  for  montlily  differences,  as  per 
the  settlement  above  quoted. 

Yours  truly, 

JAMES  W.  M.  NEWLIN. 
George  Rice,  Esq.,  Astor  House,  New  Y'ork,  N.  Y. 

Mr.  Rice  referred  to  the  report  of  the  investigation  of  the  Standard  Oil 
Company  by  what  is  commonly  termed  the  Hepburn  Committee  of  New 
York,  to  show  that  in  certain  cases  railway  officials  were  stockholders  or 
officers  in  the  Standard  Oil  Company  or  companies  allied  with  it. 

Mr.  Rice  said  that,  outside  of  the  question  of  rates  and  freight  discrim- 
inations by  the  railroad,  he  had  no  show  as  a  competitor  with  the  Standard 
Oil  Company,  as  the  great  wealth  and  power  of  that  company  permitted  it 
to  cut  the  price  of  oil  wherever  he  might  send  his  refined  product,  and  so- 
destroy  his  profit. 

Being  shut  out  of  the  markets  of  the  North.  East  and  West,  he  turned 
his  attention  to  the  South,  where,  he  claimed  he  w^as  peremptorily  brought 
up  with  a  short  and  decisive  turn  by  an  attack  by  the  railroads  at  both  ends 
of  the  line  by  means  of  a  discriminating  rebate,  not  only  upon  his  refined 
product,  but  upon  the  transportation  of  crude  petroleum  to  his  refinery. 

The  witness  said  that  in  1S81  a  Standard  Oil  official  wrote  to  .1.  M.  Culp, 
the  general  freight  agent  of  the  Louisville  &  Nashville  Railroad  Company, 
telling  them  to  "turn  another  screw"  upon  his  shipments,  which  he  said 
they  did  in  five  days,  exacting  from  him  50  per  cent,  more  freight  that  he  had 
been  payinsr,  which  shut  him  out  of  the  Tennessee  markets.  In  reply  to 
questions,  he  said  that  Chess.  Carley  &  Co.  wrote  this  letter  to  Mr.  Culp. 

The  WITNESS.  The  firm  of  Chess.  Carley  &  Co..  that  sent  this  letter, 
Is  under  the  management  of  the  Standard  Oil  Trust,  or   Standard   Oil  Com- 


GEORGE   RICE.  435 

pany,  or  was  at  that  time.  They  wrote  a  letter  to  J.  M.  Ciilp,  who  was  the 
general  freight  agent  of  the  Louisville  &  Nashville  Railroad  Company,  and 
this  is  the  original  and  has  the  stamp  of  the  receipt  of  the  railroad  company 
at  that  time.     This  is  the  original  that  I  will  read  to  you: 

Chess,  Carley  &  Co.,  Louisville. 
J.  M.  Culp,   Esq.,  General  Freight  Agent: 

Dear  Sir— Wilkinson  &  Co.,  Nashville,  received  car  of  oil  Monday,  13th— 70  bar- 
rels—which we  suspect  was  shipped  there  in  the  USUAL  fifth-class  rate,  and  "in 
fact  we  might  say"  we  know  it  did,  paying  only  $41.50  freight  from  here.  Charges 
157.40.     Please   turn   another  screw. 

Yours  truly, 

June  16,  1881.  CHESS,  CARLEY  &  CO. 

And  that  screw  was  turned  on  me  to  the  extent  of  50  per  cent,  in  five 
days. 

Q.  (By  Senator  KYLE.)  Was  the  contract  he  speaks  about  the  same 
that  was  charged  the  Standard  Oil  Company  to  that  point?  A.  Yes,  sir;  I 
suppose  it  was. 

Q.  (By  Professor  JENKS.)  Forty-one  dollars  and  fifty  cents?  A.  Yes, 
sir.     I  don't  know  about  that.     I  cannot  say  that  about  the  $41.50. 

Q.  (By  Senator  KYLE.)  You  had  not  an  inside  rate?  A.  No,  sir;  I 
had  not. 

Q.  (By  Mr.  FARQUHAR.)  Is  not  the  $41.50  the  open  rate?  A.  No,  I 
will  tell  you  how  it  is.  The  $41.50  is  the  rate  from  Louisville  to  Nashville, 
and  the  $57.40  was  the  previous  rate  from  Marietta  to  Louisville,  *paying 
only  $41.50  freight  from  here  (from  Louisville  to  Nashville),  where  I  had 
an  agency,  and  the  proposed  charge  was  $57.40. 

Q.  (By  Vice-chairman  PHILLIPS.)  They  added  50  per  cent,  to  that?  A, 
Yes,  sir;  on  me;  not  on  the  Standard  Oil  Company,  of  course. 

*Q.  (By  Vice-chairman  PHILLIPS.)  Fifty  cents  a  barrel?  A.  No,  sir; 
50  per  cent.  They  raised  the  rate  on  me  in  my  shipments  50  per  cent,  in 
five  days. 

Q.  (By  Mr.  SMYTH.)  Was  that  the  open  rate?  A.  Yes,  sir;  the  open 
tariff  rate. 

Q.  (By  Mr.  FARQUHAR.)  It  was  not  a  discriminating  rate  made 
against  your  product  at  this  time,  but  a  new  rate  for  all?  A.  Why,  yes,  sir; 
certainly.  Of  course  the  tariff  rates  are  published  rates.  Of  course  I  paid 
tariff  rates,  and  the  Standard  paid  less  rates,  you  know. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Were  there  any  other  shippers  to 
that  point  at  that  time?  A.  I  don't  recollect.  I  think  I  was  the  only  com- 
petitor at  that  time;  that  is  my  impression.  You  see,  it  is  a  good  many 
years  as-o  and  I  don't  recollect. 

Q.  (By  Mr.  CLARKE.)  How  do  you  know  they  did  not  make  the  same 
rate  to  the  Standard  Oil  Company?  A.  I  don't  know;  but  it  is  fair  to  pre- 
sume that  they  did  not,  by  all  past  experience.  I  don't  know  it  certainly. 
I  cannot  prove  it.     It  is  a  pretty  hard  thing  to  prove  rebates. 

Q.  (By  Senator  KYLE.)  You  do  not  think  they  intended  to  turn  another 
screw  on  themselves?     A.  Not  much;    *they  never  do  that,  you   bet. 

Q.  (By  Mr.  SMYTH.)  I  thought  if  you  got  this  letter,  you  might  be  able 
to  find  out  what  rates  the  Standard  Oil  Company  paid?  A.  I  think  you 
would  have  a  nice  time  at  that  sort  of  thing.  I  would  like  to  see  anybody 
bring  an  action  in  court  and  get  them  to  show  their  books. 

Q.  I  thought  if  you  had  the  opportunity  to  get  the  private  correspond- 
ence of  the  railroad  company,  you  might  be  able  to  find  out  what  their 
private  rates  were?    A.  'You  can't  sue  them  and  have  them  show  their  books. 

Q.  I  am  only  comparing  your  getting  this  private  letter  from  Mr.  Gulp's 
office,  and  your  not  finding  what  these  privates  rates  were?  A.  Well,  that 
it  what  I  want  to  know. 

Q.  I  don't  know  how  you  got  this  letter?  A.  Of  course  you  don't. 
(Laughter.) 

Q.  If  you  are  able  to  get  the  private  correspondence  of  the  railroad 
company  why  are  you  not  able  to  find  out  their  privates  rates?     A.  There 


*Black    faced    type   indicates   matter   omitted,  in  the  course  of  editing,   from  the 
official  report. 


436  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

are   some   things   that  are   impossible,   and   that   is   one  of   them.     It  is  a 
mighty  hard  thing  to  find  out  rebates. 

Q.  But  the  rates  are  generally  on  their  books;  it  must  show  in  some 
way.    A.  I  don't  know  whether  it  shows  on  their  books  or  not. 

Q.  (By  Mr.  FARQUHAR.)  Do  you  know,  of  your  own  knowledge 
whether  other  parties  had  to  pay  this  increased  rate,  as  you  did?  A.  I  don't 
know  that;  but  if  they  shipped,  of  course  they  would  have  to. 

Q.  Was  it  well  understood  that  that  was  the  rate  known  and  given  to  all 
shippers?  A.  I  always  shipped  on  tariff  rates,  and  of  course  that  is  public 
to  everybody. 

(Reading.)  "Phineas  Pease,  receiver  of  the  Cleveland  &  Marietta  Rail- 
road Company,  under  th-e  jurisdiction  of  a  United  States  Court,  suddenly 
doubles  its  crude  petroleum  freights  on  me  without  previous  notification  or 
warning,  from  17  Vz  cents  a  barrel  to  35,  in  the  carriage  of  the  same  25 
miles  from  the  oil  producing  fields  of  Macksburg  to  Marietta,  Ohio,  where 
my  refinery  was  located,  while  at  the  same  time,  he  makes  a  rate  to  the 
Standard  Oil  Trust  of  10  cents  a  barrel,  or  250  per  cent,  of  a  discrimination 
against  my  shipments." 

The  witness  read  the  opinion  of  Judge  Baxter  in  this  case,  and  said  the 
excess  of  money  he  had  paid  was  returned  to  him  by  order  of  the  court. 

The  WITNESS.  (Reading.)  "United  States  Judge  Baxter  delivers  the 
following  opinion  of  the  court  in  Handy  et  al.  vs.  the  Cleveland  &  Marietta 
Railroad  Company  et  al.: 

"It  appears  that  the  Standard  Oil  Company  and  George  Rice  were  competitors 
in  refining  oil;  that  each  obtained  supplies  in  the  neighborhood  of  Macksburg,  a  sta- 
tion of  said  railroad,  from  whence  the  same  was  carried  to  Marietta  or  Cleveland, 
and  that  for  this  service  both  were  equally  dependent  on  the  railroad,  then  in  the 
hands  of  the  receiver. 

"It  further  appears  that  the  Standard  Oil  Company  desired  to  'crush'  Rice  and 
his  business,  and  that,  under  a  threat  of  building  a  pipe  for  the  conveyance  of 
Its  oil  and  withdrawing  its  patronage  from  the  receiver,  O'Day,  one  of  its  agents, 
'compelled  Terry,'  who  was  acting  for  and  in  behalf  of  the  receiver,  to  carry  its  oil 
at  10  cents  per  barrel  and  charge  Rice  35  cents  per  barrel  for  a  like  service,  and  pay 
it  25  cents  out  of  each  35  cents  thus  exacted  from  Rico,  'making,'  in  the  judgment  of 
the  receiver,  '$25  per  day  clear  money'  for  it  'on  Rice's  oil  alone.' 

"But  it  is  due  to  the  receiver  to  say  that,  notwithstanding  his  admitted  'reluct- 
ant acquiescence'  in  the  contract  made  by  Terry  on  his  behalf  and  the  endorsement 
thereof  by  Rapello,  and  the  further  conceded  fact  that  he  charged  the  Standard  Oil 
Company  10  cents  and  Rice  .35  cents  per  barrel  as  aforesaid,  he  denies  that  he  ever 
paid    to    the    Standard    Oil    Company    any  part  of  the  money  received  from  Rice." 

It  was  proved  afterwards  that  he  did. 

"We  will,  therefore,  for  the  present  accept  his  afflrmation  touching  this  matter, 
as  true.  , 

"But  why  should  Rice  be  required  to  pay  250  per  cent,  more  for  the  carriage  of 
his  oil  than  v^as  exacted  from  his  competitor?  The  answer  is  that  thereby  the  re- 
ceiver could  increase  his  earnings.  This  pretence  is  not  true.  But  suppose  it  was, 
would  that  fact  justify,  or  even  mitigate,  the  injustice  done  to  Rice?  May  a  recei.yer 
of  a  court,  in  the  management  of  a  railroad,  thus  discriminate  between  parties  hav- 
ing equal  claims  upon  him,  because  thereby  he  can  accumulate  money  for  the  liti- 
gants? 

"It  has  been  repeatedly  adjudged  that  he  cannot  legally  do  so.  Railroads  are 
constructed  for  the  common  and  equal  benefit  of  all  persons  wishing  to  avail  them- 
selves of  the  facilities  which  they  afford.  AVhile  the  legal  title  thereof  is  in  the 
corporation  of  individuals  owning  them,  and  to  that  extent  private  property,  they 
are,  by  the  law  and  consent  of  the  owners,  dedicated  to  the  public  use.  By  its 
charter  and  the  general  contemporaneous  laws  of  the  State,  which  constitutes  the 
contract  between  the  public  and  the  railroad  company,  the  State,  in  consideration 
of  the  undertaking  of  the  corporators  to  build,  equip,  keep  in  repair  and  operate 
said  road  for  the  public  accommodation,  authorized  it  to  demand  reasonable  compen- 
sation fro.Ti  every  one  availing  himself  of  its  facilities  for  the  service  rendered. 

"But  this  franchise  carried  with  it  other  and  correlative  obligations.  Among 
these  is  the  obligation  to  carry  for  every  person  offering  business,  under  like  circum- 
stances, at  the  same  rate.  All  unjust  discriminations  are  in  violation  of  the  sound 
public  policy,  and  are  forbidden  by  law." 

That  was  before  the  interstate  comerce  act. 

"We  have  had  frequent  occasion  to  enunciate  and  enforce  this  doctrine  in  the 
past  few  years.  If  it  were  not  so  the  managers  of  railways,  in  collusion  with  oth- 
ers in  command  of  large  capital,  could  ccntrol  the  business  of  the  country,  at  least 
to  the  extf  nt  that  the  business  was  dependent  on  railroad  transportation  for  its  suc- 
cess,  and   n'ake  and   unm;ike   the   fortunes  of  men   at   will. 


GEORGE  RICE.  437 

"The  idea  is  justly  abhorrent  to  all  fair  minds.  No  such  dangerous  power  can 
be  tolerated.  Except  in  the  modes  of  using  them,  every  citizen  has  the  same  right 
to  demand  the  services  of  railroads  on  equal  terms  that  they  have  to  the  use  of  a 
public  highway  or  the  government  mails. 

"And  hence,  when,  in  the  vicissitudes  of  business,  a  railroad  corporation  be- 
comes insolvent,  and  is  seized  by  a  court,  and  placed  in  the  hands  of  a  receiver,  to 
be  by  him  operated  pending  the  litigation,  and  until  the  rights  of  the  litigants  can 
be  judicially  ascertained  and  declared,  the  court  is  as  much  bound  to  protect  the 
public  interests  therein  as  it  is  to  protect  and  enforce  the  rights  of  the  mortgagors 
and  mortgagees. 

"But  after  the  receiver  has  performed  all  obligations  due  the  public,  and  to  every 
member  of  it,  that  is  to  say,  after  carrying  passengers  and  freight  offered,  for  a 
reasonable  compensation,  not  exceeding  the  maximum  authorized  by  law,  if  such 
maximum  rates  shall  have  been  prescribed,  upon  equal  terms  to  all,  he  may  make 
for  the  litigants  as  much  money  as  the  load,  thus  managed,  is  capable  of  earning. 

"But  all  attempts  to  accumulate  money  for  the  benefit  of  the  corporators  or 
their  creditors,  by  making  one  shipper  pay  tribute  to  his  rival  in  business  at  the 
rate  of  $25  per  day,  or  any  greater  or  less  sum,  thereby  enriching  one  and, impov- 
erishing the  other,  is  a  gross,  illegal  and  inexcuable  abuse  of  a  public  trust,  that 
calls  for  the  severest  reprehension. 

"The  discrimination  complained  of  in  this  case  is  so  wanton  and  oppressive  it 
could  hardly  have  been  accepted  by  an  honest  man  liaving  due  regard  for  the  rights 
of  others,  or  conceded  by  a  just  and  competent  receiver,  who  comprehended  the  na- 
ture and  responsibility  of  his  office;  and  a  judge  who  would  tolerate  such  a  wrong, 
or  retain  a  receiver  capable  of  perpetrating  it,  ought  to  be  impeached  and  degraded 
from  his  position. 

"A  good  deal  more  might  be  said  in  condemnation  of  the  unparalleled  wrong 
complained  of,  but  we  forbear.     The  receiver  will  be  removed. 

"The  matter  will  be  referred  to  a  master  to  ascertain  and  report  the  amount 
that  lias  been,  as  aforesaid,  unlawfully  exacted  by  the  receiver  from  Rice;  which 
sum,  when  ascertained,  will  be  repaid  to  him.  The  master  will  also  inquire  and 
report  whether  any  part  of  the  money  collected  by  the  receiver  from  Rice  has  been 
paid  to  the  Standard  Oil  Company,  and  if  so,  how  much,  to  the  end  that  if  any  such 
payments  have  been  made,  suit  may  be  Instituted  for  its  recovery."    (B-111,  etc.) 

*Q.  (By  Senator  KYLE.)  What  is  that  reference?  A.  Well,  it  is  one  of 
my  exhibits;    I   put  B-111   on  one  of  my  exhibits. 

Q.  What  was  the  outcome  of  that  matter,  may  I  ask?  A.  The  court 
appointed  a  master  commissioner,  who  was  the  present  elected  Governor  of 
Ohio,  George  K.  Nash.  The  court  appointed  him  master  commissioner  to 
investigate  this  matter  and  he  found  these  to  be  the  facts  of  the  case,  as  I 
have  stated. 

Q.  Did  he  collect  the  money  and  pay  it  over?  A.  Yes,  sir;  it  was  not 
very  much:   I  got  on  to  it  right  quick  before  it  had  injured  me. 

*Vice-Chairman  PHILLIPS.     A   little   louder,   Mr.   Rice, 

Mr.  FARQUHAR.  A  little  louder,  please,  Mr.  Rice,  because  we  are  inter- 
ested in  that. 

The  WITNESS.  I  mean  to  say  that  I  got  on  to  this  discrimination  very 
quick  after  it  occurred,  for  just  as  soon  as — I  allude  to  it  in  another  paper, 
but  I  will  explain  that  as  soon  as  they  doubled  the  rate  of  freight  on  me,  I 
thought  there  was  something  wrong,  and  I  immediately  went  to  Cambridge, 
the  headquarters  of  the  road,  in  person,  to  see  the  receiver  and  ask  him 
about  it,  and  ask  him  why  my  freight  rates  had  been  doubled,  which  I  did, 
and  he  said — he  pretended  to  know  scarcely  anything  about  it.  He  said  that 
was  a  matter  that  belonged  to  the  freight  agent,  and  he  said:  "I  under- 
stand that  there  has  been  an  advance,  but  I  understand  it  is  necessary  that 
the  road  should  have  more  revenue."  Well  that  was  the  substance  of  the 
interview,  and  he  gave  me  to  understand  that  the  rates  were  going  to  remain. 
He  did  not  give  me  any  good  reason  why  they  were  advanced  at  all,  and  of 
course  I  thought  there  was  something  up,  and  I  went  back  home  and  got  up 
a  correspondence  with  him  to  put  him  down  on  paper,  to  have  him  say 
whether  he  would  let  us  know  whether  or  not  he  would  make  any  evasions 
or  give  me  some  good  reason  by  which  I  could  find  out  what  to  be  able  to 
say,  and  I  did  write  him  and  he  made  some  replies  that  were  not  to  the 
point,  you  know — that  were  evasive,  don't  you  know;   and  I  had  counsel  at 


♦Black   faced   type  indicates  matter  omitted,  in  the  course  of  editing,  from  the 
official  report. 


438  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

Marietta  to  write  to  Judge  Baxter,  who  had  charge  of  this  road,  on  which  he* 
was  engaged  as  receiver,  asking  for  a  hearing,  if  a  private  hearing  could 
not  be  had  before  him  in  chambers,  upon  what  these  letters  showed.  He 
granted  the  request  at  once,  and  I  went  down  to  Cincinnati  with  my  at- 
torney, and  the  local  attorney  of  the  road  went  down,  and  he  owned  up  the. 
whole  business  right  there  before  Judge  Baxter,  although  this  thing  had  all 
passed  through  ihe  hands  of  ex-Judge  Rapello,  of  New  York  city,  who  was 
then  the  leading  counsel  of  the  road,  and  that  is  the  way  it  came  out. 

Q.  (By  Mr.  FARQUHAR.)  Do  you  know  it  was  customary  in  those 
days,  Mr.  Rice,  before  the  interstate  commerce  law  was  passed,  for  re- 
ceivers, usually  under  instructions  from  the  court,  to  get  all  out  of  the 
roads  that  it  was  possible  to  get  for  the  benefit  of  stockholders?  A.  (Laugh- 
ing.) I  don't  know  anything  of  that  kind.  I  don't  think,  Mr.  Farquhar,  that 
any  receiver  of  a  road  should  charge  any  less  to  a  big  shipper  than  to  a 
small  shipper,  because  he  violates  the  common  law  of  the  land,  which  no 
load  had  a  right  to  do,  even  before  the  interstate  commerce  act  was  passed, 
as  Judge  Baxter  here  says.  It  was  just  as  bad  to  discriminate  before  1887,  you 
know — that  is,  it  was  unlawful,  and  as  I  understand  it,  the  only  additional 
thing  that  was  put  in  the  interstate  commerce  act  was  a  penalty  clause  by 
which  every  shipper  and  every  carrier  (that  is,  every  carrier  was  put  in 
first,  and  afterwards  it  was  amended  by  which  it  would  include  shippers  as 
well)  would  be  subject  to  a  penalty  of  $5,000  and  two  years  in  the  peniten- 
tiary for  each  and  every  offense,  and  what  good  has  it  done?  They  discrim- 
inate to-day  just  as  much  as  ever.  It  has  had  no  effect  whatever,  and  I  can 
show  you  as  I  go  along  here,  by  my  own  cases  before  the  Interstate  Com- 
merce Commission. 

Q.  Hasn't  it  been  a  fact  that  there  were  some  very  great  discrimina- 
tions made  by  receivers  in  cutting  rates?     A.  I  don't  know  that. 

Q.  As  against  all  competing  roads,  and  that  the  court  itself  would  sus- 
tain that  in  the  working  for  the  benefit  of  stockholders  and  for  the  benefit 
of  the  road  itself,  to  have  all  the  revenue  that  it  was  possible  to  get  out  of  it. 
A.  No,  sir;  I  don't  believe  that,  no;  no  honest  judge  would  ever  decide  that 
a  railroad  could  discriminate  for  a  large  shipper  against  a  small  shipper; 
yif  he  did  he  was  not  doing  his  business. 

Q.  Isn't  it  a  fact  that  receivers  have  discriminated  and  cut  rates  against 
other  roads?  A.  Right  in  my  own  case  they  did;  but  here  are  Receivers 
Cowen  and  Murray  admitting  themselves  that  they  were  giving  rebates 
when  they  wrote  that  letter,  criminally  doing  it,  too;  criminally  doing  it. 

Q.  (By  Mr.  RATCHFORD.)  Isn't  it  a  fact  that  the  majority  of  rail- 
ways generally  follow  that  practice — discriminating  in  favor  of  large  ship- 
pers, giving  them  inside  prices?     A.  Why,  certainly. 

Q.  That  is  your  observation,  isn't  it?     A.  Yes,  sir;   certainly. 

Q.  That  being  the  case,  doesn't  it  follow  that  receivers  necessarily  have 
to  resort  to  the  same  practice  in  order  to  compete?  A.  Well,  I  don't  think 
that  the  receivers  of  a  road  ought  to  violate  the  law,  nor  any  oth^r  man, 
and  particularly  the  receivers  of  a  road;  it  don't  make  any  difference  how 
it   strikes  the  road. 

Q.  Do  you  I'ecognize  their  inability  to  compete  in  case  they  do  not  resort 
to  the  same  practice?  A.  Well,  very  likely  they  do;  tbut  I  cannot  conceive 
that  In  case  of  a  man  who  is  sworn  to  do  his  duty  as  the  receiver  of  a  rail- 
road and  who  is  honest,  which  he  is  supposed  to  be.  He  is  appointed  by  a 
court  specially,  and  it  is  supposed  that  courts  don't  want  to  sanction  any 
unlawful  acts.  1  cannot  conceive  how  the  receivers  of  a  road — that  is,  I 
mean  to  say  there  is  a  greater  obligation  on  the  part  of  the  receivers  of  a 
railroad,  not  to  discriminate;  that  is  it,  because  they  are  appointed  by  the 
court;  they  are  under  the  jurisdiction  of  the  court,  fand  have  got  the  power 
back  of  them,  you  know.  Supposing  a  railroad  does  lose  freight,  that  is  no 
reason;  they  must  obey  the  law.  That  is  the  trouble  in  this  country  here, 
the  laws  ain't  obeyed,  nor  enforced  either. 


•Phineas  Pease. 

ililack   faced   type  indicates  matter  omitted,  in  the  course  of  editing,  from  the 
offlcial  report. 


GEORGE  RICE.  439 

Professor  JENKS.  There  are  some  points  that  I  think  he  had  perhaps 
better  read  here,  and  then  put  it  in  as  an  exhibit. 

The  WITNESS.  (Reading.)  "Threats  and  intimidations  used  by  the 
Chess,  Carley  Company  (Standard  Oil)  on  my  agents  that  'competition  will 
not  be  confined  to  coal  oil  or  any  one  article.'  Also  'that  the  Standard  Oil 
Company  had  authorized  him  to  spend  $10,000  to  break  up  any  concern  that 
bought  oil  from  anyone  else.'  "     (B-84.) 

Now,  I  refer  to  one  of  my  exhibits,  B,  p.  84.* 

Q.  (By  Professor  JENKS.)  Perhaps  you  can  state  what  the  substance 
of  this  is  and  put  it  in  as  an  exhibit;  it  will  save  you  some  time.  A.  Well, 
it  is  merely  that  the  company  wrote  my  agents,  Wilkinson  &  Co.,  of  Nash- 
ville, threatening  letters,  of  which  I  have  copies  in  these  exhibits  here. 
They  had  tried  to  buy  them  out,  and  one  thing  or  another,  and  made  threats 
that  if  they  didn't  come  to  time,  that  they  would  not  only  cut  their  prices 
on  oil,  but  on  all  the  general  goods  that  they  sold.  That  is  the  substance  of 
it,  but  I  have  it  all  here. 

Q.  I  understand  from  what  you  have  said  elsewhere,  that  they  did,  as  a 
matter  of  fact,  set  up  a  separate  grocery  store?  A.  No,  not  at  that  point; 
that  was  another  place;   that  was  in  Mississippi. 

Q.  But  that  was  the  same  company;  they  did  set  up  a  grocery  store? 
A.  Yes,  sir. 

Q.  In  order  to  drive  a  rival  out?  A.  Yes,  sir;  that  is  true;  oh,  yes,  sir; 
the  same  company. 

tQ.  If  that  is  the  substance  of  it,  you  may  put  it  in  and  have  it  printed 
as  an  exhibit,  and  go  on  from  there;  it  will  save  you  some  little  time;  if 
that  is  the  substance  of  it  there.     A.  Yes,  sir. 

Q.  (By  Mr.  FARQUHAR.)  How  far  did  this  extend  in  1884?  I  want 
the  definite  words  here.  A.  Well,  I  guess  I  will  read  here  a  little;  I  have  it 
right  here: 

(Reading.)  "Rust-proof  oats,  meats,  sugar,  coffee  used  as  weapons  by 
the  Standard  Oil  monopoly  to  kill  off  competftion." 

fThat  is  what  they  do,  and  that  is  what  they  say  to-day.  I  do  not  know 
now,  but  I  have  known  them  to  do  the  same  thing  from  time  to  time  in  some 
other  way,  but  it  is  the  same  thing. 

(Reading.)  "R.  M.  Eraser,  general  freight  agent  of  the  Marietta  &  Cin- 
cinnati Railroad,  wires  a  Standard  official  as  follows: 

" ,   at   Marietta,   is   inquiring  for   rates   of   freight   on   oil   to    Chillicothe. 


Don't  you  control  that  field? 

"Colonel  Thompson  to  Mr.  Eraser: 
"Yes,   that  is  our  meat."     (B-85.) 

Q.  (By  Mr.  SMYTH.)  Can  you  give  us  the  date  of  that  telegram?  A. 
I  don't  know  whether  I  have  the  date  of  that  or  not;  I  refer  to  it  as  B-85, 
but  it  is  true  all  the  same. 

tQ.  (By  Professor  JENKS.)  No,  there  is  no  date  put  down  here.  A. 
Maybe  there  is  not. 

Q.  (By  Mr.  FARQUHAR.)  This  occurred  in  1881?  A.  It  comes  along 
in  there:   I  guess  it  is  somewhere  along  in  there,     tl   don't  know. 

Q.  (By  Professor  JENKS.)  There  are  several  letters  right  along  in  this 
immediate  connection  dated  1880  and  1881.  A.  Well.  I  calculated  all  these 
things,  where  there  were  not  dates  would  come  along  in  and  about  that  time; 
twhere  I   didn't  have  the  dates,   I   calculated  where  they  would  come. 

Q.  Did  you  get  the  name  that  you  have  left  blank  here?  A.  Well,  no; 
I  didn't  get  the  name;  it  came  over  the  wire;  a  friend  of  mine  heard  it  com- 
ing over  the  wire,  who  was  a  telegraph  operator  himself.     (Reading) : 

"Standard  Oil  also  establishes  a  grocery  house  at  Columbus.  Miss.,  and 
sells  groceries  at  cost  in  order  to  force  merchants  to  buy  their  oil."     (B-86.) 

There  is  quite  an  extensive  account  there  in  connection  with  that. 

Q.  (By  Senator  KYLE.)  How  prevalent  is  that  custom  with  the  Stand- 
ard Oil  Company?     A.  Well,  it  is  not  so  prevalent  now,  because  they  are 


*The   exhibit  referred   to  is  in   pamphlet  copyrighted  by  Mr.  Rice. 
tBlack   faced   type  indicates  matter   omitted,  in  the  course  of  editing,   from  the 
official  report.    • 


440  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

establishing  their  agencies,  you  know,  all  over  the  United  States,  and  they 
don't  have  to  go  into  that  kind  of  work. 

Q.  Efforts*  have  been  made,  haven't  they?     A.  What  is  that? 

Q.  They  resorted  to  such  efforts*  formerly?  A.  Oh,  yes.  sir;  there  is 
no  trouble  about  that.    Now,  I  will  read  from  the  bottom  of  the  page: 

"The  Standard  Oil  Trust  makes  contract  with  a  merchant  of  New  Or- 
leans to  pay  him  the  sum  of  $48,000  not  to  handle  my  oils  and  while  I  was 
down  there  to  re-establish  another  agency  I  was  apprised  by  wire  that  my 
rates  to  Memphis  and  New  Orleans  were  doubled,  without  previous  warn- 
ing." 

The  witness  said  that  when  he  inquired  why  the  rates  had  been  doubled 
on  him,  Mr.  Eraser,  general  freight  agent  of  the  roads  going  out  of  Marietta, 
said  that  the  connecting  lines  made  all  the  trouble,  that  the  connecting 
lines  had  been  writing  them,  saying  they  must  have  the  freight  rates  ad- 
vanced and  they  couldn't  see  any  other  way  to  do  it  except  increase  the 
rate  on  him. 

After  two  or  three  months'  correspondence  they  restored  the  rates  as 
they  were  formerly,  but  in  the  following  year,  on  July  15,  1886,  they  raised 
the  rates  on  his  shipments,  which  were  about  all  the  shipments  out  of 
Marietta,  from  43  to  162  per  cent.,  and  he  said  they  didn't  raise  them  a  cent 
on  the  Standard  Oil  Trust,  which  had  a  big  refinery  at  Parkersburg,  12 
miles  from  Marietta,  the  tariff  rate  from  both  places  being  equal. 

The    WITNESS.  *     *     *     on    subsequent    investigation    I    got    the 

Attorney-General  of  Ohio  to  bring  an  action,  and  I  bore  all  the  expense  of  it; 
he  allowed  me  to  use  his  name,  to  forfeit  the  charters  of  the  Cincinnati, 
Washington  &  Baltimore  Railroad  and  the  Queen  &  Crescent  Road  for  these 
infernal,  accursed  discriminations,  and  we  spent  a  lot  of  money  and  a  lot 
of  time,  and  it  didn't  amount  to  anything.  We  got  a  verdict  in  the  Supreme 
Court  after  a  while,  saying  that  they  couldn't  do  that  any  more,  but  it  didn't 
amount  to  anything. 

tQ.  (By  Senator  KYLE.)  They  went  on  and  did  it?  A.  They  went 
right  on,  of  course,  and  continued  to  do  this  right  under  my  nose,  you 
know.  Well,  and  the  effect  of  it  was  that  it  shut  up  19  of  my  agencies  out 
of  24,  and  39  towns  out  of  73  in  five  months;  that  is  what  it  did,  and  these 
men  here,  Orland  Smith  and  R.  M.  Eraser,  are  responsible  for  this  collusion 
to  ruin  my  business. 

Q.  (By  Mr.  FARQUHAR.)  What  year  was  this  in,  Mr.  Rice?  A.  In 
1886. 

Q.  (By  Mr.  SMYTH.)  Were  the  published  rates  the  same  from  Par- 
kersburg as  from  Marietta?  A.  Certainly;  the  tariff  rates  were  the  same 
all  the  way  around. 

Q.  Do  you  believe  the  Standard  Oil  Company  received  the  rebates?  A. 
Well,  of  course;  I  proved  they  did;  I  proved  what  I  say;  I  proved  43  to  162 
per  cent.;  I  went  into  court  and  proved  it  before  a  referee;  it  was  on  two 
suits  to  forfeit  the  charters  of  these  roads,  and  the  court  simply  said  that 
you  couldn't  do  this  any  more.  They  would  be  ousted  from  doing  this.  That 
was  a  very  fine  sort  of  a  verdict;  of  course  it  had  a  very  great  effect  on  it. 

Q.  (By  Professor  .lENKS.)  I  see  in  connection  with  the  statement  that 
the  Standard  Oil  Trust  made  a  contract  with  a  merchant  of  New  Orleans  to 
pay  him  the  sum  of  $48,000  not  to  handle  the  oils.  In  the  exhibit  you  set 
out  the  contract  in  full?     A.  Yes,  sir. 

Q.  You  are  perfectly  sure  as  to  the  trustworthiness  of  this?  A.  Oh,  yes, 
sir;  I  got  the  facts  from  Mr.  Ong;  I  got  the  contracts;  without  a  question, 
these  are — without  a  question  these  are  genuine  contracts. 

He  said  the  general  freight  agent  of  the  Little  Rock  &  Memphis  Rail- 
road Company  wrote  him  on  November  17,  1890,  that  because  they  were  haul- 
ing his  oil  the  Standard  Oil  Company  would  not  route  any  of  their  freight 
over  their  line. 


•"Threats."  in  ofRcial  report. 

i-p.iack  faced  type  Indicates  matter  omitted,  In  the  course  of  editing,  from  the 
ofllclal  report. 


GEORGE  RICE.  441 

Because  of  his  "supposed  controversy"  with  the  Standard  Oil  Company, 
he  could  not  purchase  tank  cars  except  for  cash.  He  submitted  the  follow- 
ing letter,  which  he  said  he  had  received  from  Murray,  Dougal  &  Company: 

Office  of  the  Milton  Car  Works, 

Milton,    Pa.,   Dec.   6,   18S7. 
George  Rice,  Esq.,  Marietta,   Ohio: 

My  Dear  Sir— We  have  just  wired  you  as  follows: 

"Our  financial  friends  decline  to  advance  the  money.  We  cannot  build  them, 
except  for  cash,"   which  we  confirm. 

Our  Mr.  Dickerman  returned  this  morning,  and  after  using  every  exertion,  fail- 
ed to  negotiate  the  deferred  payments  on  your  cars.  Our  financial  friends  state 
that  they  have  declined  to  do  this  mainly  on  account  of  some  supposed  controversy 
which  they  claim  you  have  had  with  the  Standard  Oil  Company  and  various  rail- 
roads in  the  West.  They  feared  you  could  not  use  these  cars  to  advantage  if  the 
railroads   should   be   hostile   to   your   interests. 

We  regret  this  very  much,  as  we  nave  been  to  considerable  trouble  and  ex- 
pense in  making  arrangements  to  build  the  cars,  and  are  now  seriously  disappointed 
at  the  refusal  of  the  parties  to  take  the  deferred  payments,  as  they  had  partially 
promised  to  do. 

^^'e   should   be  very  much  pleased   to  build  these  cars  for  you  if  you  can  nego- 
tiate :he  notes  with  your  friends  and  pay  us  the  cash.    Please  let  us  hear  from  you 
at  your  earliest  convenience  concerning  your  ability  to  raise  the  money. 
Yours  very  respectfully, 

MURRAY,  DOUGAL   &   COMPANY,    LIMITED. 

You  see  there  was  a  discrimination  in  the  carriage  of  oils  in  barrels  as 
between  tank  cars  of  about  25  per  cent.  And  if  anybody  could  afford  to  buy 
tank  cars— rolling  stock  for  the  railroads — you  know,  of  course,  all  shippers 
had  to  furnish  them.  Of  course  they  had  to  do  that;  the  shippers  had  to 
furnish  the  railroads  all  the  cars  they  wanted,  don't  you  know,  and  let  them 
charge  what  they  please- — and  so  I  saw  that  it  was  necessary  to  get  hold  of 
some  cars — to  buy  some  cars.  It  is  generally  done  in  this  way:  Persons 
come  and  contract  for  cars — tank  cars — and  pay  20  or  25  per  cent,  down, 
and  then  pay  the  balance  in  instalments  of  four  or  five  years,  and  they  hold 
the  title  to  the  cars,  don't  you  know,  and  all  that.  *The  Standard  Oil  Trust 
could  get  all  the  credit  they  wanted,  but  they  don't  need  credit.  They  have 
got  plenty  of  money. 

Q.  (By  Mr.  FARQUHAR.)  And  yet  that  is  the  trouble,  I  suppose.  Mur- 
ray, Dougal  &  Company  said  if  you  ftirnished  the  cash  they  would  build 
the  cars?  A.  That  they  would,  yes,  sir;  but  the  trouble  was  it  would  take 
just  so  much  money  out  of  my  business,  and  of  course  that  would  cramp 
me  so  much  that  I  couldn't  afford  to  do  it. 

Q.  You  built  tank  cars  afterwards,  didn't  yoti?  A.  Yes,  sir;  I  bought  10 
cars  later  on.  I  paid  the  Pennsylvania  Works  to  build  them  for  me,  and  I 
paid  25  per  cent,  down  and  the  balance  on  time — five  or  six  years. 

Q.  You  thought  it  was  an  advantage  in  the  oil  business  to  have  tank 
cars?  A.  Well,  that  might  be;  if  everybody  got  the  same  rate;  if  the  rail- 
road would  ftirnish  the  tank  cars,  but  they  didn't  furnish  the  tank  cars.  The 
Standard  Oil  Company  in  the  early  days  bought  up  all  the  tank  cars  from 
the  railroads,  no  doubt  with  the  imderstanding  that  they  must  not  build 
any  more  tank  cars.  The  railroads  have  not  furnished  tank  cars  to  the 
shippers,  which  they  ought  to  do,  so  they  had  to  carry  oil  in  barrels  in 
the  box  cars,  as  the  Pennsylvania  did,  until  the  Interstate  Commerce  Com- 
mission act  came  into  effect,  and  then  the  Standard  Oil  Trust  got  them  to 
charge  for  the  weight  of  the  wooden  package. 

Q.  You  made  quite  a  contention  against  the  tank  cars  for  a  long  time? 
A.  Certainly.  It  is  all  right  if  the  roads  would  only  furnish  that  means  of 
carrying  oil.  but  they  will  not  do  it,  and  they  know  that  the  independent 
refiners  of  small  means  can't  afford  to  buy  tank  cars  to  take  it  in.  It  is  the 
duty  of  the  railroads  to  furnish  all  the  cars  that  are  necessary.  It  is  only  a 
freeze-out;  that  is  all. 


*Black   faced   type  Indicates  matter  omitted,  in  the  course  of  editing,  from  the 
official  report. 


442  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

Q.  Mr.  Rice,  that  is  the  question  we  are  reaching  now.  You  know  the 
private  car  system  in  the  United  States  to-day  in  transportation — of  re- 
frigerator cars  and  everything  of  that  kind.  These  are  furnished  by  private 
corporations.     A.  Yes,   sir. 

Q.  (By  Professor  JENKS.)  Is  not  the  use  of  these  tank  cars  a  positive 
advantage  for  the  transportation  of  oil?  A.  No,  sir;  I  think  it  is  the  greatest 
evil,  for  the  reason  that  the  railroads  carried  tank  cars  for  the  Standard 
Oil  Company  at  a  lump  sum  tank  car  rate,  don't  you  know,  *and  I  pay  four 
times  as  much  freight.  I  proved  before  the  Interstate  Commerce  Commis- 
sion that  between  barrel  rates  and  tank  car  rates  I  paid  four  times  as 
much  to  Birmingham,  Alabama. 

Q.  Where  they  were  able  to  furnish  tank  cars,  did  not  the  railroads 
try  to  discourage  the  use  of  the  barrel?     A.  Why  should  they? 

Q.  I  cannot  answer  that.  Was  it  not  a  condition  while  you  were  ship- 
ping? A.  I  will  say  yes  they  did,  and  they  did  it  for  the  purpose  of  freezing 
out  the  refiners.  I  will  answer  that,  yes,  sir.  They  did  it,  certainly,  because 
they  wanted  to  discourage  the  smaller  ones,  because  all  the  railroads  and 
trusts  worked  hand  in  hand  together;  each  one  owned  stock  and  bonds  in 
the  others.  Thus  I  think  they  all  work  in  collusion  and  conspiracy  to  freeze 
us  out. 

Q.  Did  any  railroad  ever  propose  that  you  should  put  on  >our  cars 
and  they  would  pull  them  at  so  much  mileage?  Did  they  ever  refuse  to  do 
that?  A.  Yes,  sir;  I  have  had  roads  refuse  me.  I  forget  now  what  the 
lines  were. 

Q.  But  some  roads  did?  A.  Certainly.  *But  what  has  that  got  to  do 
with  the  question  anyhow — because  some  of  the  roads  did?  They  discrimi- 
nate and  all  this  kind  of  thing.  Just  look  at  it  here.  Now,  I  will  tell  you 
something  about  the  tank  car  business,  *l  don't  know  but  maybe  you  know 
it,  but  I  can  give  it  to  you  here,  and  I  will  explain  it;  I  will  because  I  have 
it  right  here,  where  there  is  1,600  per  cent,  discrimination.  Now,  gentlemen, 
that  seems  incredible,  that  the  Standard  Oil  Trust  should  have  gotten  1,600 
per  cent,  discrimination  in  the  carriage  of  oil  from  the  oil  regions  to  the 
seaboard.  Now,  I  will  explain  it  to  you  in  this  way:  In  1S7S,  J.  H.  Ritter, 
general  freight  agent  of  the  New  York  Central  &  Hudson  River  Railroad 
Company,  in  the  investigation  before  the  Hepburn  Committee,  of  New  York, 
said  this,  and  it  is  on  record  published  in  the  special  tariff  sheet. 

Vice-Chairman  PHILLIPS.     A  little  louder,  please. 

The  WITNESS.  Published  in  the  special  tariff  sheet  of  rates  to  the 
Standard  Oil  Company,  and  in  that  tariff  sheet  was  a  particular  and  special 
rate  on  tank  cars  of  $60  a  tank  car  in  lump  sum  from  Cleveland  to  New 
York,  which  would  be  60  cents  a  barrel;  the  outside  tariff  then  was  $1.90  a 
barrel  to  all  competitors.  They  also  got  a  reduction  off  that  60  cents  for 
carriage  of  crude  oil  from  the  oil  regions  to  the  refineries  at  Cleveland,  on 
the  basis  of  35  cents  a  barrel  of  crude  oil.  Fourteen  barrels  of  crude  at  35 
cents  a  barrel  were  allowed  for  against  10  barrels  of  refined  shipped  from 
Cleveland  to  New  York,  to  come  out  of  that  60  cents:  on  the  liasis  of  10 
barrels,  that  would  be  $6.  They  got  a  drawback  of  $4.90,  which  made  $1.10 
for  transporting  10  barrels  of  oil  from  Cleveland  to  New  York;  that  is  11 
cents  a  barrel  as  against  $1.90.  or  1,600  per  cent,  discrimination.  *These 
are  absolute  facts;  they  are  not  any  worse  than  these  contracts  of  1872,  you 
know,  when  they  got  19  times  more  rebate  from  off  competitive  shipments 
than  they  did  from  off  their  own;    I   have  skipped  all  that,  gentlemen. 

Q.  (By  Vice-chairman  PHILLIPS.)  And  you  have  put  it  in  the  exhibit? 
A.  Yes,  sir. 

Q.  (By  Mr.  SMYTH.)  Do  you  know  of  any  railroad  company  in  this 
country  that  owns  tank  cars?  A.  Well,  I  think  the  Pennsylvania  Railroad 
Company  has  a  lot  of  tank  cars,  or  did  have,  but  in  the  early  days  no  com- 
petitor— that  is,  it  was  almost  impossible  for  any  competitor  to  get  the  use 
of  themt 


*Black  faced  type  indicates  matter  omitted,  In  the  course  of  editing,  from  the 
offlclal  report. 

iTn  tiip  official  report  the  following  arlditlonal  comment  ajipears:  "The  Staml- 
ard  Oil  Trust  had  practically  the  exclu.slve  use  of  them." 


GEORGE  RICE.  443 

Q.  Isn't  it  the  general  custom  now  in  all  oil  refineries,  both  cottonseed 
oil  as  well  as  petroleum,  that  the  tank  cars  are  owned  by  the  refiners?  A. 
I  think  the  cottonseed  oil  refineries  are  owning  their  own  cars  more  or  less. 

*Q.  They  ate  owning  their  own  cars  more  or  less?  A.  Yes,  sir;  cer- 
tainly they  are. 

Q.  And  the  railroad  companies  do  not  furnish  any  cars?    A.  I  think  not. 

Q.  (By  Mr.  RATCHFORD.)  Are  you  aware  that  the  representatives  of 
the  Standard  Oil  Company  have  stated  before  this  commission  that  no  such 
thing  as  rebates  are  given  them 

The  WITNESS.     That  is  since  the  interstate  commerce  act? 

Mr.  RATCHFORD.     Yes,  sir. 

The  WITNESS.     Yes,  sir;  yes,  sir;  I  am  coming  to  that.  Mr.  Ratchford. 

Q.  (By  Mr.  RATCHFORD.)  Now,  in  support  of  the  case  that  you  have 
just  mentioned,  referring  to  the  rebate  from  Cleveland  to  New  York,  there 
Is  a  case  that  you  should  support  by  the  strongest  possible  testimony,  if  you 
can  present  it;  letters  and  proof  are  what  we  want.  A.  Well,  I  am  going 
to  give  you  that  as  I  go  along  here;  I  am  going  to  give  you  plenty  of  proof 
as  to  freight  discriminations  since  the  interstate  commerce  law  went  into 
effect;    *is  that  what  you  want? 

iVlr.   RATCHFORD.     Yes,  sir. 

The  WITNESS.  Well,  I  have  just  about  gotten  to  that  now;  *l  don't 
know  where  I  stopped  here. 

Vice-chairman   PHILLIPS.     You  stopped  at  the  top  of  the  36th  page. 

The  WITNESS.     Well,  shall   I   read  further  down? 

Vice-chairman    PHILLIPS.     You   haven't   read   any  of  that. 

The  WITNESS.  Well,  I  will  read  it  then.  (Reading.)  "I  have  for  years 
vainly  sought  government  protection  through  Congress  and  the  Interstate 
Commerce  Commission  and  get  it  not;  also  through  State  Legislatures  and 
get  it  not;  through  the  courts  and  get  it  not.  Soon  there  will  be  trouble  in 
the  land  if  such  nefarious  work  does  not  cease,  for  anarchy  will  be  supreme. 
The  railways  and  the  trusts  are  run  conjointly  on  a  fraudulent,  dishonest 
and  destructive  basis.  The  channels  of  trade  and  transportation  are  no 
longer  open  free  to  the  people  at  large.  Our  greatest  criminals  and  cor- 
ruptionists  are  at  the  head  of  these  mighty  and  all  powerful  institutions,  who 
also  use  their  vast  resources  to  corrupt  our  politics.  They  have  no  fear 
of  the  law,  because  of  the  fabulous  fortunes  so  easily  and  quickly  obtained, 
from  which  they  expect  to  buy  immunity. 

"It  is  quite  evident  our  government  is  a  failure,  because  of  non-enforce- 
ment of  our  laws  against  this  piratical  crew  who  infest  our  inland  com- 
merce, under  the  secret  cover  of  unlawful  rebates  and  commissions  and  thus 
rob  the  people  out  of  hundreds  of  millions  of  dollars. 

"The  trusts  are  worse  than  the  pirates  of  the  sea,  for  they  sailed  in  the 
open;  and  though  they  gave  no  quarter,  they  did  their  work  under  their 
own  pirate  flag,  and  not  under  the  livery  of  the  law. 

"I  have  had  a  number  of  applications  from  unknown  correspondents 
to  take  hold  of  new  oil  developments  in  different  States,  and  have  invariably 
replied  that  it  would  be  useless;  that  however  prolific  an  oil  field  might  be 
it  would  be  made  unprofitable  and  no  money  in  it,  as  against  the  power  of 
the  Standard  Oil  monopoly  over  the  rail  lines  of  this  country." 

At  this  point  the  commission  took  a  recess  until  2  o'clock,  at  which 
time  Mr.  Rice  continued.  Chairman  Kyle  presiding. 

The  WITNESS.  (Reading.)  "John  D.  Archbold  and  Henry  H.  Rogers, 
trustees  of  the  Standard  Oil  Trust,  testify  before  this  commission  September 
8th  and  9th,  that  this  trust  has  not  received  discriminating  freight  rates, 
since  the  interstate  commission  act  took  effect,  April   5th,   1887. 

"In  1886  I  entered  complaints,  with  the  attorney-general  of  Ohio,  to 
forfeit  the  charters  of  the  Cincinnati,  Washington  &  Baltimore,  and  Cin- 
cinnati, New  Orleans  &  Texas  Pacific  Railroad,  for  gross  oil  freight  dis- 
criminations. The  petitions  were  filed  December  23,  1886.  and  depositions 
filed  November  23,  1887.  The  referee  made  his  report  July  3,  1889,  and  the 
Supreme    Court    rendered    its    decision  March    4,    1890.      I    proved    that   the 


*Black   faced   type   Indicates  matter   omltte-J,  in  the  course  of  editing,  from  the 
official  report. 


444  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

Cincinnati,  Washington  &  Baltimore  Railroad  Company,  the  initial  line  out 
of  Marietta,  and  governing  connection  lines,  issued  an  order  to  take  effect 
July  15,  1886,  by  which  freight  rates  were  not  only  advanced,  but  that  my 
shipments  were  discriminated  against  by  this  road  in  favor  of  the  Standard 
Oil  Trust  from  43  to  162  per  cent. 

"That  the  Cincinnati,  New  Orleans  &  Texas  Pacific  had  so  discrimi- 
nated from  29  to  212  per  cent.  That  the  Louisville  &  Nashville  Railroad 
Company  had  so  discriminated  from  35  to  260  per  cent.  That  the  St.  Louis, 
Iron  Mountain  &  Southern  Railway  had  so  discriminated  from  48  to  191 
per  cent.,  which  continued  at  least  to  March  4,  1890,  and  probably  much 
longer,  regardless  of  the  order  of  the  commission  (see  pages  582,  583,  584, 
585  Congressional  Investigation  1888).  These  unlawful  freight  discrimina- 
tions had  the  effect  to  close  up  19  out  of  24  of  my  agencies,  and  shut  me 
out  of  39  towns  in  73  within  five  months. 

"The  Supreme  Court  of  Ohio,  after  this  abundant  and  most  extraordi- 
nary proof  before  them,  ignored  the  people's  sacred  right  of  eminent  do- 
main, and  simply  decided  that  these  roads  be  ousted  from  charging  less- 
rates  per  100  pounds  on  tank  car  shipments,  as  compared  v/ith  barreled 
oil,  which  decision  proved  ineffective." 

This  suit  was  to  forfeit  their  charters  for  discriminatons. 

"In  November,  1887,  before  the  Interstate  Commerce  Commission,  I 
proved  the  following  gross  freight  discriminations,  which  were  exclusively 
in  favor  of  the  Standard  Oil  Trust  and  for  no  one  else;  cases  were  decided 
February  23,  1888,  and  the  several  defendant  rail  lines  pretended  to  ac- 
quiesce in  the  verdict  by  simply  changing  their  mode  of  rating. 

"The  following  outrageous  and  most  extraordinary  of  freight  discrimi- 
nations, exclusively  in  favor  of  the  Standard  Oil  Trust,  were  proved  by  me 
and  existed  at  least  up  to  April  1,  1888,  that  we  know  of,  and  from  my  sub- 
sequent complaints  and  proofs  it  is  exceedingly  doubtful  if  the  decision  of 
the  commission  had  any  appreciable  effect  on  the  railroads." 

Now,  I  have  here  the  exhibits  which  show  discriminations  to  the  extent 
of  333  per  cent.;  there  are  a  lot  of  them,  but  I  just  merely  mention  them; 
I  put  in  the  exhibits  here  which  show  that  the  highest  discrimination  was 
333  per  cent* 

(Reading.)  "The  above  gross  freight  discriminations  continued  for 
at  least  one  year  of  the  interstate  commerce  act,  regardless  of  the  penaltj^ 
of  $5,000  fine  and  two  years  in  the  penitentiary  for  each  and  every  offence. 

"On  May  28,  1888,  the  Missouri  Pacific  Railroad  regardless  of  this  deci- 
sion, were  still  carrying  cars  by  the  lump  sum.  (A-15)  This  same  road 
(1888)  in  the  State  of  Arkansas  were  carrying  petroleum  in  iron  barrels 
for  the  Standard  Oil  Trust,  at  284  per  cent,  discrimination  in  their  favor. 
(A-21) 

"In  1889  I  made  several  general  complaints  to  the  commission  of  gen- 
eral violations  of  the  interstate  commerce  act  by  the  southwestern  lines  of 
railroads,  reaching  to  the  Pacific  coast,  of  which  the  Cincinnati,  Wash- 
ington &  Baltimore  Railroad  Company  was  the  initial  line  out  of  Marietta, 
where  my  oil  refinery  was  located,  and  at  my  request  the  commission  issued 
notices  to  151  contiguous  lines  as  parties  thereto  to  appear  and  be  heard, 
if  they  so  desired.  The  substance  of  these  complaints  were  embodied  in 
these  notices,  as  follows: 

"It  appearing  to  the  commission  in  the  above  cases  that  in  addition  to  the  ques- 
tion of  reasonableness  of  rates,  the  following  other  questions  are  also  raised, 
namely: 

"1.  The  question  of  the  like  classification  of  barrel  and  tank  oils,  and  of  the 
rigrht  of  the  railroad  companies  to  charge  for  the  weight  of  the  barrel  package  in 
addition  to  the  weight  of  the  contents. 

"2.  The  question  of  discrimination  arising  from  the  returning  of  empty  tank 
cars  free  of  charge  and  also  of  the  paying  of  mileage  rate  on  such  empty  tank 
cars. 

"3.  The  question  of  whether  railroad  companies  are  not  obliged  to  furnish  tank 
cars  as  well  as  cars  of  other  description  for  oil  transportation. 

"4.  The  question  of  the  proper  classifiiation  of  cottonseed  oil  and  turpentine- 
as  compared   with  petroleum  and  its  products. 


♦These  exhibits  are   publislied   in    Liie  ufficial   report. 


GEORGE  RICE.  445 

"5.  The  question  of  discrimination  in  favor  of  petroleum  and  its  products  when 
carried  in  tank  cars,  resulting  in  giving  a  low  rate  on  cottonseed  oil  or  turpentine, 
or  either,  when  carried  as  back  loading  in  such  tank  cars. 

••6.  The  question  of  the  duty  of  railroad  companies  to  furnish  shippers  with 
tank  cars  in  cases  where  the  traffic  of  their  lines  can  profitably  or  properly  be  car- 
ried in  such  tank  cars  and  is  large  enough  to  justify  the  expenditure. 

"7.  Long  and  short  haul. 

"The  four  separate  cases  were  tried  together  in  December,  1889,  and 
thoroughly  done  by  that  astute  and  experienced  lawyer  in  railroad  matters, 
Franklin  B.  Gowen,  for  many  years  the  president  of  the  Philadelphia  & 
Reading  Railroad  Company.  The  cases  were  duly  argued  and  a  partial  but 
insignificant  decision  rendered,  but  not  until  two  years  had  elapsed,  when 
the  commission  decided  that  'All  the  cases  are  held  open  for  additional 
evidence,'  which  so  thoroughly  disgusted  me  after  having  expended  so  much 
time  and  money  thereon,  that  I  then  determined  to  proceed  no  further,  and 
abandoned  the  apparently  hopeless  ptirsuit  of  combined  and  confederated 
iniquity,  and  resolved  to  have  nothing  further  to  do  with  any  future  pro- 
ceedings  before   the   Interstate   Commerce  Commission." 

*Q.  (By  Vice-chairman  PHILLIPS.)  The  balance  for  the  next  two 
pages  there  are  simply  illustrations  of  these  discriminations?  A.  Yes,  sir; 
all  fully  and  clearly  proved  the  following  facts 

Q.  (By  Vice-chairman  PHILLIPS.)  Perhaps  we  had  better  put  in  these 
details  as  an  exhibit  from  there  until  say  the  middle  of  page  42.  A.  If  you 
say  so;    I   would  like  to  read  this. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Well,  if  you  would  like  to  read  there, 
keep  on;  it  was  simply  a  question  of  whether  that  was  a  repetition  of  facts, 
at  the  same  time,  it  will  be  printed,  of  course,  and  we  will  not  take  the  time 
to  read  all  this.     A.  Well,  I  guess  I   had  better  read  this. 

I   fully  and  clearly  proved  the  following  facts:     (Reading.) 

"That  the  Trans-Continental  Association,  composed  of  2]  lines  of  road, 
bad  advanced  freight  rates  in  1889  over  1887,  when  my  first  complaints  were 
brought  to  the  extent  of  83  per  cent.,  which  was  unreasonable.  Also  proved 
that  these  lines  carried  cottonseed  oil,  worth  four  times  that  of  petroleum, 
at  26  cents  less  per  100  pounds.  That  the  Trans-Missouri  Freight  Associa- 
tion charged  25  cents  per  100  pounds  more  for  carrying  petroleum  than 
cottonseed  oil. 

"That  the  Southern  Railway  and  Steamship  Association,  (,f  which  the 
Louisville  &  Nashville  Railroad  Company  was  a  member,  advanced  freight 
rates  in  1889  over  1887  from  10  to  121  per  cent,  which  was  clearly  unrea- 
sonable. Also  proved  that  the  Chicago,  Rock  Island  &  Pacific  Railroad 
charged  25  cents  more  per  100  pounds  for  carrying  petroleum  than  cotton- 
seed oil. 

"Up  to  March  15,  1890,  the  Standard  Oil  Trust  got  1^^  per  cent,  of  its 
shipments  carried  free  by  a  rebate  reduction  of  62  gallons  on  each  tank  car. 

"I  also  proved  that  the  Standard  Oil  Trust  had  an  exclusive  secret  re- 
bate reduction  on  quantity  shipped,  in  place  of  a  monied  rebate,  of  62 
gallons  deduction  on  each  and  every  tank  car,  or  114  per  cent,  of  its  ship- 
ments,  carried   free." 

No  one  else  got  that  at  all.  These  are  absolute  facts;  no  one  else  got 
that  rebate  or  reduction. 

Q.  (Vice-Chairman  PHILLIPS.)  Is  that  supposed  to  be  on  tank  cars  as 
compared  with  barrel  shipments?  Was  that  the  reason  they  themselves 
gave?  A.  There  was  no  reason  given  for  it.  *There  was  no  reason  given 
for  it  at  all.  I  expect  that  probably  the  only  reason  I  ever  hoard  for  it  was 
that  it  was  wind  in  the  bottom  of  the  car,  or  something  of  that  kind. 

*Q.  (By  Vice-chairman  PHILLIPS.)  That  is  the  question  I  want  to 
ask  you.  A.  There  was  no  reason  for  it  whatever;  that  is,  no  good  leason; 
no  good  valid  reason. 

Q.  (By  Vice-Chairman  PHILLIPS.)  The  question  was:  What  reason 
did  they  pretend  there  was  for  it?  A.  Well.  I  don't  know;  I  don't  know.  I 
never  knew^  of  their  pretended   reason  for  it.     There  w-as  no  good  reason. 


*Black   faced   type  indicates  matter  omitted,  in  the  course  of  editing,   from  tli€ 
official  report. 


446  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Of  course,  when  this  matter  was 
brought  to  their  attention,  both  the  railroads  and  the  Standard  Oil  Company 
presumably  assigned  some  reason  for  it?  A.  I  presume  they  did.  I  do  not 
recollect  what  reason  they  did  assign.  I  suppose  probably  leakage  or  one 
thing  or  another.  I  don't  know.  I  don't  know  what  they  did  assign  now. 
There   was    no    value   received    in    any    sense    whatever.      (Reading.) 

"This  continued  until  March  15,  1890,  when  it  was  changed  to  42  gallons 
deduction,  and  continued  to  September  1,  1892." 

*Now,  these  42  gallons  was  made  open  to  the  public;  the  62  gallons  was 
not.  It  was  never  filed  with  the  Interstate  Commerce  Commission;  that 
62-gallon   deduction  was  not  until   I   developed   it  in  my  case.     That  was  all. 

(Reading.)  "Also  proved  that  the  shippers  of  oil  in  barrels  should  not 
be  charged  only  for  the  oil  shipped,  and  not  for  the  barrel,  to  offset  the  re- 
turn of  empty  tank  cars  that  can't  bring  back  other  freight  (except  extreme 
cases),  while  a  box  car  can.  Besides,  a  tank  car  weighs  3,500  pounds  more 
than  a  box  car  of  the  same  capacity." 

Up  to  1888  the  Pennsylvania  Railroad  carried  oils  in  barrels,  including 
the  package,  for  the  same  rate  that  they  did  for  so  many  gallons  in  a  tank 
car,  but  after  the  interstate  commerce  act  took  effect,  about  a  year  after- 
wards, they  changed  that  the  other  way;  so  that  the  independent  shippers 
would  have  to  pay  for  the  weight  of  the  package. 

*Q.  (By  Mr.  KENNEDY.)  I  would  like  to  ask  you  now  if  you  want 
that  word  "not"  in  there  at  the  end  of  that  line?  "also  proved  that  the  ship- 
pers of  oil  in  barrels  should  not  be  charged  only  for  the  oil  shipped;"  it 
should  be  "charged  only  for  the  oil,"  etc.  A.  Yes,  I  guess  "not"  ought  to  be 
out;  yes,  I  guess  it  ought  to  be  out;  yes,  that  is  it;  I  see  that  is  a  mistake, 
a  clerical  error. 

Q.  (By  Mr.  RATCHFORD.)  Before  you  pass  that  point,  what  reason 
do  you  assign  for  the  change  in  the  rate  of  shipment  in  the  tanks  as  com- 
pared with  the  same  rate  in  barrels?  A.  I  think  it  is  done  at  the  instiga- 
tion and  power  of  the  Standard  Oil  Trust. 

Q.  Did  the  Standard  Oil  Trust  at  the  time  of  the  change  have  control 
of  all  the  tank  cars?     A.  Well,  principally;   oh,  yes,  almost. 

Q.  Principally?  A.  Yes.  sir;  of  course  there  are  more  or  less  outside 
refiners  that  have  a  moderate  amount  of  cars,  yon  know,  but  not  very  many; 
*oh,  there  is  no  question  in  my  mind  but  that  that  was  done  at  the  instiga- 
tion  or  collusion   of  the   Standard  Oil   Trust  with   the   railroads. 

Q.  You  believe  then,  to  make  it  plain,  that  the  reduced  rate  on  ship- 
ments in  tank  cars  is  not  due  to  the  advantage  that  results  to  the  company 
from  the  transportation  of  oil  in  tank  cars,  but  rather  as  a  favor  to  those 
who  control  the  tank  cars?     A.  Yes,  sir. 

Q.  Is  that  it?     A.  Yes,  sir. 

Q.  (By  Mr.  FARQUHAR.)  But  is  not  the  tank  car  really  an  advantage 
in  handling  oil? 

The   WITNESS.     To   whom? 

Mr.  FARQUHAR.  Of  advantage  to  the  railroad  company  and  all  in 
handling  oil. 

The  WITNESS.  No.  sir;  I  have  got  the  very  best  and  choicest  evidence 
to  show  right  here  from  the  general  freight  agent  of  the  Pennsylvania  Rail- 
road Company.  *Now,  I  want  to  show  you  this;  it  is  something  very  valu- 
able; I  am  very  glad  you  asked  that  question.  .lohn  S.  Wilson,  the  general 
freight  agent  of  the  Pennsylvania  Railroad  Company,  the  highest  authority 
we  have,  testified  before  the  Interstate  Commerce  Commission  on  January 
23,  1888,  that  he  would  rather  carry  powder  than  oil  in  tank  cars,  and  that 
the  shioment  in  barrels  is  preferable.      (Quoting  Mr.  Wilson) : 

"I  think  altogether  it  is  the  most  undesirable  business  ^-e  do.  the  car- 
riage of  oil  in  tank  cars.  There  is  no  stopping  it  when  it  starts.  We  had 
a  smash  up  at  New  Brunswick.  We  came  in  collision  tliere  with  a  line  of 
tank  cars;  the  oil  got  on  fire,  and  T  think  it  ran  two  squares,  got  into  a  sewer, 
ran  burning  a  square  or  two  more,  ran  on  the  canal,  which  was  then  frozen 
over,  followed  the  ice  a  square  or  two  beyond,  and  beside  our  own  direct 

•niack  facod  type  indicates  matter  umittetl,  in  the  courne  of  editing,  from  tlie 
official  report. 


GEORGE  RICE.  44(7 

losses  we  have  already  paid  nearly  $500,000  for  the  destruction  there.  I 
regard  it  as  worse  than  powder  to  carry.  The  bridge  at  New  Brunswick 
was  burnt  down,  which  cost  us  two  or  three  hundred  thousand  dollars,  be- 
sides nearly  half  a  million  paid  out  for  outside  destruction. 

"We  might  run  for  10  years  and  by  good  luck  have  no  serious  accident. 
Whereas,  on  the  other  hand,  we  might  strike  another  case  like  that  at  New 
Brunswick  and  lose  more  money  than  we  would  make  on  carrying  oil  for 
10  years.     I  would  rather  carry  anything  else  than  oil  in  tanks. 

"The  movement  in  barrels  I  have  always  considered  preferable  for  two 
reasons.  First,  we  load  barrels  in  a  car  that  will  carry  a  return  cargo. 
There  are  no  back  loads  for  a  tank  car.  For  stock  and  box  cars  we  can 
load  back  and  get  an  increased  earning  for  the  round  trip.  Secondly,  if 
there  comes  a  collision  or  fire,  the  packages  being  separate,  we  are  enabled 
to  save  some  of  the  tonnage.  There  is  no  hope  of  saving  the  contents  of  a 
tank  car  if  it  once  gets  on  fire.  Barrels  you  can  sometimes  scatter  and  roll 
off  and  break  them  up." 

Now,  this  gentleman  didn't  stay  with  this  railroad  long  after  this  evi- 
dence was  given. 

Q.  (By  Mr.  FARQUHAR.)  Evidently,  independent  of  that  gentleman's 
opinion,  the  railroads  have  adopted  the  tank  cars  at  large  for  the  shippers? 
A.  Yes,  sir;  they  have  adopted  it  in  favor  of  the  Standard  Oil  Trust  prin- 
cipally. 

Q.  And  independent  therefore  of  the  barrel  transportation  and  tank 
transportation,  they  put  the  tank  car  in  the  sixth  class  and  the  barrels  in 
the  fifth  class;  how  do  you  account  for  that?  A.  I  suppose  that  tariff  is 
made  up  by  the  Standard  Oil  Trust;  I  think  they  make  up  the  petroleum 
tariff  in  the  United  States;  they  make  them  up  at  26  Broadway  and  give 
them  to  the  railroads  to  carry  out  as  they  say  or  they  don't  get  any  freight; 
*l   haven't  any  doubt  about  that. 

Q.  (By  Mr.  RATCHFORD.)  Isn't  there  an  advantage  in  loading  and 
unloading  the  tank  as  compared  with  the  barrels?  A.  Yes,  sir;  if  your  tank 
cars  arrive  at  a  point  where  you  can  gravitate  the  oil  out  of  them  or  if  you 
had  a  hose  attached  to  them,  a  short  hose  into  a  pipe,  to  which  you  could 
put  a  pump  and  suck  it  out,  and  of  course  the  tanks  carry  more  oil  because 
they  save  the  weight  of  the  barrel,  you  know;  they  carry  a  larger  weight. 

Q.  In  every  case,  it  is  either  taken  out  by  gravity  or  pumped  out?  A. 
Yes,  sir. 

Q.  (By  Mr.  FARQUHAR.)  Nearly  all  cases  it  is  gravity,  is  it  not?  A. 
I  don't  know  about  that,  either,  no;  I  don't  know  that  it  is.  I  think  the 
refinery  over  at  Bayonne,  owned  by  the  Columbia  Oil  Company,  I  think  they 
take  all  their  oil  out  by  the  pump.  I  am  quite  sure  they  do,  because  their 
works,  1  know,  are  on  almost  level  ground,  and  they  could  not  take  it  out 
by  gravity;   I  am  quite  sure  they  do. 

Q.  Does  the  railroad  company  load  the  oil,  or  the  producer?  A.  The 
producer  loads  the  oil. 

Q.  And  the  railroad,  the  shipping  company,  unloads  it?  A.  The  receiver 
unloads  it.  The  receiver  of  the  oil  unloads  the  oil  and  the  producer  or 
owner  of  the  oil  loads  it;  so  that  the  road  has  nothing  to  do;  but  it  is  the 
same  with  barreled  oil,  you  know.  The  refiner  loads  these  barrels  into  a 
car  and  puts  it  in  there,  and  the  road  has  nothing  to  do  with  It;  and  so  with 
unloadin'?;  there  is  no  difference  in  that  respect  whatever  in  regard  to 
that.     (Reading.) 

"I  proved  that  the  intermediate  rates  on  petroleum  Via  the  transcon- 
tinental lines,  in  1889,  was  $1.90  per  100  pounds;  the  wooden  barrel  shipper 
was  required  to  pay  85  pounds  additional  weight,  which  would  amount  to 
$1.61  per  barrel  more,  in  gross  violation  of  Sections  3  and  4  of  this  act.  The 
average  market  price  of  crude  oil  in  1889  was  94  cents. 

"I  proved  that  there  was  a  charge  of  $95  per  tank  car  by  transconti- 
nental lines,  to  return  empties  from  Pacific  coast  to  Missouri  river." 

Now,  that  is  also  since  the  interstate  commerce  act.     (Reading.) 


*Black   factd   type   indicates   matter   omitted,  in  the  course  of  editing,  from  the 
official  report. 


448  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

"Thomas  M.  Kimball,  general  traffic  manager  of  the  Union  Pacific,  tes- 
tified on  June  27,  1887,  before  the  Pacific  Railroad  Commission,  page  1,134, 
that  his  road  carried  the  empty  tank  cars  of  the  Standard  Oil  Company 
free,  the  same  as  the  other  roads. 

"What  was  the  rate  allowed  to  the  Standard  Oil  Company?  A.  All 
sorts  of  rates,  according  to  point  of  delivery  and  the  liveliness  of  competi- 
tion at  that  point;  5  per  cent.,  10  per  cent.,  15  per  cent,  and  up  to  30  per  cent. 

"So  this  great  line,  and  a  government  road,  enters  the  arena  to  assist 
the  Standard  Oil  Trust  to  throttle  competition  as  against  the  rights  of  the 
people  who  have  built  the  road. 

"I  proved  that  refined  oils  in  bulk  were  being  carried  at  6  per  cent,  less 
than  actual  weight,  or  6  per  cent,  of  refined  oil  carried  free  for  the  Standard 
Oil  Trust.  Their  various  lubricants,  residuum  and  so  forth,  carried  at  10 
to  15  per  cent,  less  weight,  according  to  gravity. 

"I  also  proved  that  the  several  associated  lines  of  railway  constituting 
the  Southern  Railway  and  Steamship  Association  pool,  the  Southwestern 
Traffic  pool  and  the  Transcontinental  Association  pool,  were  grossly  violat- 
ing the  third  and  fourth  sections  of  the  act,  long  and  short  haul,  to  the 
extent  of  56  to  225  per  cent.,  which  inured  to  this  extent  in  favor  of  the 
Standard  Oil  Trust  by  prepayment  of  its  freight  at  the  low  car  lot  terminal 
rate,  with  privilege  to  stop  all  such  cars  at  high  rate  intermediate  points. 

"I  paid  out  over  $1,200  in  subpoenas  in  those  cases  by  an  imperative 
rule  adopted  by  the  commission  which  was  not  required  in  my  first  cases. 

"It  is  fair  to  assume  that  the  same  discriminations  not  only  have  con- 
tinued, but  they  have  gotten  worse,  for  on  May  2.  1890  (B-I6I),  the  St. 
Louis,  Arkansas  &  Texas  Railway  (applicable  to  all  Southwestern  lines) 
issued  a  special  oil  tariff  sheet  for  the  exclusive  benefit  of  the  Standard  Oil 
Trust " 

That  I  know,  because  I  couldn't  get  it. 
"— — by  which  this  trust  could  stop  off  full  loaded  tank  cars  at  high  rate 
intermediate  points,  and  divide  same  up  into  less  than  car  lots,  to  be  dis- 
tributed at  several  stations,  by  canning  same,  which  should  have  paid  three 
times  the  terminal  rate.  This  was  an  exclusive  tank  car  tariff  sheet,  not 
applicable  to  barreled  oils  in  box  cars,  for  the  independent  refiner  who 
could  not  afford  to  purchase  rolling  stock  tank  cars. 

"Per  letter  of  the  commission,  July  12,  1897,  these  special  and  most 
extraordinary  of  freight  discriminations  yet  continue  and  are  exclusively  in 
favor  of  the  Standard  Oil  Trust  on  petroleum  shipments." 

Now,  the  quotation. 

Q.  (By  Professor  JENKS.)  The  quotation  from  the  Interstate  Com- 
merce Commission?     A.  Yes,  sir. 

"  'As  to  what  lines  allow  stop-over  privileges,  it  is  understood  that  all 
the  lines  named  on  the  Southwestern  Traffic  Association  tariffs,  as  parties 
thereto  participate  in  the  stop-over  privileges  provided  for  therein.' 

"The  railroads  won't  furnish  tank  cars,  and  if  an  independent  refiner  is 
able  to  buy  a  few,  thus  decreasing  his  working  capital,  he  is  confronted  by 
these  present  special  railroad  instructions,  inserted  in  the  tariff  sheets." 

To  show  how  the  railroads  put  every  possible  obstacle  in  the  way  to 
freeze  out  and  keep  out  competitors,  here  is  what  they  put  in:      (Reading.) 

"The  Southwestern  Bureau,  of  which  the  Missouri,  Kansas  &  Texas 
Pacific  is  a  member,  owned  by  the  Standard  Oil  Trust,  has  this  to  say  at  the 
present  time: 

"'Oil  Tanks:  Carload  petroleum  storage  tanks  used  for  petroleum  and 
its  products  intended  for  permanent  oil  stations,  shall  be  transported  at 
actual  weight  at  the  oil  rate  when  filled  with  oil  that  pays  the  bureau  lines' 
oil  rate.'  " 

That  is  as  much  as  to  say  that  the  railroads  have  the  right  to  say 
whether  a  station  that  I  might  put  up  is  going  to  be  a  permanent  one.  but 
if  I  wanted  to  put  up  one  it  would  be  *the  devil's  own  jobt  to  get  the  right  of 


♦Black  faced  type  indicates  matter  omitted,  In  the  course  of  editing,  from  the 
oflRrial  re.-)ort. 

i"P^r;ictinally  impossible"  is  substituted  for  "the  devil's  own  job"  in  official  re- 
port. 


GEORGE  RICE.  449 

way  or  to  get  a  place  in  which  to  put  it  up.  I  was  two  years  waiting  and 
trying  to  get  that.  If  you  do  get  your  plant  up  it  is  in  the  discretion  of  the 
railroad  to  say  whether  it  is  going  to  be  permanent  or  not.  Anybody  knows 
it  would  not  be  permanent,  because  you  could  not  live.  They  would  make 
discriminating  rates  and  you  couldn't  live,  and  your  permanent  station 
would  be  no  good.  Even  if  you  put  it  up  in  good  faith,  it  would  do  you  no 
good  whatever. 

I  have  got  another  one  here.     (Reading.) 

"Central  Freight  Association.  Tank  Gauge  Hand  Book  No.  4  says  ap- 
plicable to  all  roads  in  the  United  States  at  the  present  time: 

"  'Petroleum  and  its  products  in  tank  cars  delivered  only  when  con- 
signed to  parties  at  points  at  which  they  have  proper'  " — just  think  of  it — 
"  'unloading  and  storage  facilities,  and  when  shipments  in  tank  cars  are 
sent  to  parties  who  have  not  such  facilities,  the  shipments  will  be  returned 
to  shippers  at  their  risk  and  expense.'  " 

It  is  all  left  with  the  railroad  to  say  whether  you  can  have  any  show  or 
not,  and  they  don't  give  you  any  show  and  don't  propose  to  do  it  either. 

(Reading.)  "On  May  6,  1891,  the  Southern  Pacific  Company  issued  a 
special  oil  tariff  with  these  exclusive  advantages  in  favor  of  the  Standard 
Oil  Trust,  being  the  exclusive  owner  of  a  peculiar  box  tank  car  combination, 
patented,  of  two  upright  iron  tanks  set  inside  a  box  car;  that  thus  avoids 
paying  $105  a  tank  car  for  return  of  empty  cylinder  from  Pacific  coast  to 
Missouri  river.  This  special  oil  tariff  governing  all  transcontinental  lines, 
allowed  this  trust  27  cents  per  hundred  pounds  lower  rates  for  petroleum 
transported  in  these  special  patent  cars,  as  against  the  regular  rates.  This 
is  discriminatory  against  the  independent  tank  and  barrel  shipper  of  $105  a 
tank  car  and  $1.08  per  barrel  when  shipped  in  barrels.     (B-164.) 

"The  present  highest  intermediate  rate  on  petroleum  in  less  than  car 
lots,  Chicago  to  Pacific  coast,  over  transcontinental  lines,  is  $2.70  per  100 
pounds,  or  $10.80  per  barrel  of  400  pounds,  to  the  independent  barrel  ship- 
per; while  the  Standard  Oil  Trust,  by  prepayment  of  its  freight  at  the  car 
lot  terminal  rate  of  78%  cents  per  100  pounds  on  320  pounds,  or  $2.51  per 
barrel,  gets  an  advantage  of  330  per  cent,  over  its  competitors,  in  freight  dis- 
crimination. 

"Another  method  of  freight  discrimination  in  favor  of  the  Standard  Oil 
Trust  on  the  transcontinental  lines,  per  tariff  of  1888,  was  to  reduce  rates 
temporarily  one-half  and  then  raise  them  again  50  per  cent.,  so  the  trust,  on 
exclusive  secret  information,  could  stock  up  on  the  low  prices,  while  its 
competitor  always  had  to  pay  the  high  tariff  rates."     (B-191.) 

Now.  I  will  read  some  telegrams  that  passed  between  Mr.  Stubbs,  of  the 
Southern  Pacific  Railroad  Company,  in  which  he  agrees  to  let  the  Standard 
Oil  Trust  pay  a  low  price.  Here  is  the  evidence  right  here  in  telegrams 
that  I  have.  I  think  I  had  better  read  them,  because  it  is  very  important. 
*lt  is  a  most  despicable  thing,  gentlemen — they  show  you  to  what  extent 
they  will  go.  This  is  from  the  Paint,  Oil  and  Drug  Review  of  January  25. 
1893.  I  know  all  about  it,  because  one  of  the  men  interested  in  it  came  to 
see  me  about  it  and  showed  me  some  of  these.  How  completely  the  Stand- 
ard Oil  Company  has  its  grip  on  the  railroads  is  best  evidenced  by  produc- 
ing copies  of  telegrams  that  passed  between  freight  agents  of  the  trans- 
continental lines. 

Mr.  Rice  read  a  large  number  of  telegrams  that  he  said  had  passed 
between  J.  C.  Stubbs,  general  traffic  manager  of  the  Southern  Pacific  Com- 
pany, located  at  St.  Louis,  and  W.  Sproule,  assistant  general  freight  agent 
of  the  Southern  Pacific  Company,  located  at  San  Francisco;  between  W.  A. 
Bissell,  of  St.  Louis,  and  Mr.  Sproule;  between  W.  H.  Tilford,  trustee. 
Standard  Oil  Trust,  New  York,  and  E.  A.  Tilford,  all  covering  arrangements 
for  fixing  freight  rates  over  the  Southern  Pacific,  his  purpose  being  to  show 
that  an  effort  was  being  made  to  have  rates  lowered  when  the  Standard  Oil 
Company  wanted  to  stock  up,  and  increased  when  they  had  sufficient  stock 


•Black   faced   type  indicates  matter   omitted,  in  the  course  of  editing,  from  the 
official  report. 

29 


450  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

on  hand,  to  the  detriment  of  competitors.  These  telegrams  were  dated  on 
various  days  in  November,  1888.  He  said  they  were  taken  from  the  Paint, 
Oil  and  Drug  Review  of  January  25,  1893. 

The  witness  said  that  W.  A.  Bissell,  of  St.  Louis,  who  was  the  general 
freight  agent  of  the  Atlantic  &  Pacific  Railroad,  was  the  one  who  made 
public  the  telegrams  he  quoted  in  relation  to  this  subject.  He  said  he 
thought  Bissell  was  discharged  and  became  an  employe  of  the  Standard  Oil 
Company  afterwards,  but  he  was  not  positive  about  that.  He  thought  he 
was  discharged  from  either  the  railroad  company  or  the  Standard  Oil  Com- 
pany or  he  left  the  company  with  which  he  was  connected,  and  that  was 
the  way  the  telegrams  were  made  public. 

The  latest  move  by  the  railroads  and  the  trusts,  he  said,  is  to  ignore 
and  deny  all  rebates  and  freight  discriminations  and  to  pay  a  "commission," 
which  the  roads  claim  they  can  do  whenever  they  please.  The  railroads, 
he  said,  claim  that  they  can  pay  10,  25  or  50  per  cent,  on  shipments  in  the 
form  of  a  commission.  That  was  simply  whipping  the  devil  around  the 
stump.  When  a  certain  quantity  of  freight  is  shipped  in  a  given  time,  he 
claimed,  the  railroads  deduct  whatever  percentage  they  agree  upon.  In 
order  to  make  this  arrangement,  the  large  shipper  sends  to  a  railroad  an 
agent,  who  agrees  to  secure  for  the  road  certain  business  if  allowed  a  stipu- 
lated commission  on  it. 

Q.  (By  Mr.  CLARKE.)  Have  you  any  correspondence  or  documents  of 
any  kind  to  prove  this  use  of  the  word  "commissions?"  A.  I  don't  know 
that  I  have.     I  haven't  any  here. 

Q.  How  do  you  know,  then,  that  is  their  present  method?  A.  Oh,  I 
know  that  from  general  information  I  have  had  on  the  subject. 

Q.  (By  Mr.  SMYTH.)  Have  you  ever  asked  for  a  "commission?"  A. 
No,  sir. 

Q.  It  has  never  been  refused  you?  A.  Well,  I  have  never  asked,  and  of 
course  it  would  not  be  refused. 

Q.  You  think  it  would  be  refused?  A.  Certainly;  they  would  say  at 
once:  "We  are  not  giving  any  rebates,  not  making  any  commissions  or  dis- 
criminations to  anybody." 

Q.  Do  you  think  that  is  done  in  other  lines  of  business  besides  the  oil 
business?  A.  Yes,  sir;  only  I  think  in  the  oil  business  it  is  much  greater. 
I  think  the  discriminations  in  oil  are  far  greater.  I  think  to-day  that  almost 
all  of  these  trusts  and  combinations  are  being  formed  and  re-formed  on 
these  lines  and  concentrated  throughout.  They  go  to  a  railroad,  you  know, 
and  dictate  to  the  road  by  saying:  "We  have  got  so  much  freight  to  carry; 
what  will  you  take  it  for?  If  you  don't  want  it,  we  will  give  it  to  some  other 
road."  They  will  fix  up  a  rate  and  say:  "We  will  give  you  so  much 
freight,  don't  you  know,  within  a  certain  length  of  time,  and  if  you  want  to 
accept  it,  all  right." 

These  large  shippers,  *and  especially  the  Standard  Oil  Trust,  figure  this 
out  to  a  hair's  breadth.  They  know  just  what  the  road  can  take  in  order  to 
make  a  small  margin,  *and  if  they  don't  want  to  take  it — they  know  very 
well  the  road  does  on  general  principles — but  they  can  get  other  roads  to 
take  it,  don't  you  know. 

Q.  You  have  no  proof  of  that?    A.  No,  sir;  I  have  no  proof  of  that. 

Q.  But  you  think  that  is  so?  A.  I  do.  I  should  think  that  all  these 
gross  freight  discriminations  that  I  have  exposed  here  show  they  would  do 
almost  anything  under  the  light  of  the  sun  to  accomplish  their  ends.  It  is 
against  the  law,  but  what  does  this  $5,000  fine  and  two  years  in  the  peni- 
tentiary, for  each  and  every  offense  of  freight  discriminations,  amount  to? 
It  don't  amount  to  anything.  It  don't  deter  any  of  these  men  from  freight 
discriminations;  not  a  bit. 

Q.  Do  you  mean  that  owing  to  the  hostility  of  the  Standard  Oil  Com- 
pany toward  you,  these  discriminations  arc  not  granted  to  you?  Do  you 
think  they  are  granted  in  other  lines  of  business.  A.  Certainly  they  are. 
The  letter  of  the  receivers,  Cowen  and  Murray,  is  the  best  evidence  of  that 
I  know  of.     *Up  to  a  late  day,  they  say  that  in  ail  the  territory  north  of  the 


*Black   faced  type  indicates  matter  omitted,  In  the  course  of  editing,  from  the 
official  report. 


GEORGE  RICE.  451 

Ohio,  and  east  of  the  Mississippi  river,  they  have  rebates  and  drawbacks 
and  other  devices.  I  have  no  doubt  they  are  granted  by  all  of  the  lines 
within  that  territory  to-day.  They  admit  that  in  their  letter  to  the  Inter- 
state Commerce  Commission,  but  they  say  that  after  the  1st  of  January, 
1899,  "we  are  going  to  observe  the  interstate  commerce  law,  and  if  we  find 
any  of  our  neighbors  violating  the  law,  we  will  complain  to  you,  and  we 
hope  you  will  use  your  best  efforts  to  compel  them  to  come  to  time." 

The  witness  said  the  Sherman  anti-trust  act  was  not  enforced  "because 
the  Attorney-General  does  not  enforce  it  as  he  ought  to  enforce  it."  He  had 
had  correspondence  with  the  Attorney-General  of  the  United  States  in 
regard  to  proceeding  against  the  Standard  Oil  Company,  but  the  Attorney- 
General  did  not  act.  When  asked  by  Representative  Livingston  whether  he 
had  copies  of  such  correspondence,  he  said  he  did  not  have  it  with  him. 

Q.  (By  Professor  JENKS.)  Did  I  understand  you  to  say  that  in  your 
correspondence  with  the  Attorney-General,  he  declined  to  enforce  the  law? 
A.  He  made  excuses  of  one  kind  or  another;  that  he  had  not  had  time  to 
look  into  it,  and  the  Assistant  Attorney  had  gone  to  Europe,  and  hadn't  got 
back,  *and  all  this  and  that  and  the  other. 

Q.  (By  Senator  KYLE.)  I  think  it  would  be  better  to  have  a  copy  of 
all  that  correspondence  in  the  evidence,  if  you  can  furnish  it,  Mr.  Rice.  A. 
I  suppose  I  can.f 

Q.  Inasmuch  as  the  implication  has  been  made  that  he,  in  a  sense,  put 
you  off?    A.  Yes,  sir. 

Q.  (By  Professor  JENKS.)  Will  you  be  kind  enough  to  furnish  the 
commission  with  a  copy  of  your  correspondence  with  the  Attorney-General; 
your  letters  to  him  and  his  letters  to  you?    A.  Yes,  sir;  I  can. 

Q.  (By  Representative  LIVINGSTON.)  You  said  a  while  ago  that  these 
discriminations  on  these  transcontinental  lines  were  prevalent  and  coilstant. 
Have  you  made  any  effort  with  the  Interstate  Commerce  Commission  to 
have  them  stopped?  A.  I  have  in  two  of  my  cases  eight  or  ten  years  ago. 
I  made  complaints  and  the  cases  have  all  been  held  up  and  have  never  been 
decided.  They  have  been  partially  decided,  but  it  didn't  amount  to  any- 
thing. I  brought  suits  against  the  transcontinental  lines,  the  whole  business, 
you  know,  with  notifications  to  151  lines,  so  they  could  appear  and  answer, 
and  I  proved  all  these  gross  freight  discriminations,  you  know,  and  I  believe 
they  are  going  on  just  as  much  to-day  as  ever,  you  know. 

Q.  What  does  the  Interstate  Commerce  Commission  say  about  it?  A. 
They  didn't  decide  my  cases.  They  didn't  decide  these  gross  freight  dis- 
criminations. 

Q.  Did  they  give  you  any  reason  why  they  did  not  decide  them?  A. 
Well,  let  me  see — — 

Q.  (Interrupting.)  Have  you  the  correspondence  here  that  will  show 
that?    A.  Yes,  sir;  I  have  the  decision  here. 

Q.  (By  Vice-Chairman  PHILLIPS.)  When  was  that  decision  rendered? 
A.  On  Saturday,  April  9,  1892.     They  were  brought  in  March,  1899. 

*Q.    (By   Professor  JENKS.)      1889,   you    mean?     A.  Yes,   sir. 

Q.  Both  of  them  in  1889?  A.  *Yes,  sir;  and  they  didn't  decide  them  until 
April,  1892,  and  then  they  only  partially  decided  them,  and  left  them  all 
open  for  additional  evidence,  you  know. 

Q.  Additional  evidence  on  which  side?  A.  And  of  course  that  so  dis- 
gusted me  that  I  wouldn't  have  anything  further  to  do  with  it;  I  wouldn't 
take  any  more  evidence,  because  I  had  spent  a  lot  of  money,  and  had  a  first- 
class  lawyer,  one  of  the  finest  in  the  United  States — and  a  railroad  man — to 
sue  on  the  cases,  you  know,  and  I  proved  all  that  I  charged.  Then  they 
hung  them  up,  you  know. 

The  witness  said  he  had  been  forced  to  discontinue  his  refining  business 
owing  to   freight   discriminations,   not  having  run   his  refinery   since   May, 


*B!ack  faced  type  indicates  matter  omitted,  In  the  course  of  editing,  from  the 
ofRrial  report. 

tThis  correspondence  was  filed  with  the  commission,  according  to  the  official 
report,  but  it  was  not  published  as  a  part  of  Mr.  Rice's  testimony. 


452  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

1896.     As  a  pi'oducer  of  oil  he  was  not  discriminated  against.     He  said  his 
refinery  was  rotting  down. 

Q.  (By  Mr.  SMYTH.)  Does  this  persecution  on  the  part  of  the  Standard 
Oil  Company  apply  to  your  business  as  a  producer  of  oil?  A.  No,  I  don't 
suppose  it  does;  because  I  get  the  same  price  per  barrel  as  anybody  else; 
*they  pay  the  same  to  everybody. 

Q.  'i'hey  buy  your  crude  oil?  A.  Yes,  sir;  *just  the  same  as  anybody 
else. 

Q.  And  it  is  only  in  your  business  as  a  refiner  that  you  meet  with  this 
opposition?     A.  Yes,  sir;   *that  is  where  the  trouble  has  occurred. 

Q.  And  have  you  been  forced  to  discontinue  that  business?  A.  Yes,  sir; 
I  have  been  forced  to  discontinue  my  refining  business  owing  to  freight  dis- 
criminations. 

Q.  And  your  refinery  is  idle?  A.  Yes,  sir;  idle  and  rotting  down;  I 
haven't  lun  it  since  May,  1896;  there  is  no  use  at  all  of  trying;  no  use  of 
anybody  trying  to  build  a  new  refinery  as  against  this  Trust;  it  would  be  sui- 
cidal. 1  would  not  any  more  think  of  going  in  and  putting  any  money  in  it, 
even  if  1  had  $1,000,000  or  $5,000,000  I  wouldn't  go  in  and  buck  against  that 
combination. 

Q.  Did  they  offer  to  buy  you  out — to  buy  it  from  you?  A.  On  one  occa- 
sion, years  ago,  we  had  some  negotiations,  but  not  lately. 

Q.  Why  didn't  you  sell  to  them?  A.  They  didn't  want  to  pay  me 
what!  it  w  as  worth,  and  I  didn't  sell  to  them. 

Q.  You  either  had  to  take  what  they  offered,  or  quit?  A.  Yes,  sir;  you 
would  have  to  take  whatever  they  thought  it  was  worth,  and  since  that  time 
they  have  been  charging  me  with  blackmailing,  and  all  that  kind  of  thing, 
because  I  didn't  take  what  they  thought  it  was  worth,  you  know. 

Q.  But  there  is  no  obstacle  thrown  in  your  way  as  a  producer  of  oil? 
A.  Oh,  no,  sir;   *but  I  am   not  producing  much,  anyhow. 

Q.  (By  Mr.  KENNEDY.)  Are  there  any  refineries  in  Ohio  independent 
of  the  Standard  Oil  Company?  A.  Yes,  sir;  Scofield,  Shurmer  &  Teagle 
has  one  in  Cleveland. 

Q.  There  is  one  in  Cleveland?  A.  Yes,  sir;  Scofield,  Shurmer  &  Teagle 
have  one  in  Cleveland. 

Q.  Do  they  refine  the  Lima  oil?  A.  I  don't  know  that;  I  am  not  sure 
about  that. 

Q.  Do  you  know  whether  they  are  doing  business  at  a  profit  or  not?  A. 
I  don't  know  that. 

Q.  How  long  have  they  been  running?  A.  They  have  been  in  business 
a  good  many  years;  I  don't  know  whether  they  are  doing  business  at  a 
profit,  but  on  general  principles  I  don't  think  there  is  hardly  an  independent 
refiner  that  is  making  money;  *there  may  be  at  the  present  moment  but  I 
am  not  sure  of  that;   but  I  mean  generally  speaking. 

Q.  Have  they  a  large  refinery?  A.  Yes,  sir;  a  pretty  good  size.  *Now, 
Mr.  Emery  here  says,  I  thought  I  put  it  in  my  book  here,  that  in  writing  to 
correspond — you  know  he  is  a  large  refiner,  about  1,000  barrels  a  day,  and 
he  said  he  markets  about  70  per  cent,  of  his  oil  in  Europe,  because  of  freight 
discriminations  in  this  country.     That  is  true,  no  doubt. 

Q.  (By  Mr.  A.  L.  HARRIS.)  Are  you  conversant  with  the  first  and  sec- 
ond sections  of  the  law,  in  what  is  known  as  the  Knight  case?  A.  No,  I 
think   I    have  seen   it;   but  I   am   not  conversant  with   it. 

Q.  The  first  section  is  in  regard  to  what  is  a  conspiracy  in  restraint  of 
trade.  In  the  second  section  they  define  the  word  "monopoly"  to  be  the 
exclusive  privilege  granted  by  a  power  able  to  give  the  privilege  granted, 
and  that  there  was  in  the  Knight  case  (that  was  the  sugar  case)  nothing  of 
that  kind;  because  there  was  nothing  to  prevent  other  capital  from  coming 
in  and  occupying  the  same  ground  that  was  already  occupied  by  the  Ameri- 
can Sugar  Refining  Company,  and  therefore  it  was  not  a  monopoly  within 
the  meaning  of  the  statute.     In  the  same  case  you  will   find  that  it  was  not 


♦Black  faced  type  indicates  matter  omitted,  in  the  course  of  editing-,  from  the 
official  report. 

tin  the  official  report,  the  words  "I  thought"  are  inserted  between  "what" 
and   "it." 


GEORGE  RICE.  453 

*in  restraint  of  trade,  for  the  reason  that  it  was  not  commerce  in  fact  until 
it  flowed  into  the  channel  of  commerce.  It  was  not  under  the  operation  of 
this  act  until  it  got  into  the  stream  of  commerce  and  from  that  time  until  it 
was  landed  at  the  place  of  destination,  it  was  commerce.  It  was 
not  commerce  at  the  place  of  destination  nor  at  the  place  of  manufacturing. 
In  order  to  make  the  Sherman  anti-trust  act  effective,  there  should  be  some 
amendments  that  are,  I  think,  very  clearly  indicated  by  the  decision  of  the 
Supreme  Court.  Therefore  the  Attorneys-General  have  hesitated  to  bring 
suits  that  were  on  all  fours  with  the  suits  already  brought,  and  were  not 
disposed  of,  making  costs  against  the  United  States,  without  compelling  a 
remedy?  A.  I  don't  think  that  extra  costs  should  have  any  weight  in  regard 
to  prosecuting  a  thing  that  shows  any  kind  of  monopoly  or  is  in  restraint  of 
trade.  I  suppose  a  combination  in  restraint  of  trade  might  not  be  a  monop- 
oly and  it  might  be. 

Q.  I  am  only  calling  attention  to  the  reason  for  the  failure  of  those 
cases  in  the  Supreme  Court.  Of  course,  until  the  Supreme  Court  reverses 
its  own  decision,  that  is  the  law  of  the  land  and  is  as  binding  as  a  statute 
passed   by  Congress?     A.   Oh,  certainly;   of  course. 

Q.  Well,  how  do  you  reconcile  this  position  with  that  other?  A.  This  is 
one  of  these  joint  traffic  agreements. 

Q.  This  is  one  of  these  joint  traffic  agreements?  A.  I  understand 
that;    it  is   in  the   Federal   anti-trust   law,  though. 

Q.  But  remember  these  cases  were  of  this  character;  there  was  a  regu- 
lar contract  made  in  restraint  of  trade  and  in  restraint  of  commerce,  and  a 
forfeiture  of  $5,000  was  provided  for  each  company,  I  believe,  that  violated 
the  contract.  A.  You  know  that  my  experience  is  with  most  of  these  offi- 
cials, that  they  are  always  complaining  that  they  haven't  got  enough  power. 
I  don't  think  they  exercise  all  the  power  they  have,  and  of  course  those  that 
are  violating  it,  do  so  in  a  nice  manner,  you  know;  so  as  to  extend  the  time 
and  delay;  everything  is  put  for  delay;  to  keep  anybody  from  interfering 
with   their   unlawful   acts. 

Q.  (By  Repi-esentative  LIVINGSTON.)  What  is  your  opinion,  and  the 
opinion  of  others  similarly  situated  with  yourself,  as  to  the  real  reason  why 
these  things  are  not  attended  to?     A.  Well,  the  real  reason  of  it  is  this 

Q.  You  seem  to  think  the  authority  is  broad  enough?     A.  Yes.  sir;   I  do. 

Q.  What  is  the  real  reason,  then?  A.  The  whole  trouble  is  because  the 
oIRcials  whose  duty  it  is  to  execute  the  law,  don't  do  it. 

Q.  Why  don't  they  do  it?  A.  Well,  that  is  what  is  the  matter.  Why 
don't  they  do  it?     That  I  cannot  answer. 

*Q.  I  supposed  you  had  studied  it  closely?  A.  It  is  pretty  hard  for  a 
person  to  say  why  they  do  not  do  it. 

Q.  It  has  been  suggested  by  one  of  the  commissioners  that  a  decision  of 
the  Supreme  Court  stood  in  the  way.  You  did  not  seem  to  agree  with  that? 
A.    No,   sir;    I   don't  think  so.      I   don't  see   how   it  does. 

Q.  If  you  do  not  agree  that  that  Supreme  Court  decision  stands  in  the 
way  of  the  enforcement  of  these  laws  by  the  authorities  that  are  in  power, 
you  must  have  some  idea  why  they  do  not  enforce  them?  A.  Why  the 
officials  don't  execute  the   law? 

Q.   Yes,  sir.     A.   Well (Laughing.) 

Q.  Is  it  political,  pecuniary,  or  what  is  the  trouble?  Just  thrash  it  out, 
if  you  know?  A.  I  think  the  power  of  the  trusts  and  combinations  have 
their  influence. 

Q.  In  a  pecuniary  or  political  way,  or  both?  A.  I  think  they  have  it 
politically. 

Mr.  Rice  said  his  cases  were  under  the  interstate  commerce  act  and  not 
under  the  Sherman  anti-trust  act. 

When  asked  by  Representative  Livingston  if  he  could  suggest  any 
amendments  to  the  law  by  which  trusts  and  combines  could  be  con- 
trolled, he  said  he  believed  there  was  no  other  way  to  cure  that  trouble 
except  by  government  ownership  of  the  railroads.  He  recommended  taking 
the  protective  tariff  off  products  of  trusts  and  industrial  combinations. 


♦Black   faced    lype   indicates   matter   omitted,  in  the  course  of  editing,  from   tlie 
official  report. 


454  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

Q.  (By  Representative  LIVINGSTON.)  Do  you  mean  to  say  that  you 
have  no  new  suggestions  or  recommendations  to  give  to  the  commission  by 
which  we  can  amend  that  law,  or  bring  into  life  a  new  law,  by  which  these 
trusts  and  combines  can  be  controlled?  *Have  you  anything  practical  that 
you  can  give  the  commission.  A.  I  don't  believe  in  any  amendments  of  that 
kind  to  any  law  you  have  got,  I  believe  in  government  ownership  of  rail- 
roads; I  don't  believe  there  is  any  other  way  that  you  can  get  out  of  that 
trouble.  We  have  had  12  years  of  the  interstate  commerce  act  and  nine 
years  of  the  Federal  anti-trust  act,  and  they  haven't  reached  it. 

Q.  Suppose  the  government  owned  all  the  railroads  and  broke  up  the 
protective  tariff,  then  what  would  you  do?  A.  I  don't  believe  there  is  any- 
thing else  that  would  break  it  up  in  any  manner,  shape  or  form. 

Q.  Then,  you  mean  that  your  remedy  would  be  to  draw  off  all  the  pro- 
tection, and  own  the  railroads;  is  that  your  suggestion?  A.  Yes,  sir;  take 
off  all   protection  on  any  trust  or  combination. 

Q.  And  then  own  the  railroads?  A.  Yes,  sir;  I  do;  and  you  can  get  rid 
of  this  political  bugbear  that  they  may  say  may  make  centralization,  and 
all  of  this  and  that.  Why,  just  disfranchise  the  employes  of  the  railroads, 
and  what  does  that  amount  to?  There  are  only  about  800,000  employes 
and  there  are  1,000,000  men  to-day  that  don't  vote;  if  you  would  disfranchise 
them  then  you  would  get  rid  of  all  the  political  end  of  it. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Provided  the  government  did  own 
the  railroads  and  there  was  absolutely  no  discrimination  in  freights,  could 
you  refine  and  market  oil  in  this  country?  A.  I  think  I  can.  Of  course  I 
cannot  do  it  now  so  well  as  I  could  before  this  condition  of  things  had  come 
on  several  years  ago,  before  this  epidemic  of  combines  got  up;  but  now, 
don't  you  know,  they  can  come  in  and  cut  your  prices  right  where  you  sell 
and  freeze  you  out;  *they  can  do  it  now  because  they  have  accumulated  so 
much  of  these  ill-gotten  gains;  they  can  cut  your  throat  anywhere,  don't  you 
see? 

Q.  (By  Vice-Chairman  PHILLIPS.)  Then  any  large  combine  can  follow 
up  the  small  operator  and  cut  the  market?    A.  Yes,  sir. 

0.  And  absolutely  destroy  him?     A.  Yes,  sir. 

Q.  If  there  was  absolutely  no  discrimination?  A.  Yes,  sir;  they  could 
do  that  even  without  any  discrimination,  by  the  aid  of  these  ill-gotten 
gains  they  have  secured  in  the  past,  you  know. 

Q.  (By  Representative  LIVINGSTON.)  Then  the  ownership  of  the  rail- 
roads would  do  us  no  good  unless  the  other  remedy  came  with  it — *the 
destruction   of  the   combines? 

The  WITNESS.     Which? 

Representative  LIVINGSTON.     The  destruction  of  the  combines. 

The  WITNESS.     Yes,  sir. 

*Q.  (By  Representative  LIVINGSTON.)  The  dismantling  of  these  com- 
bines? A.  Yes,  sir;  that  would  help,  you  know  to  destroy  them.  I  don't 
say  that  that  would,  but  I  don't  see  any  other  way  of  destroying  these  com- 
binations, except  that  the  Attorneys-General  of  the  various  States  go  after 
them  and  forfeit  their  charters. 

Q.  (By  Mr.  CLARKE.)  Could  we  have  any  power  against  the  combines 
of  foreign  countries?     A.  I  don't  see  why  we  would  not. 

*Q.    rBy   Representative   LIVINGSTON.)      Haven't  we   got   it   now? 

Q.  (By  Mr.  CLARKE.)  I  want  you  to  answer  that  question.  A.  I  don't 
understand    his  question.      What   was  the   question? 

Q.  Would  we  have,  under  the  arrangement  you  propose,  any  power 
against  the  combines  of  foreign  countries?  A.  I  don't  see  why  we  would 
not, 

Q.  You  say  yon  would  repeal  the  protective  tariff?  A.  I  would  repeal 
the  protective  tariff  wherever  it  affected  any  trust  or  combination. 

Q.  Suppose  the  trust  or  combination  was  formed  in  a  foreign  country 
upon  some  article  or  line  of  merchandise 

*Mr.  FARQUHAR.    Analine  dyes,  say,  and  then  you  will  have  it. 


*niack   faced  type  Indicates  matter  omitted,  In  the  course  of  editing,  from  the 
official  report. 


GEORGE  RICE.  455 

*Mr.  CLARKE.  I  won't  specify  anything;  I  will  make  my  statement 
general.  That  would  give  them  an  opportunity  to  operate  against  similar 
productions  of  this  country  as  strongly  as  any  combine  does  here.  Now, 
wouldn't  you  need  a  protective  tariff  to  protect  you  against  that?  A.  I  be- 
lieve in  a  protective  tariff,  to  a  certain  extent;  that  is  in  the  protection  of 
home  industries. 

Q.  (By  Representative  LIVINGSTON.)  Provided  it  is  an  individual 
industry?  A.  Yes,  sir;  I  say  it  should  protect  the  individual  more  than  the 
trust;  the  trouble  is  that  the  trusts  and  the  combinations  are  getting  all  the 
protection  and  the  people  in  the  smaller  operations,  the  little  fellows,  don't 
seem  to  get  it. 

*Q.  (By  Mr.  CLARKE.)  Well,  are  you  sure  about  that?  A.  Well,  you 
don't  get  it  on  the  railroads  all  the  same;    I   know  that. 

Q.  You  believe,  then,  in  a  protective  tariff  if  it  could  be  fairly  adminis- 
tered for  the  benefit  of  the  people  generally?  A.  Of  the  masses;  benefit  of 
the  masses.     I   believe  in  taking  care  of  home   industries,  you   know. 

Q.  Can  you  do  it  in  any  other  way  than  by  a  protective  tariff?  A.  Oh, 
well,  of  course  not;  you  have  got  to  have  a  certain  amount  of  protective 
tariff,  of  course;  but  I  don't  believe  in  a  tariff  that  will  protect  trusts  and 
combinations. 

Q.  Well,  you  would  not  repeal  the  tariff  merely  because  some  trust  or 
combination  has  some  benefit  from  it,  when  it  is  clear  to  you  that  the  people 
generally  have  a  benefit  from  it,  too?  A.  No,  if  the  people  generally  get  the 
advantage  of  it,  it  is  all  right;  I  believe  in  that;  I  believe  in  a  protective 
tariff  where  the  masses  of  the  people  get  protection;  certainly  I  do;  I 
believe  in   protecting  the  masses  against  the  classes. 

Q.  Then  your  principal  warfare  is  against  trusts  and  combines,  and 
their  abuses  of  privileges,  rather  than  against  the  law  which  we  now  have, 
which  is  designed  for  the  protection  of  the  people  all  alike?  A.  I  haven't 
got  anything  against  the  law;  I  bow  to  the  laws  of  our  land.  The  great  com- 
plaint that  I  have  is  that  they  are  not  properly  executed;  they  are  not 
enforced. 

Q.  You  do  not  care  to  have  them  repealed,  then?  A.  No,  sir;  I  don't 
think  it  is  necessary  to  amend  them,  or  anything  of  the  kind;  I  think  it  is 
no  harm  to  amend  them  if  we  can  make  them  any  better,  but  the  main 
-trouble   is  that  they  are  not  enforced. 

Mr.  Rice  said  he  could  not  suggest  off  hand  any  amendment  to  the 
Sherman  anti-trust  law,  as  that  was  a  legal  question  and  he  had  not  looked 
into  it. 

*Q.  (By  Representative  LIVINGSTON.)  What  do  you  think  about  Gov- 
ernor Harris'  objection,  or  the  point  that  he  raised  as  to  what  the  Supreme 
Court  decided  on  that  word  monopoly?  Ought  not  that  to  be  amended  in 
some  way  so  that  the  Supreme  Court  should  allow  the  Attorney-General  to 
enforce  the  law?  What  amendment  would  you  suggest  there?  It  seems  to 
me  that  we  are  hung  up  on  that  Supreme  Court  decision.  A.  I  cannot  say 
right  off  what  amendment  would  probably  be  necessary,  because  that  is  a 
legal  question  that  I  don't  understand,  you  know;  I  haven't  looked  into  it, 
you   know;    I   haven't  formed  an  opinion  about  that  at  all. 

Senator  KYLE.  Now,  we  will  proceed  where  we  left  off.  We  are  get- 
ting side  tracked  here  a  little  on  politics. 

Representative  LIVINGSTON.  There  is  no  politics  in  this,  you  know; 
Ihis  is  business. 

The  WITNESS.     Where  did  I   leave  off? 

Senator   KYLE.     At  the   bottom   of  page  44. 

The  WITNESS.  I  think  I  read  the  paragraph  under  B-191;  I  think  I 
did. 

Vice-Chairman  PHILLIPS.  Yes,  sir;  that  paragraph  was  the  last  one 
you    read,    Mr.    Rice. 

The  WITNESS.      (Resuming.)     That  is  my  recollection.      (Reading.) 

"The  Chicago.  Rock  Island  &:  Pacific  Railway,  in  which  two  trustees  of 
the   Standard    Oil   Trust,   Henry   M.    Flagler   and   Benjamin   Brewster,   were 


•Black   faced   type  indicates  matter  omitted,  in  the  course  of  editing-,  from  tiie 
■official  report. 


456  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

directors,  issued,  on  June  13,  1891,  a  'special  tariff,'  including  all  connecting 
lines,  in  which  petroleum  and  its  products  from  Whiting,  Ind.,  are  made  at 
Chicago  rates  as  follows: 

"Current  Chicago  rates  as  published  in  various  issues  of  this  company." 

(No  doubt  practically  in  effect  to-day  without  a  published  tariff.) 

"The  Standard  Oil  Trust  have  at  Whiting,  Ind.,  suburb  of  Chicago,  on 
the  lake  shore,  the  largest  petroleum  refining  plant  in  the  world. 

"Freight  discrimination  of  110  per  cent,  in  1897  in  favor  of  the  Standard 
Oil  Trust." 

Now,  here  is  something  in  1897;  that  is  pretty  late;  a  discrimination. 
Mr.  Archbold  says  you  haven't  had  any  since  1887;  this  is  up  to  1897:  (Read- 
ing.) 

"In  1897,  the  New  York,  New  Haven  &  Hartford  Railroad  Company,  in 
which  Mr.  William  Rockefeller  is  a  director,  discriminated  in  freight  rates 
in  favor  of  the  Standard  Oil  Trust  to  the  extent  of  110  per  cent.,  by  which 
two  cars  of  naphtha,  containing  100,986  pounds  were  carried  at  48,000  pounds, 
or  two  carloads  for  one,  applicable  to  all  Standard  shipmentts,  this  being 
accidentally  discovered." 

The  witness  said  the  above  condition  was  brought  out  in  a  case  that 
was  before  the  Interstate  Commerce  Commission,  and  which  had  not  yet 
been  decided,  but  he  said  it  was  all  correct.  Mr.  Rice  also  read  a  letter 
in  reference  to  the  above,  dated  December  15,  1897,  and  addressed  to  him  by 
the  Liberty  Oil  Company,  C.  M.  Coburn,  manager,  in  which  the  latter  said 
his  company  expected  to  be  able  to  procure  a  criminal  indictment  against 
the  Standard  Oil  Company  in  this  case. 

On  December  14,  1882,  the  Produce  Exchange,  of  New  York,  established 
by  resolution,  which  the  witness  said  had  not  been  changed,  a  gravity 
weight  in  the  sale  of  refined  oil  of  44°,  which  he  said  actually  weighs  six 
and  seven-tenths  pounds  per  gallon.  The  railroads  had  established  a  weight 
of  six  and  four-tenths  pounds  per  gallon,  by  which  the  refined  oil  of  the 
Standard  Oil  Company  is  now  carried  free  to  the  extent  of  four  and  sixty- 
eight-hnndredths  per  cent,  through  under  weight.  This  regulation  applies 
equally  to  all  oil  shipped  by  competitors  of  the  Standard  Oil  Company. 

Q.  (By  Mr.  SMYTH.)  That  statement  you  make  at  the  top  of  the  page 
about  the  two  cars  of  naphtha;  was  it  proven  that  that  was  a  custom;  was 
there  more  than  one  case,  or  was  there  only  one  case  proved?  A.  You 
wouldn't  be  apt  to  prove  more  than  one  case;  that  was  the  only  case  that 
came  up.  There  was  not,  as  I  understand,  any  further  proof  of  any  other 
cases;  this  one  only  got  out  accidentally,  you  know;  you  never  can  find 
anything  of  this  kind,  only  when  we  get  it  accidentally;  but  it  is  fair  to 
presume  that  all  the  shipments  over  this  line  were  on  that  same  basis.  No 
question   about  it  whatever. 

Q.  (By  Professor  JENKS.)  Do  you  remember  what  defence  they  put  in? 
*A.   No,   I    do  not. 

Q.  Did  they  say  it  was  an  accident,  a  clerical  error?  A.  Yes;  Mr.  How- 
ard Page,  the  agent  of  the  Standard  Oil  Company.  Avent  over  to  Boston,  and 
said  it  was  a  clerical  error,  and  it  was  corrected.  Of  course  they  will  do 
that.  They  are  very  nice  men  and  do  it  every  time,  because  they  soon  had 
paid  it  on  a  coTiple  of  cars,  and  they  probably  do  this  thing  right  straight 
along. t      (Reading.) 

"This  also  applied  to  paraflfine  and  lubricating  oils,  fuel  oil  and  resi- 
duum, which  are  carried  at  17  per  cent,  less  than  actual  weight.  The  Stand- 
ard Oil  Trust  own  over  8,000  tank  cars,  which  are  paid  for  every  three  years 
through  the  allowed  milea°:e  rate  of  three-fourths  of  a  cent  a  mile  each 
way — another  form  of  freight  discrimination,  for  the  railroads  pay  to  them 
three  fourths  of  a  cent  a  mile  to  haul  back  a  dead  weight  empty  tank  car 
that  is  not  applicable  to  s:eneral   freight,  like  a   box   car." 

Mr.  Rice  said  that  rate  applied  to  all  classes  of  tank  cars  and  presumed 
that  the  same  rule  applied  to  the  refrigerator  cars  of  the  meat  packing 
companies. 


*Dlack  fuccd  type  indicates  matter  omitted,  in  the  course  nf  editing,  from  the 
ofTicial  report. 

■;Th('  fnllowinp  is  in  the  answer  in  the  nflicial  ri'pnrt:  "Tliey  iirol);ibly  curried  a. 
thousand   cars   there  that  same   way." 


GEORGE  RICE.  457 

He  again  referred  to  the  letter  of  Receivers  Cowen  and  Murray,  of  the 
Baltimore  &  Ohio  Railroad  Company,  of  December  20,  1898,  in  regard  to 
freight  rate  discriminations. 

The  witness  said:  (Reading.)  "Section  6  of  the  interstate  commerce 
act  provides  that  all  original  tariff  sheets  'shall  also  state  separately,  the 
terminal  charges  and  any  rules  or  regulations  which  in  anywise  change, 
affect  or  determine  any  part  or  the  aggregate  of  such  aforesaid  rates  and 
fares  and  charges.'  " 

He  said  the  railroads  violate  this  section  by  issuing  and  filing  with  the 
commission  general  tariff  sheets  for  public  use,  and  then  side-track  these 
tariff  sheets  by  the  issuance  of  innumerable  supplements,  special  oil  tariffs, 
special  circulars,  commodity  sheets  and  so  forth.  He  said  the  interstate 
commerce  act  provides  that  the  general  tariff  shall  state  upon  its  face  every 
thing  that  affects  the  rate  and  yet  the  commission  does  not  enforce  it. 

Senator  Kyle  inquired  whether  the  Interstate  Commerce  Commission 
did  not  say  it  had  no  power  to  enforce  anything.  Mr.  Rice  replied  that  they 
could  enforce  that  regulation  and  he  thought  the  excuse  that  they  had  no 
power  was  a  very  flimsy  one.  He  thought  they  had  plenty  of  power  to  do 
a  great  deal  more  than  they  do. 

"What  is  the  reason  they  do  not  do  it,  I  would  like  to  know?"  he  said. 
"Because  we  have  not  got  any  kind  of  a  country  here  that  enforces  law." 

(Reading.)  "In  1894  an  expert  accountant  discovered  that  $7,000,000 
in  rebates  had  been  paid  by  the  Atchison,  Topeka  &  Santa  Fe  Railroad  Com- 
pany, of  which  no  doubt  the  Standard  Oil  Trust  got  the  lion's  share." 

Q.  (By  Professor  JENKS.)  The  rest  you  have  already  explained  to  us. 
A.  Yes,  sir.  (Reading.)  "These  discriminations  are  not  now  confined  to 
oil,  but  extend  to  and  cover  nine-tenths  of  the  commerce  of  the  country, 
meat  and  manufactured  products,  as  well  as  the  products  of  the  soil  and 
mines,  which  articles  to-day  are  controlled  by  the  great  trusts  and  com- 
bines and  this  control  has  been  secured  only  through  unlawful  re- 
bates.      *       *        * 

"Our  laws  are  over-ridden;  our  courts  are  condemned,  and  our  whole 
social  structure  is  debauched." 

H:  :{:  ^  ^  :{:  :j:  :{: 

The  witness  said  that  it  was  absurd  to  say  that  the  Standard  Oil  Trust 
had  made  oil  cheap,  and  he  declared  petroleum  products  are  to-day  higher 
than  they  should  be.  He  said  producers  of  oil  are  charged  20  cents  a  barrel 
for  local  pipage,  which  does  not  cost  five  cents,  and  that  the  rail  rate  from 
the  oil  region  to  the  seaboard  is  equal  to  52  8-10  cents  per  barrel. 

Mr.  Rice  criticised  the  statement  of  Mr.  F.  B.  Thurber,  of  New  York, 
that  the  Standard  Oil  Company  had  made  oil  cheap,  reducing  the  average 
price  for  refined  oil  for  export  from  25.7  cents  per  gallon  in  1871  to  an 
average   of  5.7   cents   per  gallon   in   1898. 

Q.  (By  Mr.  CLARKE.)  Do  you  dispute  his  statement  that  it  was  only 
attainable  through  the  aggregation  of  capital  in  this  industry?  A.  Yes,  sir, 
I  do  dispute  it. 

^  zi:  ^  :i:  ^  ^  ijp 

The  witness  said  that  up  to  August  28.  1898,  the  Pennsylvania  Railroad 
Company  carried  50  gallons  of  oil.  including  the  wooden  package,  at  the 
same  price  per  barrel  as  50  gallons  in  bulk  in  a  tank  car.     (Reading.) 

"On  September  15,  1895,  the  Produce  Exchange,  of  New  York,  through 
the  power  of  the  Standard  Oil  Trust,  passed  a  resolution  making  the  manu- 
factured products  from  inferior  Lima  crude  petroleum,  known  as  sulphur 
oil,  a  good  delivery,  on  a  parity  with  the  manufactured  products  from  best 
grade  crude.  The  average  annual  market  price  of  this  inferior  grade  crude 
for  past  five  years,  1894  to  1898  inclusive,  was  59  cents  per  barrel,  as 
against  $1.01%  for  the  best  erade.  or  the  latter  72  per  cent,  higher.  Thus  it 
is  that  the  Standard  Oil  Trust  receives  72  per  cent,  more  profit  in  the  sale 
of  manufactured  Lima  crude  products  than  from  those  of  the  higher  priced 
crude,  which  could  not  be  done  except  through  the  power  of  this  monopoly 
to  enforce  and  exact  equal  price  for  both  classes  of  goods,  and  this  is  an- 
other instance  of  this  great  trust  making  petroleum  products  from  inferior 


458  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

grade  crude  so  cheap  to  the  consumer.  For  past  five  years,  1894  to  1898 
inclusive,  the  total  production  of  petroleum  was  279,129,467  barrels,  of  which 
Ohio  produced  85,306,684  barrels  and  Indiana  20,608,793  of  this  inferior  grade 
of  crude  petroleum,  or  38  per  cent. 

"The  last  government  report  for  1898  has  this  to  say  about  this  inferior 
grade  of  crude: 

"  'The  product  is  characterized  by  the  presence  of  sulphur  compounds, 
which  makes  it  of  less  value  for  refining  purposes  than  the  Eastern  Penn- 
sylvania product.' 

"The  refined  product  from  this  poor  grade  crude  is  adulterated  with 
the  products  made  from  the  best  grade  crude,  and  the  results  are  easily 
seen  by  a  white  film  on  the  lamp  chimney  that  obstructs  the  light,  requires 
constant  attention  to  turn  up  the  wick  to  get  more  light,  smokes  the  lamp 
and  has  an  offensive  smell.  In  view  of  Archbold's  laudatory  remarks  on 
this  particular  oil  it  will  be  quite  refreshing  to  refer  to  a  caution  circular, 
issued  in  1890  by  one  of  the  trust  corporations,  denouncing  said  oil.    ('B-166)" 

This  is  a  very  interesting  circular,  giving  what  they  think  about  that 
oil;   it  states  what  the  Standard  thought  of  this  oil. 

Q.  (By  Mr.  FARQUHAR.)  Haven't  they  through  two  processes  elimi- 
nated the  sulphur  and  a  great  many  other  deleterious  substances  from  the 
Lima  oil?  A.  Precisely;  but  the  product  from  the  Lima  oil  is  not  near  as 
good  as  the  other. 

Q.  But  there  has  been  a  great  improvement  since  1890.  when  they 
issued  this  circular?  A.  Yes,  sir;  they  have  improved  the  manufacture  of  it; 
yes,  sir,  to  some  extent.  I  will  put  in  an  exhibit  to  show  violations  of  the 
interstate  commerce  law. 

The  witness  read  the  following  head  lines  of  exhibits  presented,  but  not 
read  by  him:      (Reading.) 

"Non-compliance  and  non-enforcement  of  the  interstate  commerce  act 
produces  existing  gross  discriminating  freight  rates  as  to  persons  and 
places,  and  to  the  extent  of  211  per  cent.,  in  violation  of  sections  3  and  4  of 
the  act." 

"The  long  and  short  haul  clause  of  the  act  not  violated  in  the  shipment 
of   general   commodities   in   five   different   classes." 

"Clement  A.  Griscom.  president  of  the  National  Transit  Company  (Stand- 
ard Oil  Trust)  and  as  a  director  in  the  Pennsylvania  Railroad  Company, 
makes  conspiracy  agreement  for  and  on  behalf  of  all  trunk  lines  to  the  sea- 
hoard,  and  of  the  Tidewater  Pipe  Company,  supposed  competing  pipe  line, 
for  maintenance  of  pipe  with  rail  rates,  ten  times  above  pipage  cost  exist- 
ing to-day." 

"Railroads  allow  Standard  Oil  Trust  to  lay  its  pipes  in  the  road's  right- 
of-way,  in  consideration  of  the  road  having  only  the  pipe  to  transport, 
thereby  losing  all  its  former  oil  freight." 

"The  United  States  Pipe  Line  Company  has  been  trying  for  seven  years 
to  get  its  two  pipe  lines,  crude  and  refined,  from  the  oil  regions  to  New  York 
bay,  through  the  State  of  New  Jersey,  and  must  now  abandon  it  because  of 
joint  opposition  of  railroads  and  of  the  Standard  Oil  Trust." 

"On  August  1,  1899,  50  per  cent,  more  is  charged  by  the  railroads  to 
carry  grain  from  Chicago  to  New  York  for  domestic  use  than  export  for 
foreign  consumption.  Within  three  months,  by  November  1,  1899,  domestic 
rates  have  been  raised  30  per  cent,  and  export  80  per  cent,  with  rebate  on 
export  quantity  shipped." 

(Reading.)  "The  Standard  Oil  monopoly  is  the  originator  of  the  system 
for  devices  for  rebates  in  the  form  of  commissions,  arbitraries,  billing  under 
weight,  blind-billing,  dockage,  lighterage,  terminal  charges,  special  style  tank 
cars,  over-loading,  billing  to  intermediate  points  at  the  low  terminal  rate, 
stopping  cars  in  transit  and  delivering  small  lots  at  carload  rates,  'ghost 
trains'  on  which  no  freight  is  paid,  commissions  or  rebates  on  all  com- 
petitive shipments,  shipping  out  from  its  agencies  to  surrounding  territories 
and  paying  no  freight  thereon  that  to-day  permeates  all  the  arteries  of  com- 
merce, exclusively  in  favor  of  the  trusts,  effectually  wiping  out  and  closing 
tip   all   competitive  industries." 


GEORGE  RICE.  459 

Mr.  Rice  complained  that  there  was  a  species  of  freight  discrimination, 
practiced  by  the  railroad  by  what  were  known  as  "ghost  trains."  He  quoted 
Mr.  Gowen,  president  of  the  Philadelphia  &  Reading  Railroad  Company,  that 
a  "ghost  train"  "is  a  long  train  of  loaded  cars  which,  though  visible  to  the 
sight  and  susceptible  of  identification  by  all  the  other  senses,  makes  no 
impression  upon  the  manifest  of  the  corporation,  and  leaves  no  trace  upon 
the  treasury  of  the  company." 

The  witness  also  read  the  following  head  lines  of  exhibits  presented  to 
the  commission,  but  not  read  by  him: 

"Since  the  Federal  anti-trust  law  took  effect,  1890,  there  has  been  con- 
solidated 946  railroads,  aggregating  63,000  miles,  or  one-third  of  total." 

"The  railroads  and  industrial  trusts  are  capitalized  at  $18,818,554,031." 

"There  are  to-day  at  least  44  unlawful  railroad  traffic  associations  and 
water  lines  combined  acting  in  entire  unison  to  increase  and  maintain 
freight  charges  and  discriminate  in  favor  of  the  trusts  on  all  rail  and  water 
transportation  rates  in  violation  of  the  interstate  commerce  act,  and  of  the 
Federal  anti-trust  act." 

He  renewed  his  advocacy  of  government  ownership  of  railroads  as  the 
only  means  by  which  freight  discriminations  could  be  avoided. 

Q.  (By  Mr.  KENNEDY.)  I  was  out  of  the  room  when  you  said  it,  but 
I  understand  you  said  you  were  in  favor  of  disfranchising  the  800,000  em- 
ployes of  railroads  of  the  country?  A.  Yes,  sir;  in  order  to  take  the  ques- 
tion out  of  political  power  or  influence. 

Q.  You  would  be  in  favor  of  disfranchising  these  800,000  working  men? 
A.  Certainly  I  would,  and  there  are  plenty  of  voters  left. 

Q.  (By  Senator  KYLE.)  Do  you  not  think  that  proposed  remedy  would 
be  absolutely  impracticable? 

*Mr.   FARQUHAR.     But   it  don't  matter  about  that  with   him. 

The  WITNESS.  If  that  is  the  best  remedy,  you  could  get  plenty  of 
men  to  take  the  positions  and  take  them  out  of  politics. 

Q.  (By  Mr.  KENNEDY.)  Do  you  think  you  could  get  plenty  of  men 
to  take  those  positions?  A.  Yes,  sir;  and  I  should  be  in  favor  of  it  right 
quick. 

Q.  Do  you  know  anybody  else  in  the  United  States  that  would  be  in 
favor  of  it?  A.  I  should  suppose  there  would  be  any  quantity;  certainly; 
why  not?  The  greatest  good  for  the  greatest  number.  What  harm  is  there 
in  it? 

Mr.  KENNED  if.     But  they  are  citizens  of  this  country. 

The  WITNESS.  The  residents  of  this  town  can't  vote;  all  citizens  of 
this  district  can't  vote. 

*Mr.  FARQUHAR.     They  go  home  to  vote. 

Senator  KYLE.     You   mean  those  born   here. 

Mr.  A.   L.  HARRIS.     We  ran  one  for  Governor. 

The  WITNESS.  We  gain  350,000  to  400,000  voters  every  year;  we  have 
more  voters  now  than  we  need. 

:}:  ^  4:  ^  4:  4=  ^ 

"If  the  people  cannot  get  justice  and  are  not  soon  relieved  of  the  bur- 
dens and  conspiracy  oppressions  imposed  by  the  railroads  and  of  the  trusts, 
in  gross  violation  of  the  laws  of  the  land,  matters  may  assume  an  ugly  shape. 

"A  century  ago  the  American  colonies,  goaded  to  despair  by  long  con- 
tinued injuries,  insults  and  exactions,  broke  the  fetters  that  had  bound  them 
for  many  years,  and  appealing  to  the  Supreme  .Judge  of  the  world  for  the 
rectitude  of  their  intentions  'assumed  amongst  the  powers  of  the  earth,  the 
separate  and  equal  station  to  which  the  laws  of  nature  and  of  nature's  God 
entitled  them.'  In  that  renowned  Declaration  of  Independence  our  fore- 
fathers asserted  'that  when  a  long  train  of  abuses  and  usurpations,  pursuing 
invariably  the  same  object,  evinces  a  design  to  reduce  them  under  absolute 
despotism,  it  is  their  right,  it  is  their  duty,  to  throw  off  their  oppressors  and 
provide  new  guards  for  future  security.' 

"The  last  resort  is  for  the  people  to  retake  into  their  own  hands  the 
power    that   has    been   delegated    and    abused.      Vigilance    committees    have 


•Black   faced   type  Indicates  matter   omitted,  1  i  the  course  of  editing,   from   \.he 
offlclal  report. 


460  REVIEW   OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

more  than  once  had  a  purifying  influence.  There  may  be  conditions  which 
will  again  render  them  a  necessity.  There  is  a  limit  to  human  forbearance. 
Has  that  limit  yet  been  reached? 

"I  am  free  to  assert  that  unless  some  drastic  measures  are  soon  taken 
to  do  justice  for  the  people,  the  end  will  come  in  an  ugly  shape.  The  colossal 
fortunes  that  have  been  piled  up  as  a  result  of  the  advantages,  enjoyed 
by  the  few  and  denied  to  the  many,  represent  just  that  much  money  coined 
fi'om  the  blood  sweat  of  the  masses.  I  do  not  believe  any  system  will  be 
permitted  to  exist  which  allows  one  man  to  accumulate  a  fortune  of 
four  to  five  hundred  millions  of  dollars  while  millions  of  his  fellow  creatures 
are  suffering  for  the  bare  necessities  of  life." 

The  witness  referred  to  the  letter  written  by  J.  M.  Gulp,  traffic  manager 
of  the  Southern  Railway  Company,  in  which  he  emphatically  denied  that  the 
Southern  Railway  Company  had  at  any  time  given  to  the  Standard  Oil  Com- 
pany or  any  of  its  representatives  "any  lower  rates  of  freight  in  the  car- 
riage of  shipments  made  by  that  company  over  our  rails,  either  by  direct 
tariff,  refund  or  otherwise,  than  to  any  other  shippers  of  similar  com- 
modities." 

He  was  unable  to  give  a  specific  case  of  a  freight  discrimination  over 
the  Southern  Railway  in  favor  of  the  Standard  Oil  Trust,  but  said  the  former 
company  was  connected  with  a  number  of  "unlawful  freight  associations." 
The  company  was  also  pooled  with  railroads  in  the  territory  north  of  the 
Ohio  and  east  of  the  Mississippi,  in  which  Receivers  Cowen  and  Murray, 
of  the  Baltimore  &  Ohio  Railroad,  had  said  that  "illegal  concessions  through 
secret  rates,  drawbacks  and  other  devices"  were  made.  Because  of  these 
circumstances,  he  inferred  that  the  Southern  Railway  also  granted  secret 
rates,  drawbacks,  rebates,  etc.,  adding:  "If  any  kind  of  I'ebates  in  any 
shape  are  given,  you  may  rest  assured  that  the  Standard  Oil  Trust  gets  the 
lion's  share,  as  fully  exposed  by  me." 

The  attention  of  the  witness  was  called  to  the  explanation  made  by  Mr. 
Culp,  of  the  Chess.  Carley  Company  letter  containing  the  phrase  "Please 
turn  another  screw,"  this  explanation  having  been  made  before  the  Bacon 
Committee  in  1888,  Mr.  Culp  having  declared  that  there  was  no  discrimina- 
tion against  Mr.  Rice  at  the  time  that  letter  was  written.  Mr.  Rice,  referring 
to  this  statement,  said:  "It  is  for  the  people  to  believe  Mr.  Culp  against 
me,  if  they  want  to." 

Q.  (By  Mr.  FARQUHAR.)  Mr.  Carley,  in  this  investigation,  testified 
that  he  had  never  gotten  any  rebate  at  that  time  discriminating  in  any  rate 
whatever,  which  is  also  the  sworn  testimony  of  a  reputable  witness  outside 
of A.  Who  is  reputable?     You  call  Carley  a  reputable  witness? 

Q.  No  one  could  call  him  otherwise.  The  Congressional  Committee  took 
it  in  that  way.  A.  They  can  take  it  as  much  as  they  are  amind  to.  I  don't 
believe   him. 

Q.  It  is  in  the  Bacon  report.  A.  I  wouldn't  believe  either  one  of  these 
men.  That  is  my  experience,  you  know.  I  wouldn't  believe  either  one  of 
them. 

Q.  I  merely  desired  to  call  your  attention  to  it.  A.  Because  many  of 
these  exhibits  are  in  this  testimony  to  prove  otherwise,  and  people  can  take 
and  believe  what  they  please,  or  what  they  are  amind  to.  I  am  telling  the 
truth  absolutely,  without  a  doubt,  by  solid  experience.  There  is  no  question 
in  regard  to  it  whatever,  that  they  raised  the  rates  on  me  50  per  cent,  within 
five  days  under  that  letter.  What  have  you  to  say  to  that?  *That  man 
ought  to  be  shot.  Do  you  know  that?  I  have  had  men  tell  me  that  they 
would  shoot  such  a  man  as  that.  *He  is  an  arrant  scoundrel.  Of  course  I 
don't  like  to  use  epithets,  but  any  man  that  will  do  that  will  do  most  any- 
thing under  the  light  of  the  sun.  By  God,  it  is  awful!  Think  of  it!  Any 
railroad  man  ought  to  be  shot  that  would  do  such  a  thing  as  that.  It  is  out- 
rageous to  violate  the  laws  of  this  country  i-i  this  way.  You  know  there 
isn't  lan°:ua?e  strong  enou-^h  to  express  a  man's  disgust  at  the  execution  of 


*Black    faced    type   indicates   m:ilter   iiinitUnl,  in   the  ccurso  (if  cditins'.   finm   the 
official  report. 


GEORGE  RICE.  461 

our  laws.  How  anybody  can  excuse  such  men  or  have  any  belief  in  them 
I  cannot  understand — any  men  that  will  do  such  outrageous  things.  *They 
ought  to  be  wiped  off  the  face  of  the  earth. 

Q.  (By  Mr.  CLARKE.)  Do  you  recommend  shooting  as  a  remedy?  A. 
Oh,  God,  I  think  it  will  come  to  something  of  that  kind,  Mr.  Clarke,  if  we 
cannot  get  relief.  What  did  our  colonists  do  over  in  Boston?  They  threw 
the  tea  overboard  because  of  oppression,  didn't  they?  We  are  just  as  much 
oppressed  to-day  as  they  were,  and  more  so.  *Hundreds  of  millions  of  dol- 
lars are  involved  and  there  was  only  a  few  thousand  there.  That  is  what 
they  did  over  there.  They  put  on  masks  and  went  aboard  like  Indians  and 
threv/  the  tea  overboard  because  of  a  little  extra  tax — threw  it  overboard. 
Don't  you  think  that  some  of  these  railroad  men  ought  to  be  thrown  over- 
board? I  do.  I  will  tell  you  what  it  is,  people  are  getting  tired  of  this  thing, 
I  think. 

The  witness  said  that  Mr.  Archbold  "falsely  asserts,  when  he  states 
that  pipage  rates  were  included  in  the  rail  rates  on  the  Cleveland  & 
Marietta  Railroad."  He  said  he  paid  35  cents  a  barrel  on  his  petroleum  ship- 
ments, while  the  Standard  Oil  Trust  paid  10  cents  a  barrel.  He  said  that 
Phineas  Pease,  the  receiver  of  this  railroad,  allowed  the  Standard  Oil  Trust 
to  lay  its  pipe  line  not  only  in  the  roadbed  right-of-way,  but  also  across 
passenger  bridges  to  assist  it  to  convey  crude  oil  from  the  Macksburg  oil 
fields  to  Parkersburg,  West  Virginia,  12  miles  from  Marietta,  where  the 
Standard  Oil  Company  had  a  large  refining  plant,  though  by  that  means  the 
road  was  deprived  of  Standard  Oil  freight.  In  1885,  Mr.  Rice  said,  when 
he  wanted  to  go  under  the  tracks  of  this  road  with  his  pipe  lines,  to  reach 
the  Muskingum  river,  thence  to  barge  his  oil  to  Marietta  to  avoid  excessive 
rates,  Mr.  Pease  telegraphed  him  to  desist  from  laying  his  pipes  under  the 
road,  which  he  did  not  obey.  In  November,  1887,  seven  or  eight  months 
after  the  interstate  commerce  act  took  effect,  he  "proved  before  the  Inter- 
state Commerce  Commission"  that  he  was  paying  four  times  as  much  freight 
as  the  Standard  Oil  Trust  on  shipments  of  oil  to  Bii'mingham.  Alabama.  He 
paid  59  cents  a  100  pounds,  witli  400  pounds  to  the  barrel,  while  the  Stand- 
ard Oil  Company  paid  only  16.8  cents  per  100  on  315  pounds  of  bulk  oil,  the 
discrimination  being  346  per  cent. 

The  witness  denied  tliat  anyone  in  this  country  ever  put  up  a  dollar  to 
aid  him  in  any  fight  tliat  he  had  made  against  the  Standard  Oil  Trust. 

Q.  (By  Mr.  A.  L.  HARRIS.)  Did  you  ever  offer  to  sell  out  for  .$500,000? 
A.  Yes,  sir:  I  did  offer  it:  they  offered  me  $250,000  in  1882  and  in  1886  or 
1887,  about  the  time  that  I  was  trying  to  get  transferred  some  shares  that  I 
had  in  my  name — which  they  refused  to  do — the  Standard  Oil  Trust  certifi- 
cates— they  were  considerably  exercised  to  prevent  it,  and  a  negotiation  was 
started  along  in  there. 

The  witness  read  a  portion  of  his  re-direct  examination  by  Attorney- 
General  Monnett,  March  21,  1899,  during  the  Ohio  investigation,  in  which 
he  said,  in  part:      (Reading.) 

"A.  The  charge  that  Mr.  Archbold  has  made  against  me  as  being  a 
blackmailer  because  of  any  interest  that  I  may  have  taken  in  the  proceed- 
ings against  the  Standard  Oil  Company  of  Ohio  or  in  these  proceedings,  is  a 
malicious  statement  and  false.  There  is  not  a  word  of  truth  in  it  what- 
soever in  that  regard,  in  that  respect.  In  1882  Mr.  F.  B.  Squires,  the  present 
secretary  of  the  Standard  Oil  Company  of  Ohio,  came  to  me  at  Asbury 
Park,  where  I  was  stopping  with  my  wife,  and  offered  me  $250,000  for  my 
oil  properties,  including  the  producing  properties  and  the  refining  plant. 
This  I  testified  to  before  Judge  O'Brien,  of  this  city,  in  1888,  in  proceedings 
that  I  brought  against  the  trustees  of  the  Standard  Oil  Company  to  get  trans- 
ferred an  original  trust  certificate,  standing  in  another  man's  name,  into 
my  name.  Mr.  Archbold  was  present  at  the  proceedings  and  heard  what  I 
testified  to  and  made  no  objections,  nor  was  it  denied.  He  at  the  same  time 
went  on  to  the  stand  and  testified  that  my  plant  was  not  worth  to  exceed 
$25,000  or  $30,000  (or  five  years  later  that  it  was  worth  only  one-tenth  of  the 
previous  offer:  if  so  the  Standard  Oil  Trust  was  wholly  the  cause  of  it).    He 


•Black  faced  type  indicates  matter  omitted,  in  the  course  of  editing,  from  the 
offlcial  report. 


462  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

also  produced  an  expert  to  say  that  it  was  not  worth  over  $25,000.  At  this 
time  that  I  testified,  and  at  which  Mr.  Archboid  was  present,  in  the  early 
spring  of  1887,  some  four  or  five  months  previous  to  the  proposition  to  which 
he  alluded  and  which  I  will  subsequently  allude  to,  I  offered  my  plant  to 
him  through  Mr.  Orvis  to  Mr.  Archboid  for  the  sum  of  $125,000  and  $25,000 
a  year  for  five  years.  In  1886  it  is  true  that  I  did  submit  a  proposition  to 
him  to  take,  for  producing  properties  and  refining  plant,  the  whole  oil  busi- 
ness that  I  had,  the  sum  of  $250,000  and  $50,000  a  year  for  five  years.  He 
considered  the  proposition  and  wrote  me  two  letters  of  which  I  would  like  to 
submit  here  the  copies  of  them,  because  they  were  very  short." 

Mr.  Rice  read  the  following  copies  of  letters  which  he  had  submitted  ia 
the  above  testimony: 

26  Broadway,   New  York,  November  17.  1S86. 
George  Kice,  Marietta,  Ohio: 

Dear  Sir— I  write  to  advise  you  that  I  have  not  lost  sight  of  our  recent  inter- 
view, but  there  has  been  unavoidable  delay  in  gathering  information  which  we  de- 
sire on  tiie  subject.  We  now  expect  to  have  this  information  in  a  week  or  so,  and 
will   then   again   communicate   with   you.    Believe  me, 

Very  truly  yours, 

JOHN   D.   ARCHBOLD. 

Standard  Oil  Trust,   26  Broadway,    New   York, 

December  13,  1886. 
George  Rice,  Marietta,  Ohio: 

Dear  Sir— We  have  given  further  consideration  to  the  subject  of  our  recent  in- 
terview and  are  prepared,  if  you  so  desire,  to  discuss  it  further  with  you.  Awaiting 
your  advice  as  to  your  wish  in  the  matter,  and,  if  favorable,  the  designation  of  a 
time  when  you  will  meet  with  us  here,  1  remain, 

Truly  yours, 

JOHN   D.   ARCHBOLD. 

Mr.  Rice  said  he  never  replied  to  them  and  never  called  on  them. 

The  witness  quoted  at  considerable  length  from  testimony  taken  during 
the  Ohio  investigation  concerning  his  attempted  sale  of  his  refining  plant 
and  producing  properties  to  the  Standard  Oil  Company. 

Q.  (By  Vice-Chairman  PHILLIPS.)  What  was  the  price  fixed  or  talked 
of  at  that  time,  Mr.  Rice?  A.  $250,000  and  $50,000  a  year  for  five  years,  as 
I  read  from  the  testimony.  Now,  there  in  the  records  it  shows  that  the 
plant  and  the  good  will  of  the  business,  the  mercantile  agency  of  R.  G.  Dun 
&  Company,  for  several  years  made  a  rating  of  a  million  dollars  on  this 
same  property.  It  seems  ridiculous,  you  know.  How  silly  and  ridiculous  it 
is  for  these  hundred  million  millionaires  to  charge  me  with  blackmail  when 
they  have  robbed  the  stockholders  of  the  railroads  through  dishonest  and 
unlawful  means,  through  freight  discriminations,  out  of  hundreds  of  millions 
of  dollars  and  which  has  been  paid  by  the  public  in  higher  priced  oils  and 
of  a  poorer  quality.  When  people  get  hurt  by  the  exposure  of  their  infamies 
they  generally  cry  blackmail.  It  seems  ridiculous,  you  know,  for  me  to  have 
to  answer  this,  but  inasmuch  as  the  charges  have  been  made,  you  know,  and 
under  all  the  circumstances,  I  have,  though  it  didn't  seem  hardly  worth  while. 

Mr.  Rice  read  from  his  testimony  given  during  the  Ohio  investigation  at 
some  length. 

The  witness  read  letters  written  by  Edgar  P.  Hill,  attorney  and  coun- 
sellor-at-law,  New  York,  to  Mr.  Cuthbert,  an  official  of  the  Standard  Oil 
Trust,  November  13,  1899,  making  propositions  to  sell  the  oil  property  of  the 
witness,  and  denied  any  responsibility  for,  or  connection  with,  that  offer. 
These  letters  follow: 

Ex.  No.  1.  Edgar  P.  Hill, 

Admitted  in  evidence.  Attorney    and    Counsellor-at-Law, 

November  13,    '89.  93  Nassau  Street,  New  York. 

March  20,  1888. 
My  Dear  Cuthbert— I  am  going  to  write  you  a  very  plain  letter  in  regard  tn  the 
matter  of  Rice  and  the  Standard  Oil  Company.  In  my  judgment  the  company  is 
making  a  great  mistake  in  not  getting  Rice  out  of  their  way.  I  KNOW  what  I  am 
writing  about,  and  the  necessity  of  Mr.  Brewster's  being  put  in  possession  of  such 
facts  as  I  shall  give  you  some  account  fs  URGENT.  Can  you  consistently  and  prop- 
erly  through   Mr.    Bushnell   have  them  reach    Mr.    Brewster.      If    you    can    without 


GEORGE  RICE.  46* 

prejudice  to  your  interests,  I  hope  you  will  do  so.  If  you  cannot,  say  so  plainly, 
and  reply  to  this  letter  as  soon  as  you  possibly  can.  1  shall  not  call  on  Mr.  Dodd 
again  unless  he  sends  for  me.  I  don't  think  he  appreciates  the  situation.  But  to. 
the  facts,  of  which  you  will  see  something  in  the  papers  before  you  are  many  days- 
older. 

First— Mr.  Rice  owns  certain  shares  of  the  Standard  Oil  Company  stock.  An 
alternative  mandamus  has,  or  will  be  soon  ibsued  commanding  the  company  to 
transfer  that  stock  to  George  Rice,  or  show  cause  why  it  is  not  done.  If  the  com- 
pany transfers  the  stock,  Mr.  Rice  will  prove  to  be  a  more  troublesome  customer 
than  he  is  now,  unless  he  IS  SETTLED  WITH  AT  ONCE.  If  the  company  refuse 
to  transfer  the  stock  they  will  be  COMPELLED  to,  and  then  its  troubles  will  be 
greater.     The    company    cannot    RESIST  the   Court   if  it   refuses. 

Second— Mr.  Rice  has  been  summuned  before  the  Interstate  Commerce  Com- 
mission and  will  be  before  that  commissiuii  to-morrow;,  or  very  soon  to  answer 
interrogatories  already  framed,  the  answers  to  which  will  be  TROUBLESOME  to 
the  compaiiv,  to  speak  within  bounds.  Those  interrogatories  had  best  remain 
UNANSWERED. 

Third— Legal  proceedings  are  about  to  be  commenced  against  two  of  the  rail- 
roads having  large  contracts  in  the  past  and  at  present  with  the  Standard  Oil  Com- 
pany in   violation   of  the  interstate   commerce  law,  for  a  forfeiture  of  their  charters. 

Fourth- A  law  has  been  framed  and  will  soon  be  introduced  in  Congress  giving 
Mr.  Rice  the  authority  to  bring  suits  in  any  State  against  railroads  that  have 
made  contracts  with  the  Standard  Oil  Company  discriminating  against  Rice  and 
to  his  prejudice. 

Fifth— It  is  useless  for  the  company  to  try  to  make  a  settlement  with  Rice 
through  OTHER  PARTIES.  It  must  be  done  with  ME  or  not  at  all.  There  are  other 
matters  I  could  call  attention  to  but  this  is  sufHcient  for  the  present.  I  write  as  I 
have  to  you  for  the  sole  purpose  of  having  these  facts  brought  to  the  notice  of  Mr. 
Brewster  and  for  NO  OTHER  PURPOSE.  Could  I  have  an  interview  with  him,  I 
am  sure  it  would  be  to  the  advantage  of  the  company.  Again  let  me  say  that  I 
do  not  want  you  to  be  prejudiced  in  the  least  in  this  matter,  and  unless  you  can  see 
your  way  clearly  TO  DO  THIS,  DON'T  DO  IT,  but  return  this  letter  to  me  and 
that  will  be  the  end  of  it  so  far  as  you  are  concerned.  Please  do  not  delay  your 
snswer. 

Sincerely    yours, 

(Signed)  EDGAR    P.    HILL. 

Now,  here  is  another  from  him  dated  March  29,  1888: 

Edgar  P.  Hill, 
Ex.  2.  Attorney  and  Counsellor-at-Law, 

Nov.   13,  18S9.  93  Nassau  Street,  New  York. 

I  March  29,  1888. 

My  Dear  Cuthbert— I  have  your  letter  of  the  26th  inst.  for  which  you  have  my 
thanks.  I  am  very  glad  indeed  that  you  sent  my  letter  to  Mr.  B.  and  1  infer  that 
he  or  Mr.  Brewster  has  it  now,  as  you  do  not  mention  its  having  been  returned 
to  you.  I  shall  be  fully  engaged  to-day  and  to-morrow  in  another  matter  and  as 
soon  as  that  is  off  my  hands,  I  shall  ask  Mr.  Brewster  for  an  interview  and  I  am 
confident  that  good  will  come  to  the  company  from  it.  I  desire  to  have  you  under- 
stand that  I  am  not  acting  and  will  not  act  in  this  matter  in  any  spirit  of  hostility  to 
the  company,  but  on  the  contrary  I  desire  to  bring  about  a  settlement  between  the 
company  and  Rice,  and  nothing  else.  I  am  the  only  person  who  has  the  handling 
of  this  matter  and  the  Standard  Oil  Company  is  simply  wasting  valuable  time  in  try- 
ing to  reach  Rice  through  someone  else.  That  this  has  been  done  I  am  SURE,  but 
it  has  had  and  will  not  have  the  least  encouragement.  I  shall  endeavor  to  make  my- 
self understood  by  Mr.  Brewster,  and  am  not  without  hope  of  causing  him  to  see 
matters  as  they  ARE  and  not  as  they  are  represented  to  be  by  others  in  whom  he 
places  confidence.  Mr.  Dodd  hinted  at  blackmail  on  the  part  of  Rice,  but  that 
is  absurd  on  its  face,  as  I  only  ask  to  be  heard  fairly  in  an  endeavor  to  settle  the 
matter  between  these  parties  NOW,  and  which  will  be  more  difficult  the  longer  it  is 
delayed.  I  can  settle  the  matter  in  less  time  than  a  week  if  a  fair  and  accommodat- 
ing spirit  is  shown  on  the  other  side.  I  am  well  pleased  with  the  situation,  and 
again  thank  you  for  the  kind  assistance  you  have  rendered  me. 

Sincerely    yours, 
(Signed)  EDGAR    P.    HILL. 

Mr.  Rice  said  these  letters  were  throv/n  out  by  the  court  in  the  case  of 
the  State  of  Ohio  vs.  the  Standard  Oil  Company  of  Ohio.  Yet  he  said  Mr. 
Dodd  had  sent  this  correspondence  to  the  chairman  of  the  Committee  on 
Manufactures  of  the  House  of  Representatives  to  show  that  he  (Rice)  had 
threatened  to  give  troublesome  evidence  before  that  committee  unless  set- 
tlement was  made  with  him  and  parole  evidence  to  show  that  the  price  for 
such  settlement  was  $550,000. 


464  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

Q.  (By  Vice-chairman  PHILLIPS.)  Did  Mr.  Dodd  know  that  it  had 
been  thrown  out?  A.  Certainly,  he  knew  about  it;  of  course  he  knew  it; 
there  wasn't  any  question  about  it;  you  know,  it  is  ridiculous  and  outrage- 
ous to  have  to  answer  all  these  things,  you  know,  but  the  charge  has  been 
made  against  me,  and  I  thought  I  ought  to  answer  it  here. 

Q.  (By  Professor  JENKS.)  You  never  yourself  had  any  communication 
with  Mr.  Hill  at  all?  A.  Not  a  particle;  not  at  all;  not  a  bit,  and  all  these 
letters  are  gotten  up  for  the  purpose — for  some  reason  or  other. 

Q.  (By  Mr.  FARQUHAR.)  Was  Hill  a  broker  in  New  York?  A.  No, 
sir;   a  lawyer.     *     *     * 

Mr.  Rice  also  referred  to  a  pamphlet  he  had  issued  called  "Black 
Death,"  being  devoted  to  the  Standard  Oil  Trust,  and  said  that  the  latter 
issued  a  duplicate  of  his  pamphlet  with  various  critical  marginal  notes.  He 
read  these  marginal  notes  to  show,  as  he  said.  "What  kind  of  people  the  are." 

Q.  (By  Senator  KYLE.)  You  had  attacked  them  in  your  pamphlet,  had 
you?  A.  Yes,  sir;  I  had  attacked  them,  certainly.  This  was  showing  up 
bugaboos. 

Q.  And  this  is  in  the  shape  of  rebuttal,  as  it  were?  A.  Yes,  sir;  I  sup- 
pose so.  Now,  they  have  admitted  this,  you  know,  in  the  suit.  *l  think 
they  have  admitted  this  pamphlet  with  all  this  stuff.  Now,  I  have  alluded 
here  to  where  they  attack  me.  They  say:  "If  the  Standard  Oil  Company 
pays  George  Rice  $250,000  for  his  refinery,  worth  $50,000,  can  they  sell  oil 
any  cheaper  or  serve  the  public  any  better  than  they  do  now?" 

But  on  the  front  part  they  say:  "Common  sense  pricks  this  hullabaloo; 
such  missionaries  as  George  Rice  work  mostly  for — George  Rice.  Buy  the 
best  and  cheapest  goods  of  the  agent  of  the  Standard  Oil  Company." 

"The  black  border  on  the  first  page  means  blackmail  by  George  Rice." 

This  is  issued  by  the  great  Standard  Oil  Trust,  the  great  philanthropic 
institution,  which  is  worth  several  hundred  million  dollars,  you  know,  and 
they  say  at  the  bottom,  "Buy  Standard  goods  of  the  Standard  agents." 

"If  George  Rice's  goods  are  no  better  than  his  pamphlet,  you  don't  want 
them.     His  pamphlet,  boiled  down,  simply  means  'Sour  grapes.'  " 

*"After  a   protracted   game  of  bluff  and   brag,   George    Rice   plays   baby." 

"Mrs.  Winslow's  Soothing  Syrup  quiets  fretful  babies;  will  not  the  nurse 
try  it  on   Georgie?" 

Q.  (By  Senator  KYLE.)  Do  you  want  that  to  go  into  your  testimony? 
A.   I   don't  believe  I  would;   probably  it  better  not  go  in.     *     *     * 

Mr.  Rice  said  the  Standard  Oil  Company  acknowledged  that  they  pub- 
lished this  pamphlet  and  said  he  had  evidence  to  show  that  they  did 
acknowledge  it. 

Mr.  Rice,  in  reply  to  a  question  by  Mr.  Phillips,  said  the  Oil  City  Der- 
rick had  attacked  independent  oil  producers  and  had  called  him  a  black- 
mailer. PTe  had  not  known  it  to  attack  anybody  in  the  Standard  Oil  Trust 
and  he  claimed  it  was  known  as  the  organ  of  the  Standard  Oil  Trust 
throughout  the  oil  regions.  The  witness  was  told  that  the  Oil  City  Derrick 
was  not  on  trial  before  the  commission. 

The  witness  said  that  he  had  no  suggestion  of  a  remedy  for  the  freight 
discriminations  he  had  complained  of,  except  government  ownership  of  the 
railroads. 

*The  WITNESS.  I  think  it  is  ridiculous  and  foolish,  all  this  thing;  the 
idea  of  a  great  institution  like  the  Standard  Oil  Trust  charging  an  individ- 
ual with  being  a  blackmailer;  why,  it  is  so  ridiculous,  you  know,  on  the  face 
of  it,  when  they  are  getting  these  extraordinary,  outrageous  freight  discrim- 
inations from  the  railroads,  robbing  the  stockholders  of  the  roads  out  of 
hundreds  of  millions  of  dollars,  and  because  somebody  has  asked  more  for 
their  property  than  they  think  it  is  worth,  he  is  a  blackmailer,  and  they  get 
their  organs  to  publish  it  all  over  the  country,  you  know;  that  is  what 
they  do. 

********* 

Q.  (By  Vice-Chairman  PHILLIPS.)  Do  you  know  what  the  dividends 
of  the  Standard  Oil  Company  have  been  since  its  organization?     A.  Well,  I 


♦Black  faced  tyre  indicates  matter  omitted,  In  the  course  of  editing,  from  the 
official  report. 


GEORGE  RICE.  465 

see  $170,000,000  since  1892,  and  the  ten  years  previous  would  be  another 
$100,000,000  or  $270,000,000  or  something. 

Q.  (By  Vice-chairman  PHILLIPS).  What  has  their  capital  stock  sold 
at;  about  the  highest  price?    A.  It  sold  at  $500  in  May  last. 

Q.  (By  Vice-chairman  PHILLIPS.)  What  would  that  make  the  total 
sum?  A.  Half  a  billion. 

Q.   (By  Vice-chairman  PHILLIPS.)  Half  a  billion  of  dollars?  A.  Yes.  sir. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Do  you  know  anything  about  the 
surplus?  A.  No,  sir;  I  do  not.  I  cannot  get  any  statement;  they  don't  make 
any  statements  to  anybody,  *it  don't  make  any  difference  who;  they  are  too 
high-toned  for  that. 

Q.  (By  Mr.  CLARKE.)  I  would  like  to  ask  Mr.  Rice  if  he  has  any  other 
remedy  to  recommend  to  this  commission  and  Congress  than  the  govern- 
ment ownership  of  the  railroads?  A.  I  don't  believe  I  have,  Mr.  Clarke,  for 
the  reason  that  I  think  that  with  the  experience  of  the  past  12  years  of  the 
Interstate  commerce  act,  with  the  penalty  clause  attached  of  $5,000  and  two 
years  in  the  penitentiary  for  each  and  every  offense,  I  think  more  drastic 
measures  must  be  used;  and  I  do  not  see  how  it  could  be  remedied,  except 
by  governmental  ownership  of  railroads  to  stop  freight  discriminations.  *lf 
these  men  have  robbed  in  the  past  by  means  of  these  discriminations,  as  I 
have  shown  here,  and  they  go  on,  I  don't  know  what  they  won't  do,  and 
unless  you  can  get  these  men  behind  the  bars  in  the  penitentiary  they  will 
never  stop  freight  discriminations. 

Q.  In  your  pamphlet  you  make  some  allusions  to  the  ease  with  which 
certain  people  can  control  legislation,  especially  in  the  State  of  New  Jersey. 
A.  Yes,  sir;  I  think  by  the  centering  of  trusts  and  combinations  in  one 
State,  it  is  much  easier  to  control  them,  I  said,  in  the  way  of  legislation. 

Q.  Do  you  not  recognize  that  there  would  be  great  danger  if  railways 
were  owned  and  controlled  by  the  government,  of  great  abuses  and  political 
evils,  and  so  forth,  incident  to  it?  A.  No,  sir;  I  do  not,  for  this  reason:  I 
do  not  know  of  any  instance  of  any  particular  account,  in  which  any  depart- 
ment of  the  government  is  run  dishonestly.  That  is  to  say,  every  man  is 
getting  his  equal,  just  deserts,  the  way  I  understand  it.  You  don't  hear  any 
complaints  that  the  government  is  being  robbed,  excepting,  of  course,  occa- 
sionally, now  and  then.  I  suppose  the  Carter  case  is  an  exception,  but  I 
mean  to  say,  in  a  general  way,  the  departments  of  the  government  are  run 
honestly  and  fairly  and  squarely. 

Q.  We  have  heard  from  you  several  times  to-day  that  you  do  not  think 
the  government  officials  perform  their  duty.  A.  I  don't  think  they  do  per- 
form  their  duty. 

Q.  AVould  they  be  any  more  likely  to  do  it  if  they  had  control  of  the 
railroads?  A.  Yes,  sir;  I  think  so.  But  if  they  didn't  do  their  duty  quite  so 
well  and  there  was  not  freight  discrimination,  it  would  be  a  great  advan- 
tage. I  can  tell  you,  to  the  people  of  the  country.  As  I  understand  it  the 
government  employes  do  their  duty  generally,  don't  they? 

Q.  Do  you  not  think  freight  discriminations  can  be  provided  against 
effectively  without  government  ownership  of  the  railroads?  A.  No,  I  don't 
know  how;  I  don't  know  how  it  could  be  done,  because  in  the  experience  we 
have  had  for  the  past  12  years  with  this  severe  penalty  clause  which  they 
put  in  for  the  violation  of  the  law,  everything  shows  the  discriminations  are 
about  as  bad  to-day  as  ever.  Of  course,  they  are  more  covered  up,  and  you 
don't  get  at  the  worst  of  it  to-day.  A  friend  of  mine  told  me  lately — he  was 
the  expert  on  the  books  of  the  Atchison,  Topeka  &  Santa  Fe  Company  in 
which  that  $7,000,000  of  rebates  was  discovered  three  or  four  years  ago — - 
and  that  expert  told  a  friend  of  mine  within  a  few  davs — this  railroad  expert 
who  was  put  on  the  books — that  he  was  just  getting  into  the  "meat"  of 
it,  and  had  discovered  these  discriminations,  and  had  got  on  to  it  through 
an  entry  of  a  pencil  mark  which  is  put  on  the  books.  This  pencil  mark 
turned  out  to  be  a  secret  mark  which  he  finally  demonstrated  to  be  the  key 
which  led  him  up  to  get  into  where  he  could  find  out  where  the  rebates 
were.    He  was  just  getting  into  it  when  he  was  shut  off,  after  he  had  discov- 


*Black   faced   type  indicates  matter   omitted,  in  the  course  of  editing,  from  the 
official  report. 

30 


466  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

erod  rebates  to  the  extent  of  $7,000,000,  and  he  said  he  thought  there  were 
some  $20,000,000  or  $30,000,000  of  rebates  which  could  have  been  discov- 
ered* if  he  had  had  more  time  to  worlt  it  out.  A  friend  of  mine  told  me 
that  the  expert  told  him  this,  and  I  have  no  doubt  it  is  so. 

Mr.  Rice  concluded  his  testimony  with  the  following  statement: 
"I  pretend  to  say  that  the  Standard  Oil  Trust  is  growing  stronger  all 
the  time,  and  that  that  trust  is  not  dissolved  by  any  means;  simply  passing 
a  resolution  to  dissolve  it  does  not  dissolve  it,  by  any  means;   I  don't  know 
whether  I  made  that  plain  enough,  but  that  is  the  end  of  it." 

At  this  point  the  commission  adjourned  until  the  following  morning. 


CHAPTER  XX. 

TESTIMONY  OF  MR.  HOWARD  PAGE,  OF  NEW  YORK, 
VICE-PRESIDENT  OF  THE  UNION  TANK  LINE  CO. 


Mr.  Howard  Page,  of  New  York  City,  vice-president  of  the  Union  Tank 
Line  Company,  appeared  before  the  commission  on  December  13,  1899.  He 
stated  that  the  Union  Tank  Line  is  the  company  that  owns  the  cars  in 
which  the  Standard  Oil  Company  makes  its  shipments  over  the  various  rail- 
roads of  the  United  States. 

The  witness  began  business  with  Chess,  Carley  &  Co.  in  1878,  and  con- 
tinued with  that  firm  until  1881,  when  it  became  a  corporation  under  the 
name  of  the  Chess-Carley  Company.  The  Chess-Carley  Company  was  suc- 
ceeded by  the  Standard  Oil  Company  of  Kentucky  about  1886.  Chess, 
Carley  &  Co.  and  the  Chess-Carley  Company  were  under  the  direct  control 
and  management  of  F.  D.  Carley,  who  was  the  I'esident  partner  and  the 
manager  at  Louisville.  Mr.  Page  remained  with  the  Standard  Oil  Company 
of  Kentucky  until  1889,  when  he  went  to  New  York  with  the  Standard  Oil 
Company  of  New  York,  since  which  time  he  has  been  with  that  company 
and  with  the  Union  Tank  Line  Company,  having  been  vice-president  of  the 
Union  Tank  Line  Company  since  it  was  formed  in  1891.  While  with  the 
Chess-Carley  Company  in  Louisville  and  with  the  Standard  Oil  Company  of 
Kentucky,  he  was  in  charge  of  their  traffic  business. 

He  desired  to  reply  to  some  charges  made  by  Mr.  George  Rice,  of  Mari- 
etta, Ohio,  when  before  the  commission,  saying  that  some  of  these  charges 
had  been  made  and  reiterated  and  advertised  so  frequently  that  they  had 
come  to  be  believed. 

Continuing  his  testimony,  he  said: 

"Mr.  Rice  charges  that  the  Cottonseed  Oil  Trust  paid  the  Standard  Oil 
Company  $2.50,000  for  a  copy  of  its  trust  agreement  and  this  we  deny  as  to 
that  or  any  other  sum. 

"In  Mr.  Rice's  testimony  he  claims  that  the  railroads  paid  the  Galena 
Oil  Company  very  high  prices  for  its  oil,  and  this  forms  a  kind  of  freight 
discrimination  in  favor  of  the  Standard  Oil  Company.  Mr.  Archbold  denied 
it  and  I  deny  it  again.  The  facts  are  that  the  trade  secured  by  the  Galena 
Oil  Company  is  because  of  the  superior  and  uniform  quality  as  compared 
with  the  ordinary  oils  on  the  market.  As  to  the  prices  paid  for  the  Galena  oils 
as  compared  with  others,  the  Galena  Oil  Company  sells  its  oils  to  railroads  un- 
der an  agreement  with  the  railroad  by  which  the  Galena  Oil  Company  always 
guarantees  that  the  cost  shall  not  exceed  the  cost  of  oils  that  the  railroad 
has  used  before,  and  generally  guarantees  a  reduction  in  the  cost.  This 
guarantee  Is  in  the  form  of  a  certain  cost  per  train  mile  for  the  different 
equipments  which  the  railroad  runs  over  its  rails.  That  is.  the  cost  per 
train  mile  of  engines,  freight  cars  and  passenger  cars  that  the  road  trans- 


*Tn  tho  ofncial  report  the  statement  "he  thought  more  could  have  been  discov- 
♦^red"  apprars  in  place  of  "he  thought  there  were  $20,000,000  or  $,'^0,000,000  of  rebates 
which  could  have  been  discovered." 


HOWARD   PAGE.  467 

ports  over  its  rails  is  found  from  the  railroad's  own  books,  and  then  the 
Galena  Oil  Company  guarantees  that  railroad,  after  finding  the  cost  of  the 
use  of  the  other  oils,  the  cost  of  using  Galena  oils  will  be  less,  and  never 
more,  than  by  using  the  other  oils." 

Q.  (By  Mr.  CLARKE.)  Do  you  refer  to  lubricating  oils  entirely?  A. 
Lubricating  oils  entirely  and  signal  oils.  The  result  of  this  has  been  great 
saving  in  the  cost  of  the  lubrication  of  railroads  and  a  growing  trade  to  the 
Galena  Oil  Company.  This  saving  is  produced  by  the  fact  that  the  Galena 
oil  will  do  more  work  for  the  same  money  than  any  other  oil.  Experience 
has  shown  that  that  result  has  been  obtained  and  the  guarantee  is  made 
good.  The  amount  of  money  that  the  railroads  pay  to  the  Galena  Oil  Com- 
pany for  the  use  of  its  oils,  compared  with  the  ordinary  oils  on  the  market, 
is  shown  to  be  less. 

Q.  (By  Mr.  FARQUHAR.)  I  would  like  to  ask  Mr.  Page,  has  it  not  been 
customary  in  selling  oils  for  the  last  30  years,  for  the  railroads  to  demand 
these  tests  of  all  persons  that  present  oils  to  them  for  use;  *and  to  make 
the  30-day  or  other  test  as  to  the  economy,  the  lack  of  friction  and  the  gen- 
eral economy  In  the  use  of  oil?  Has  it  not  been  the  custom  of  the  oil  trade 
for  30  years  to  do  that  as  the  Galena  does?  A.  I  do  not  think  any  other 
company  has  gone  into  it  as  a  science,  as  the  Galena  Company  has  done. 

Q.  Not  as  to  uniformity?  A.  Nor  do  I  know  that  they  have  ever  guar- 
anteed the  cost  per  train  mile  for  a  year  or  a  series  of  years  as  the  Galena 
Company  does.  It  is  immaterial  to  a  railroad  whether  a  gallon  of  oil  costs 
10  cents  or  five  cents,  if  the  10  cent  oil  will  do  work  for  three  miles  that  the 
five  cent  oil  will  only  do  for  one  mile.  That  is  simply  the  result  of  the  use 
of  the  Galena  oils.  The  Galena  oils,  although  they  have  but  one  price,  and 
a  uniform  price,  and  are  higher  than  the  cheaper  grades  of  oil,  will  do  more 
W'ork  and  the  railroad  will  pay  less  money  at  the  end  of  a  year  by  the  use 
of  those  oils  than  they  pay  by  the  use  of  the  cheaper  oils,  and  they  are  so 
guaranteed. 

Q.  (By  Mr.  SMYTH.)  Has  that  fact  ever  been  demonstrated?  A.  Ab- 
solutely. The  demonstration  is  proved  by  what  l\Ir.  Rice  claims — that  the 
result  has  been  that  9.5  per  cent. — I  do  not  say  it  is  95  per  cent.,  but  I  do 
say  the  Galena  Oil  Company  has  secured  a  large  and  growing  trade  with  the 
railroads,  and  it  could  not  have  done  so  had  not  their  oils  been  superior 
and  the  results  been  obtained  that  they  have  shown. 

Q.  You  claim  that  this  large  trade  with  the  railroads  Is  due  to  the 
superiority  of  that  oil  and  not  to  any  influence  brought  to  bear  by  the  Stand- 
ard Oil  Company?  A.  Absolutely;  the  superiority  of  the  oils  and  the  econ- 
omy that  they  have  given  to  the  railroads  themselves. 

*  >;:  J}:  %  :J;  ^  *  *  sj:  %  * 

Mr.  Page  said  the  price  of  the  Galena  Oil  Company  for  its  oils  is  the 
same  to  every  railroad  in  the  United  States.  The  price  per  gallon  is  the 
same  to  all  roads,  regardless  of  the  quantity  they  use. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Do  you  claim  that  there  is  no 
refiner  or  person  engaged  in  the  manufacturing  of  lubricating  oil  that  can 
make  oil  equal  to  the  Galena  oil?  *That  there  is  no  outsider  or  independent 
refining  concern  that  can  make  just  as  good  oil  as  the  Galena  Company? 
A.  I  cannot  answer  that.  I  can  only  say  what  the  result  of  the  Galena 
Company's  oil  and  its  business  has  been. 

Q.  (By  Vice-Chairman  PHILLIPS.)  But  you  spoke  of  their  guarantee- 
ing a  superior  quality  of  oil?  A.  I  did  not  say  guaranteeing  a  superior  qual- 
ity.    I  said  they  guaranteed  their  cost. 

Q.  (By  Vice-Chairman  PHILLIPS.)  And  above  the  cheaper  oil.  The 
inference  to  the  commission  probably  would  be  that  all  oth^-rs  made 
inferior  or  cheaper  oils  than  the  Galena  Company?  A.  I  did  not  say  that, 
sir. 

Q.  (By  Vice-Chairman  PHILLIPS.)  You  did  not  say  it  in  so  many 
words?  A.  I  said  that  the  result  of  the  use  of  the  Galena  oils  had  been  a 
saving  to  the  railroads  in  the  cost,  and  that  they  were  justified  in  guaran- 


*Black   faced   type  indicates  matter  omitted,  in  the  course  of  editing,  from  the 
official  report. 


468  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

teeing  that  cost  by  the  fact  that  the  Galena  oils  did  better  work  for  the 
same  money  than  the  cheaper  grades  of  oil  that  were  offered  on  the  market. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Did,  or  did  not,  the  monopoly  of 
the  lubricating  oil  business,  so  far  as  the  railroads  are  concerned,  grow  up 
during  the  time  when  the  rebate  system  was  in  vogue  everywhere?  A. 
Absolutely  not.  For  ten  years  back,  during  which  time  the  Standard  Oil 
Company  has  not  received  a  dollar  in  rebates,  the  trade  of  the  Galena  Oil 
Company  has  grown  tremendously  and  I  would  say  is  probably  ten  times 
to-day  what  it  was  on  the  date  of  the  passage  of  the  interstate  commerce 
law. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Did  they  not  get  this  monopoly  of 
the  lubricating  business  of  the  country  prior  to  the  interstate  commerce 
act,  though  it  has  grown  largely  since?  The  railroads  have  increased  by 
thousands  and  tens  of  thousands  of  miles  since  that  day.  A.  I  think  I  have 
already  answered  that  by  saying  that  to-day  the  trade  of  the  Galena  Oil 
Company  is  ten  times  what  it  was  10  years  ago,  and  in  the  last  10  years  we 
have  not  received  a  dollar  of  rebates,  therefore,  prior  to  the  interstate  com- 
merce law,  when  we  did  receive  lower  rates  of  freight  than  the  tariff,  as 
all  other  shippers  did.  the  trade  of  the  Galena  Oil  Company  was  only  one- 
tenth  of  what  it  is  to-day. 

Q.  (By  Vice-Chairman  PHILLIPS.)  But  still  it  was  practically  a 
monopoly  of  that  business  at  that  date?  A.  It  was  not,  sir.  If  they  only 
had  one-tenth  of  the  business  they  have  to-day,  they  could  not  have  had  a 
monopoly  at  that  time. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Did  they  use  your  oil  and  other 
oils?  Has  not  the  use  of  lubricating  oil  *made  from  petroleum  been  grow- 
ing right  along?  Was  there  or  was  there  not  any  considerable  amount  of 
oil  furnished  by  independent  or  outside  people  to  the  railroads  prior  to  the 
interstate  commerce  act?  A.  They  sold  the  railroads  then  and  they  sell 
them  now. 

Q.  (By  Vice-Chairman  PHILLIPS.)  No  considerable  amount  to  the 
railroads  prior  to  that?  A.  Oh,  yes,  sir;  as  far  as  my  knowledge  goes,  they 
did,  and  they  try  to  now  and  they  do  now. 

Q.  (By  Mr.  FARQUHAR.)  Is  it  not  a  fact  that  the  Galena  Company, 
before  it  ever  cam.e  into  the  Standard,  had  established  a  lubricating  busi- 
ness?    A.  Yes,  it  had. 

Q.  Is  it  not  generally  known  in  the  oil  trade  of  this  country  that  the 
Galena  is  the  best  lubricant  ever  made  in  this  country?  Is  not  that  its  gen- 
eral reputation  among  railroad  men  and  all  others?  A.  Its  success  has  cer- 
tainly proved  that. 

In  reply  to  questions,  the  witness  said  the  Galena  Oil  Company  had 
made  a  specialty  of  the  railroad  and  steamship  trade,  and  does  not  make  a 
special  effort  to  sell  to  mills  and  the  machine  trade,  although  it  does  so, 
and  in  addition  has  a  large  and  growing  trade  abroad.  The  Galena  oil  is 
made  especially  for  the  requirements  of  railroads.  When  the  oil  is  sold  to 
mills,  they  pay  the  same  piices  as  are  paid  by  the  railroads. 

Q.  (By  Professor  .JENKS.)  Does  the  fact  that  the  Galena  oils  are  sold 
to  the  railroads  mostly  on  contract  for  a  year  explain  the  statement  that  has 
been  made  here  at  different  times  that  when  independent  dealers  attempt 
to  sell  oil  to  local  railroad  officials  they  are  invariably  referred  to  the 
higher  officers  of  the  railroad  company?  Your  own  officials  also,  I  believe, 
have  testified  that  they  have  no  knowledge  of  the  price  of  lubricating  oils, 
because  they  themselves,  the  local  managers,  did  not  deal  with  the  local 
officers.  A.  That  is  true,  and  is  generally  true,  I  believe,  in  regard  to  sup- 
plies used  to  any  large  extent  on  railroads.  In  other  words,  the  local  pur- 
chasing acent,  or  local  division  agent  of  a  railroad  is  not  the  man  that  buys 
for  a  lar^^e  system  of  roads  any  article  that  is  used  to  a  large  extent,  and 
naturally  the  local  men  would  not  know  the  price  of  a  contract  that  would 
probably  be  made  by  the  general  manager  for  a  series  of  years  covering 
the  entire  lubrication  of  a  railroad. 


*Rlack   faced   type  indicates  matter  omitted,  in  the  course  of  editing,   from   the 
official  report. 


HOWARD   PAGE.  469 

Q.  (By  Mr.  SMYTH.)  All  those  articles  are  generally  bought  by  the 
year  by  contract  with  the  railroad?  A.  The  contracts  are  generally  for 
three  or  five  years,  simply  because  the  results  of  the  economies  cannot 
always  be  demonstrated  in  one  year. 

Q.  (By  Senator  KYLE.)  They  have  no  schedule  prices  whatever  on 
those?     A.  They  have  an  absolute  schedule  price  per  gallon. 

Q.  For  from  three  to  five  years?  A.  From  three  to  five  years,  and  they 
guarantee  the  cost  per  train  mile  of  the  various  equipments  run,  based  on 
the  cost  that  has  been  shown  before  by  that  same  railroad,  *over  the  same 
railroad,  in  the  use  of  the  ordinary  oil. 

So  far  as  the  witness  knew,  the  Galena  Oil  Company  made  the  same 
prices  for  a  railroad  for  a  five-year  contract  that  they  made  for  a  barrel  of 
oil  to  a  private  consumer. 

Mr.  PAGE.  (Continuing.)  In  regard  to  Mr.  Newlin's  letter  to  George 
Rice,  alleging  freight  discriminations  by  the  Pennsylvania  Railroad  in  favor 
of  the  Standard  Oil  Company,  as  compared  with  other  shippers,  I  beg  to 
hand  you  a  letter  from  Solicitor  Dodd  addressed  to  the  commission,  attached 
to  which  are  some  letters  from  the  attorneys  of  the  railroad  in  reference  to 
that  matter.  I  will  say  briefly  that  Mr.  Newlin's  deductions,  as  presented 
in  his  letter  to  Mr.  Rice  were  the  same  as  argued  by  him  before  the  United 
States  Court  at  Philadelphia,  and  the  court  dismissed  the  case.  The  facts 
in  the  case,  boiled  down,  are  simply  that  the  Standard  Oil  Company  paid 
exactly  the  same  rate  of  freight  as  all  other  shippers  over  the  Pennsylvania 
Railroad  from  and  to  the  various  points  named  in  Mr.  Newlin's  letter,  but 
on  such  oil  as  w-as  carried  partly  by  pipe  line  and  partly  by  railroad,  the 
pipe  line  was  allowed  a  share  of  the  through  rate,  the  same  as  the  railroad 
would  allow  any  other  connection.  The  pipe  line  is  a  common  carrier  under 
the  laws  of  Pennsylvania,  and  on  all  oil  that  is  gathered  in  the  oil  fields  and 
piped  tov/ard  the  seaboard  and  delivered  to  the  Pennsylvania  Railroad,  as 
it  was  at  Hamilton,  the  rate  was  the  same  as  the  through  railroad  rate,  and 
the  pipe  line  got  a  share  of  that  rate  for  its  haul  as  the  Pennsylvania  Rail- 
road got  a  share  for  its  haul.  The  legal  and  the  full  explanation  is  in  the 
letter  from  Mr.  Dodd  and  the  attorneys  of  the  Pennsylvania  Railroad, 
which  I  shall  present  as  an  exhibit: 

(Following  are  copies  of  the  exhibits  referred  to  by  the  witness) : 

New  York.  December  7,  1S99. 
To  the   United   States  Industrial  Commission: 

Dear  Sirs — James  W.  M.  Newlin,  in  his  letter  to  George  Rice,  which  was  given 
in  €viclen:e  before  the  United  States  Industrial  Commission,  made  two  specific  alle- 
gations: 

First— That  during  the  years  ISSl,  18S2  and  1SS3,  Fenaille  &  Despeaux  paid  the 
Pennsylvania  Railroad  Company  48  cents  per  barrel  for  carriage  of  oil.  all  rail, 
from  Foxburg  to  Communipaw,  and  at  the  same  time,  between  the  same  points,  the 
railroad  company  carried  oil  for  the  Standard  Oil  Company  at  a  reduction  of  2214 
cents  per  barrel. 

Second — That  the  Pennsylvania  Railrrad  Company  carried  oil  from  McCahnont 
and  other  points  to  Communipaw,  charging  Fenaill?  &  Despeaux  33  cents  per  barrel. 
and  at  the  same  time  between  the  same  points  carried  oil  for  the  Standard  Oil  Com- 
pany of  New  Yoik  for  19.875  cents  per  barrel. 

He  further  claims  that  these  facts  were  proven  in  the  case  of  Fenaille  &  Det- 
peau.K  vs.  the  Pennsylvania  Railroad  Company. 

We  desire  to  make  the  most  specific  denial  of  these  statements. 

First— That  it  is  not  true  that  oil  was  sn  carried  for  the  Standard  Oil  Com- 
pany,  and 

Second- It  is  not  true  that  any  evidence  of  such  fact  was  given  in  the  case  of 
Fenaille  &  Despeaux  vs.  the  Pennsylvania  Railroad  Company,  or  any  other  case. 
nor  was  any  evidence  given,  written  or  oral,  from  which  any  sane  man  could  infer 
such  a  state  of  facts.  On  the  contrary, the  evidence  given  was  positive  that  at 
dates  mentioned,  the  Standard  Oil  Company  paid  the  same  rates  on  freight  as  other 
shippers  and  received  no  drawbacks  or  preferences. 

Mr.  Newlin,  after  stating  these  facts  were  proven  in  said  case,  refers  to  ihe 
specific  evidence,  which  was  an  agreement  between  the  Pennsylvania  Railroad  Com- 
pany and  the  National  Transit  Company,  dated  May  6,  18,81.  I  presume  a  copy  of 
this  agreement  was  handed  to  the  commission  and  it  is  only  necessary  to  say  that 
the  most  astute  and  suspicious  mind  could  not  distort  the  languaee  of  that  agree- 
ment into  a  support  of  the  allegations  which  Mr.  Newlin  bases  upon  it.  and  Mr. 
Newlin  should  have  been  more  cautious  in  making,  such  allegation,  as  he  had  already 


470  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

been  heard,  in  the  United  States  Court  at  Philadelphia  on  his  construction  of  this 
agreemeiJt,  and  after  argument,  the  case  was  dismissed  by  the  court  for  want  of 
auy  proof  of  discrimination. 

Mr.  Ntwlin  claims  the  discrimination  lurks  in  Sections  4  and  8  of  said  agree- 
ment. The  agreement  was  a  joint  trafflic  agreement  in  regard  to  oil  carried  partly 
by  pipe  and  partly  by  rail,  the  through  pipe  line  at  that  time  having  been  com- 
pleted to  a  point  near  Milton,  Pa. 

The  fourth  section  is  as  follows: 

"The  through  rates  from  the  discharging  points  of  the  gathering  pipes  in  the 
region  to  the  destination  of  the  oil,  whether  the  same  shall  be  shipped  entirely  by 
rail  or  by  trunk,  pipe  and  rail,  shall  be  fixed  by  the  trunk  line  railroad  companies, 
provided  that  they  can  agree  upon  the  same,  and  the  Transit  company  agrees  to 
accept  thereof  as  the  share  due  to  its  through  pipes,  the  proportions  hereinafter 
fixed,  through  pipe  lines  include  only  such  lines  as  receive  oil  from  the  local  or 
gathering  pipes,  and  Co  not  include  any  part  of  said  local  or  gathering  pipes." 

By  this  section,  the  railroad  companies  were  authorized  to  make  the  through 
rate,  and  a  distinction  was  drawn  which  has  always  been  maintained  between  the 
local  and  gathering  lines  and  the  through  pipe  lines.  With  the  local  or  gathering 
pipe  lines,  and  their  charges  for  gathering  oil,  the  railroad  had  no  connection,  ex- 
cept in  the  single  event  provided  for  in  Section  8.  Charges  for  oil  carried  by  the 
through  lines  to  Milton  and  thence  by  rail  were  prorated  between  the  pipe  lines 
and  railway  as  provided  in  Section  7. 

Section  8  is  as  follows: 

"Whenever  the  through  rate  from  the  exit  point  of  gathering  pipe  shall  be  less 
than  forty  (40)  cents  per  barrel,  the  local  or  gathering  pipe  shall  be  considered  as 
entitled  to  a  rate  equivalent  to  only  one- fourth  (Vi)  of  the  rate  which  shall  be_ 
formed  by  the  addition  of  the  said  through  rate  to  the  public  rate  which  the  local' 
pipe  charges,  and  one-half  (Va)  of  the  difference  between  this  one-fourth  (14)  and  the 
said  public  rate  shall  be  considered  as  due  and  to  be  paid  to  the  railroad  company, 
but  this  difference  shall  never  be  such  as  to  make  the  local  pipe  receive  less  than  ten 
(10)  cents  per  barrel." 

The  obvious  intention  of  this  so-called  dangerous  section  is  to  take  from  the 
pipe  line  a  certain  portion  of  its  charges  and  give  it  to  the  railroad  when  :he  through 
rate  is  less  than  40  cents. 

Referring  to  Mr.  Newlin's  figures,  the  first  relates  to  a  rate  in  excess  of  40  cents 
and  he  certainly  could  see,  if  he  has  eyes,  that  Sectioi'  8  has  no  reference  to  such 
a  case.  The  second  table  of  Mr.  Newlin's  figures  relates  to  a  rate  less  than  40 
cents,  and  if  it  referred  to  carrying  oil  by  pipe  line  to  Milton,  or  any  point  on  the 
through  lines  and  thence  by  rail  to  the  seaboard,  it  would  come  within  Section  8, 
but  it  does  not  so  refer.  If  the  Standard  had  oil  carried  by  rail  from  Foxburg  or  Mc- 
Calmont,  it  was  not  affected  by  this  agreement;  if  it  had  oil  carried  by  pipe  line  to 
Milton  and  thence  by  rail  to  seaboard  and  the  total  tlirough  rate  was  3o  cents,  it 
paid  the  railroad  3:5  cents  and  the  railroad  adjusted  the  charges  with  the  pipe  line 
company  under  Section  8. 

Further.  Mr.  Newlin's  figures  are  based  on  a  total  misreading  of  Section  8.  This 
misreading  consists  in  confounding  "through  rate  from  exit  point  of  gathering  pipe" 
and  the  "public  rate  which  the  local  pipe  line  charges." 

In  Mr.  Newlin's  first  figures  the  throigh  rate  from  exit  point  of  gathering  pipe 
is  48  cents.  Tiie  public  rate  which  the  local  pipe  line  charges  is  20  cents.  One-fourth 
of  the  sum  of  these  rates  is  17  cents. 

Mr.  Newlin  says  one-half  of  the  difference  between  this  17  cents  and  68  cents  is 
the  amount  the  Standard  Oil  Company  paid  to  the  railway  company  for  freight. 
The  contract  does  not  say  so.  It  says  one-half  of  the  difference  between  this  17  cents 
and  the  "said  public  rate"  shall  be  paid  to  tlie  railroad.  Referring  back  to  see  what 
"public  rate"  has  been  mentioned,  we  find  it  is  "the  public  rate  which  the  local  pipe 
line  charges."     There  is   no   other  reference  to  "public  rate"  in  the  section. 

The  figures  which  Mr.  Newlin  injects  instead  of  the  "said  public  rate"  are  made 
up  of  tlie  through  rate  from  exit  point  of  gathering  pipe  and  the  public  rate  which 
the  local  pipe  line  charges,  or  68  cents,  while  "said  public  rate"  is  20  cents,  and  one- 
half  of  the  the  difference  between  17  and  20  is  one  and  a  half.  Therefore,  if  he  had 
made  his  figures  correctly,  he  would  have  shown  that  the  Standard  only  paid  one 
and  a  half  cents  per  barrel  freight,  while  others  were  paying  48  cents.  But  such  a 
reductio   ad   absurdum   would   have   defeated  his  purpose. 

Pursuing  the  investigation  further,  it  will  be  found  on  Mr.  Newlin's  theory  that 
"one-half  of  the  difference  between  this  one-fourth  and  the  said  public  rate"  fixed 
the  amount  the  Standard  paid  for  its  freight.  If  the  railroad  charged  others  60  cents 
per  barrel,  the  Standard  would  pay  nothing.  But  if  others  paid  33  cents  per  barrel, 
the  Standard  would  pay  3.37V2.  and  the  lower  the  rate  to  the  others,  the  higher  to  the 
Standard. 

All  this  is  absurd,  and  the  absuridty  consists  in  the  mireading  and  misapplica- 
tion of  the  section.  It  has  no  reference  whatever  to  the  freight  rates  the  Standard 
shall  pay.  They  were  fixed  by  the  railroad  without  discrimination.  When  others 
paid  48  cents,  the  Standard  paid  48  cents,  and  when  others  paid  .33  cents,  the  Standard 
paid  33  cents,  but  If  the  oil  went  part  of  the  way  to  seaboard  by  pipe  line,  under  this 


HOWARD   PAGE.  471 

agrtenient,  the  pipe  line  was  paid  a  pro  rata  proportion  of  its  share  of  the  transpor- 
tation. To  compensate  the  railroad  for  a  lew  rate  of  freight,  the  pipe  line  company 
agrtud  to  take  someihing  from  the  pipe  rate  which  the  local  pipe  line  charged  and 
pay  it  to  the  railroad.  This  only  applied  when  the  rate  was  less  than  40  cents  and 
would  increase  as  the  railroad  rate  diminished  below  this  point,  but  was  "never  to 
be  such  as  to  make  the  local  pipe  receive  less  than  10  cents  per  barrel." 

Admit,  for  argument,  that  the  Standard  and  the  pipe  line  are  essentially  the 
same,  and  what  is  the  result?  The  Standard  received  from  the  railroad  company  a 
pro  rata  amount  for  its  share  of  the  transportation  by  pipe  line,  and  to  recompense 
the  railway  company  for  an  exceedingly  low  rate  for  through  freight,  agreed  to  pay 
to  the  railroad  company  a  portion  of  its  local  pipe  line  earnings.  It  may  have  been  a 
rebate  to  the  railroad;  it  certainly  was  not  a  rebate  to  the  Standard. 

Coming  next  to  the  agreement  of  August  22,  1SS4,  which  superseded  the  agree- 
ment of  May  6,  ISSl,  a  case  of  payment  to  the  railroad  company  is  much  more  clearly 
shown.  The  pipe  line  was  then  completed  to  seaboard.  It  could  not  have  reached 
that  point  without  the  consent  of  the  railway  company,  as  no  free  pipe  line  law  then 
existed  in  the  State  of  New  Jersey.  It  was  still  necessary  to  have  a  tratflc  contract 
with  the  railroad  and  to  deliver  oil  to  the  railroad  at  different  points  on  the  through 
line,  that  point  being  Milton,  as  before,  for  oil  destined  for  Philadelphia.  In  addi- 
tion to  agreeing  to  pro  rata  rates  for  oil  carried  partly  by  pipe  and  partly  by  rail,  it 
was  further  agreed  that  if  the  railroad  company  did  not  move  26  per  centum  of  ihe 
oil,  the  Transit  Company  should  pay  it  the  deficiency. 

Settlements  were  made  with  the  railroad  company  and  one  of  the  settlements  is 
referred  to  in  Mr.  Newlin's  letter,  that  of  September  30,  1884,  which  shows  a  pay- 
ment to  the  railroad  company  for  such  a  deficiency  amounting  to  $10,772.22. 

Many  such  settlements  were  put  in  evidence,  all  of  them  showing  monthly  pay- 
ments of  large  amounts  to  the  railroad  company.  None  of  these  were  payments  for 
freight,  but  payments  to  the  railroad  company  for  the  deficiency  in  the  amount  it 
carried  as  specilied  in  the  agreement. 

Attempting  to  distort  a  payment  of  this  kind  to  the  railroad  company  as  a  dis- 
crimination in  favor  of  the  Standard  Oil  Company  ceases  to  be  absurd— it  is  mali- 
cious. 

S.   C.  T.  DODD. 

Law  Offices  of  George  Tucker  Bispham,  A.  H.  Winterstein,  John  Hampton  Barnes, 

Sharswood   Brinton. 

Girard  Building,  Broad  and  Chestnut  Streets,   Philadelphia. 
Despeaux  vs.  P.  R.  R. 

November  29,  1899. 
S.  C.  T.  Dodd,  Esq.,  Standard  Oil  Company,    26  Broadway,  New  York: 

Dear  Sir— I  did  not  find  Mr.  Sellers  in  when  I  called  to-day  and  am  now  writing 
without  consultation  with  him.  I  will,  however,  supplement  this  letter  by  any  sug- 
gestion which  Mr.  Sellers  may  have  to  make. 

Mr.  Newlin's  claim,  to  which  you  refer,  is  based  not  upon  any  oral  testimony 
given  at  the  trial,  but  entirely  upon  his  construction  of  the  fourth  and  eighth  para- 
graphs of  the  agreement  of  May  6,  1881.  This  agreement  was  between  the  National 
Transit  Company  and  the  railroad  company  and  it  was,  in  our  view  of  the  matter, 
simply  a  trafTic  agreement  between  two  transporting  companies.  Mr.  Newlin's  posi- 
tion, however,  was  that  the  National  Transit  Company  was  in  reality  the  Standard 
Oil  Company,  which  owned  a  large  controlling  interest  in  its  stock,  and  his  argument 
is  based  upon  that  assumption,  and  his  contention  is  that  any  diminution  or  abate- 
ment of  the  charges  of  the  railroad  company  under  this  contract  inured  to  the  advan- 
tage of  the  Standard  Oil  Company,  and  was  to  be  treated  as  if  it  were  an  allowance 
or  rebate  to  the  latter  company. 

He  arrives  at  the  figures  which  you  give  in  j-our  letter,  in  this  manner: 

He  considers  the  fourth  and  eighth  paragraphs  in  the  agreement  together,  and 
he  contends  that  the  provisions  as  to  through  rate  contained  in  the  latter  para- 
graph, when  read  in  connection  with  the  former,  are  applicable  to  through  rates, 
whether  the  same  are  greater  or  less  than  40  cents  per  barrel  from  Foxburg  to  Com- 
munipaw.    Assuming  this  to  be  so,  Mr.  Newlin's  calculation  is  as  follows: 

The  eighth  paragraph  provides: 

"Whenever  the  through  rate  from  the  exit  point  of  gathering  pipe  shall  be  less 
than  40  cents  per  barrel  the  local  or  gathering  pipe  shall  be  considered  as  entitled  to  a 
rate  equivalent  to  only  one-fourth  of  the  rate  which  shall  be  formed  by  the  addition 
of  the  said  through  rate  to  the  public  rate  which  the  local  pipe  charges  and  one-half 
of  the  difference  between  this  one-fourth  and  the  said  public  rate  shall  be  considered 
as  due  and  to  be  paid  to  the  railroad  company,  btit  this  difference  shall  never  be 
such  as  to  make  the  local  pipe  receive  less  than  10  cents  per  barrel." 

The  through  rate  by  rail  was  48  cents. 

The  public  rate  of  the  local  or  gathering  pipe  was  20  cents. 


472  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

The  calculaiion,  therefore,  would  be  thus: 

48  plus  20  equals 68 

ia  uf  tJS  equals 17 

1/2  of  51  equals 251/2 

48  minus  251/2  equals 22i/^ 

The  above  calculation  is  the  basis  on  which  Mr.  Nt-wlin's  allegation  in  his  letter 
to  Mr.  Rice,  to   which  you  refer  is  based. 

The  19.875  cents  per  barrel  is  arrived  at  by  Mr.  Newlin  in  this  way:  The  calcula- 
tion being  at  tht  rate  of  33  cents  per  barrel  from  McCalniont  to  Communipavv  on  the 
same  principle  as  above.    Thus: 

33  plus  20  equals 53.00 

1/4  of  53  equals 13.25 

y2  of  39.75  equals 19.875 

This  is  the  way  in  which  he  gets  his  figures  showing,  as  he  says,  that  the  Stand- 
ard Oil  Company  was  charged  that  amount  only  for  transportation. 

In  addition  to  the  obvious  replies  that  the  arrangement  was  a  traffic  arrange- 
ment and  that  such  an  agreement  cannot  be  construed  as  a  rebate  to  a  shipper 
simply  because  that  shipper  happens  to  be  a  stockholder  and  even  a  controlling 
stockholder  in  one  of  the  transportation  companies,  there  are  other  answers  based 
upon  the  language  itself  of  Paragraphs  4  and  8.  The  assumption  that  the  provision 
in  Paragraph  8  when  the  rate  is  less   than  40  cents  shall  be  applicable  to  Paragraph 

4,  which  refers  to  a  rate  above  40  cents,  would  seem  to  be  without  warrant.  More- 
over, the  "one-half  of  the  difference  between  this  one-fourth  and  the  said  public 
rate"  refers  to  the  difference  between  tlie  said  one-fourth  (made  up  of  the  through 
late  by  rail  to  the  public  rate  by  local  pipe  charges)  and  the  rate  of  local  pipe 
charge,  that  is  20  cents.  In  other  words,  instead  of  taking  one-half  of  51  (see  above 
calculation)   there  should  be  taken  one-half  of  three,  being  20  less  17,  or  one  and  a 

half. 

Whether  I  am  right  in  this  last  calculation  or  i:ot.  it  is  nevertheless  true,  as  1 
have  stated  above,  that  there  was  no  evidence  whatever,  oral  or  written,  which  was 
introduced  at  tlie  trial,  which  justified  Mr.  Newlin's  assertion;  but  that  assertion 
rests  altogether  upon  his  forced  construction  of  the  fourth  and  eighth  paragraphs  of 
the  agreement  of  ISSl,  which  I  have  endeavored  to  explain. 

If  the  foregoing  is  not  sufficiently  clear  to  you,  let  me  know,  and  I  will  endeavor 
to  make  it  plain. 

i^  Yours  truly, 

(Signed)  GEORGE  TUCKER  BISPHAM, 

1 

Attached  thereto  is  the  following: 
Law  OlHces  of  George  Tucker  Bispham,  A.    H.    Winterstein,  John   Hampton   Barnes,. 
Sharswood  Brinton. 

Girard  Building,  Broad   and  Chestnut   Streets,   Philadelphia. 
Despeaux  vs.  P.  R.  R. 

December  6,  1899. 

5.  C.  T.  Dodd,  Esq.,  26  Broadway,  New  York: 

Dear  Sir— I  have  your  favor  of  the  5th  instant.  After  the  plaintiff  closed  his 
evidence,  a  motion  for  a  non-suit  was  made  and  fully  argued  by  Mr.  Sellers  and 
myself  on  the  part  of  the  defendant,  and  by  Mr.  Newlin  for  the  plaintiff.  The  motion 
for  a  non-suit  was  granted.  Mr.  Newlin  made  a  motion  to  take  it  off,  and  this  was 
subsequently  argued  and  the  motion  denied.  The  non-suit  therefore  stands.  Mr. 
Newlin  has  taken  an  appeal  to  the  Circuit  Court  of  Appeals;  but  there  has  been 
some  difficulty  about  settling  a  bill  of  exceptions.  When  this  is  finally  adjusted,  I 
will   advise  you.     Meanwhile  the  above  will  give  you  the  present  condition  of  affairs. 

Yours  truly, 

(Signed)  GEORGE  TUCKER  BISPHAM. 

Q.  (By  Professor  JENKS.)  Have  these  pipe  line  and  railway  compau- 
ies  changed  their  rates  on  oil  since  1884 — *since  the  time  the  Pennsylvania 
Railroad  Company  made  the  contract  with  the  National  Transit  Company 
as  regards  the  price  of  oil?  A.  You  go  back  too  far  for  me.  professor.  I 
can  say  that  the  rate  for  oil  of  the  Pennsylvania  Railroad  Company,  both 
for  pipe  and  rail,  is  the  same  as  it  was  when  I  came  to  New  York  nearly 
10  years  ago. 

Q.  The  reason  I  asked  the  question  was  that  a  copy  of  the  contract  was 
furnished  by  Mr.  Archbold  and  fixed  the  dates  pretty  definitely,  but  you 
say  the  rates  have  not  changed  for  10  years?    A.  For  10  years. 


*P>lack   faced    type  indicates   matter  omitted,  in  the  ro>;rse  of  editing,  from  the 
official  report. 


HOWARD   PAGE.  473- 

Regarding  letter  from  Chess,  Carley  &  Co.  to  J.  M.  Culp,  general  freight 
agent  of  the  Louisville  &  Nashville,  Railroad,  June  16,  1881,  in  which  tne 
expression  was  used,  "Please  turn  another  screw."  The  firm  of  Chess. 
Carley  &  Co.,  was  a  partnership  in  which  the  Standard  Oil  Company  of 
Cleveland  had  an  interest.  This  was  before  the  formation  of  the  Standard 
Oil  Trust,  which  was  formed  in  1882,  and  the  firm  of  Chess,  Carley  &  Co., 
as  1  have  testified,  was  a  partnership  in  which  Mr.  F.  B.  Carley  was  resident 
partner  and  manager.  The  Standard  Oil  Company  of  Ohio  had  an  interest 
in  the  Chess,  Carley  &  Co.  business,  but  absolutely  no  control  or  direciion 
of  that  company's  affairs.  I  know,  because  I  was  in  the  office,  and  the  only 
boss  we  knew  was  Mr.  F.  B.  Carley. 

I  would  like  to  refer,  in  regard  to  Mr.  Carley's  control  of  that  business, 
to  his  testimony  taken  before  the  Bacon  Committee,  in  1888.  On  page  526  of 
that  committee's  report  Mr.  Carley  testified  as  follows:      (Reading.) 

'•Q.  Were  you  a  member  of  the  firm  of  Chess,  Carley  &  Co.?  A.  Yes,  sir. 

"Q.  At  what  time?     A.  Through  its  whole  history. 

"Q.  Over  what  years  does  that  extend?  A.  I  do  not  remember  exactlj', 
but  I  think  somewhere  about  1869  or  1870,  we  formed  that  firm. 

"Q.  When  did  you  terminate  it?  A.  When  we  formed  the  Chess-Carley 
Company. 

"Q.  When  was  that?  A.  Four  or  five  years  ago.  I  was  president  of  it 
until  its  dissolution. 

"Q.  State  whether  or  not  it  was  dissolved  when  it  sold  its  property  to 
the  Standard  Oil  Company?     A.  Yes,  sir. 

"Q.  Are  you  connected  with  the  Standard  Oil  Company?     A.  No.  sir. 

"Q.  You  occupy  no  position  under  it?     A.  No,  sir. 

"Q.  Where  did  you  reside  during  the  time  you  were  a  member  of  the 
firm  of  Chess,  Carley  &  Co.  and  the  Chess-Carley  Company?  A.  Louisville, 
Kentucky. 

"Q.  Had  you  charge  of  that  business?  A.  Yes.  sir;  I  was  sole  and  ex- 
clusive manager  of  the  Chess,  Carley  &  Co.  and  of  the  Chess-Carley 
Company." 

The  party  who  wrote  this  letter  (and  without  the  knowledge  of  Mr. 
Carley)  was  a  Mr.  Hathaway,  who  had  formerly  been  in  the  Loiiisville  & 
Nashville  Railroad  employ.  His  explanation  of  this  letter  was  that  when 
errors  occurred  in  the  Louisville  &  Nashville  Railroad  office  there  was  an 
expression  used  "that  the  machinery  of  the  office  was  loose,"  and  it  should 
be  corrected  or  tightened  up  by  turning  a  screw.  In  the  case  referred  to, 
the  shipment  of  a  car  of  oil  by  Rice  to  Nashville  was  billed  at  less  than  the 
regular  tariff  rate  which  other  shippers  were  paying,  and  Hathaway  simply 
called  their  attention  to  the  error  and  used  the  expression  referred  to.  By 
referring  to  page  530  in  the  book  of  testimony  taken  before  the  Committee 
on  Manufactures  in  1888,  it  will  be  seen  that  Mr.  F.  B.  Carley  testified  as 
follows:       (Reading.) 

"This  much  I  know  about  this  letter  that  Hathaway  wrote:  He  would 
say  to  me,  Mr.  Carley,  there  is  another  carload  gone  through  to  Wilkinson, 
or  to  whoever  it  might  be.  I  said:  I  do  not  think  it  is  right  on  the  part 
of  the  road.  Can  you  not  get  them  to  stop  it?  I  mentioned  it  to  them 
before.     They  said  it  was  the  fault  of  the  clerk;  that  it  was  clerical." 

Now,  on  page  524  of  the  same  book,  Mr.  .1.  M.  Culp.  who  is  the  gentle- 
man to  whom  the  letter  is  addressed,  and  who  was  general  freight  agent  of 
the  Louisville  &  Nashville  road,  and  who  is  now  traffic  manager  of  the 
Southern  Railway  here,  testified   as  follows:      (Reading.) 

"I  desire  to  say,  with  regard  to  that  letter,  or  rather  with  regard  to  the 
rate  charged  on  the  shipment  referred  to  in  that  letter,  that  it  was  less  than 
the  proper  rate.  It  was  less  than  any  rate  that  we  had  with  Chess.  Carley 
&  Co.,  or  1  believe  ever  have  had.  It  was  a  fifth-class  rate.  Our  rate  on 
oil  from  Louisville  to  Nashville  was  higher  than  fifth  class,  and  I  presume 
the  desire  of  Chess,  Carley  &  Co.  was  to  have  at  least  as  high  a  rate  as  was 
charged  on  their  shipments  charged  on  this.  Had  that  letter  come  to  me — 
had  I  even  seen  the  letter — I  would  have  simply  understood  it  that  it  meant 
that  we  should  require  our  agents  to  charge  at  least  as  high  a  rate  as  was 
charged  on  the  shipments  of  Chess,  Carley  &  Co." 


474  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

That  is  the  explanation  of  it,  and  in  my  opinion,  a  very  reasonable  one. 
The  tacLs  are  as  Mr.  Gulp  has  testified  and  as  I  recollect  the  occurrence, 
that  the  rate  charged  on  that  shipment  was  less  than  we  were  paying  at 
that  time  and  was  less  than  we  have  ever  paid  even  prior  to  the  interstate 
commerce  law. 

Mr.  Rice  alleges  that  the  Standard  Oil  Company  established  grocery 
stores  in  the  south.  This  was  before  the  Standard  Oil  Company  had  any 
control  or  direction  in  the  Chess,  Carley  &  Co.'s  business,  as  that  business 
was  entirely  under  the  control  of  Mr.  F.  B.  Carley.  And  the  establishment 
of  that  grocery  store,  referred  to  by  Mr.  Rice,  was  during  the  time  of  Chess, 
Carley  &  Co. 

Q.  (By  Professor  JENKS.)  Such  a  grocery  store  was  established  by 
Chess,  Carley  &  Co.  for  the  purpose  alleged  by  Mr.  Rice?  A.  There  was 
such  a  store. 

Q.    (By  Mr.  SMYTH.)     Was  there  only  one?     A.  Only  one. 

Q.  (By  Professor  JENKS.)  Was  it  established  for  the  purpose  of  driv- 
ing out  a  competitor  in  the  oil  business?  A.  I  did  not  say  that.  I  say  that 
Chess,  Carley  &  Co.  established  that  store  to  sell  groceries  and  oil,  the  same 
as  there  were  stores  established  selling  oil  and  groceries. 

Q.  Did  Chess,  Carley  &  Co.  have  stores  elsewhere  for  the  purpose  of 
selling  groceries  and  oil?  A.  No;  it  only  had  that  grocery  store,  but  prob- 
ably the  profits  of  that  were  not  sufficient  to  justify  any  extension. 

Q.  (By  Mr.  SMYTH.)  Where  was  that  store?  A.  Columbus,  Mississippi, 
but  the  Standard  Oil  Company  had  no  more  to  do  with  it  than  that  stenog- 
raphei'. 

Q.  (By  Senator  KYLE.)  Has  the  Standard  Oil  Company  ever  indulged 
in  such  an  enterprise?  A.  It  has  not,  to  my  knowledge,  in  any  way  or  at 
any    place. 

Q.  Prior  to  the  interstate  commerce  act  or  since?  A.  Not  to  my  knowl- 
edge. 

Q.  Have  they  ever  made  any  threats  in  that  direction  through  their 
agents?     A.  Not  to  my  knowledge. 

Q.  You  do  not  know  then?     A.  I  do  not. 

Regarding  Murray,  Dougal  &  Co.*. declining  to  build  tank  cars  for  Rice 
on  credit,  the  Standard  Oil  Company  never  directly  or  indirectly  had  any- 
thing to  do  with  it  and  never  had  any  knowledge  of  it  until  it  was  seen  in 
Mr.  Rice's  testimony. 

The  charge  that  the  Standard  Oil  Company  bought  up  tank  cars  from 
railroads  in  order  to  keep  them  from  other  shippers  is  positively  denied. 

As  to  railroads  owning  tank  cars,  I  wotild  say  that  the  tank  car  is  a 
special  car  used  for  the  transportation  principally  of  petroleum,  and  it  would 
be  a  burden  upon  the  railroads  if  they  were  required  to  invest  their  capital 
in  tank  cars,  as  the  ownership  of  the  car  would  not  insure  transportation 
of  oil,  and  if  all  railroads  were  required  to  have  a  sufficient  tank  car  equip- 
ment to  do  the  oil  business  that  at  times  moves  over  its  rails,  it  would 
mean  the  building  of  many  more  tank  cars  than  the  business  would  require. 
For  instance,  say  it  would  require  200  tank  cars,  costing  $150,000  to  trans- 
port oil  between  Chicago  and  St.  Paul  and  Minneapolis.  There  are  five  lines 
competing  for  this  business,  and  if  each  railroad  was  required  to  own  200 
cars,  there  would  be  four  times  as  many  tank  cars  as  the  business  would 
require.  Take  as  another  example,  the  McDonald  field,  which  was  a  pro- 
ducing field,  and  is  now.  At  one  time  it  produced  oil  to  the  extent  of  60,000 
to  80,000  barrels  a  day.  It  has  run  down  now  to  5,000  barrels.  If  the  Penn- 
sylvania road  and  the  Lake  Erie  &  Western,  which  are  the  two  railroads 
which  touch  that  field,  had  been  required  to  furnish  tank  cars  to  move  the 
oil  produced  in  the  McDonald  field  when  it  was  producing  60,000  to  80,000 
barrels  a  day,  these  roads  would  be  in  rather  bad  shape  with  their  tank 
cars  now  when  there  is  only  5,000  barrels  to  move  from  there.  A  tank  car 
is  just  like  a  Pullman  car.  You  might  just  as  well  require  a  railroad  to  own 
all  the  Pullman  cars  that  are  necessary  to  go  over  its  road  as  to  require  the 


•In  the  official  report  the  firm   Murray,    Dougal   &    Co.    Is   referred    to   as    "Mc- 
Dougall." 


HOWARD   PAGE.  475 

railroad  company  to  own  all  the  tank  cars  that  may  at  times  go  over  its 
rails. 

Q.  (By  Mr.  KENNEDY.)  Which  is  the  cheaper  system  for  the  rail- 
roads to  employ  in  the  transporting  of  oil,  the  tank  car  or  barrel?  A.  The 
tank  car  by  all  means.  Mr.  Rice  referred  especially  to  that  in  his  evidence, 
and  I  will  touch  that  later  on.  If  you  will  allow  me  to  proceed  in  the  regular 
order   of  his   testimony,   I   think  it  is   better  to   go  right  through   it. 

Mr.  Rice  alleged  great  discriminations  in  favor  of  the  Standard  Oil  Com- 
pany as  against  himself  for  a  year  or  so  after  the  passage  of  the  law.  I 
would  say  that  he  refers  to  the  published  tariffs  of  various  railroads,  that 
were  published  and  printed  and  open  for  all  on  the  Louisville  &  Nashville 
Railroad  and  other  railroads,  which  at  that  time  made  lower  rates  on  oil 
In  tank  cars  than  on  oils  in  barrels  in  carloads.  These  were  published  tariffs 
and  open  to  everybody,  and  Mr.  Rice  and  other  shippers  shipped  in  tank 
cars  as  well  as  the  Standard  Oil  Company,  and  the  Standard  Oil  Company 
shipped  oil  in  barrels  in  carloads  the  same  as  Mr.  Rice  and  other  shippers. 
it  was  simply  a  tariff  rate  in  which  the  railroads  made  a  difference  between 
the  tank  car  rate  and  the  barrel  box  car  rate,  and  it  was  open  to  all.  There 
was  no  discrimination  between  parties  at  all.  It  was  a  discrimination  or 
difference  rather  between  two  modes  of  shipment. 

Q.  (By  Professor  JENKS.)  At  that  time  had  there  been  any  ruling  upon 
the  relative  rates  for  tank  cars  and  barrel  shipments  by  the  Interstate  Com- 
merce Commission?  A.  There  had  not  been.  But  in  1888  Judge  Cooley,  of 
the  Interstate  Commerce  Commission,  ordered  that  the  rates  per  100  pounds 
on  oil  in  the  tank  cars  as  well  as  on  oil  in  barrels  in  carloads,  including  the 
weight  of  the  barrels,  should  be  made  the  same,  and  the  railroads  adjusted 
their  tariffs  according  to  that,  and  the  tariffs  remain  on  that  basis  to-day. 

Q.  At  the  time  Mr.  Rice  claims  he  was  discriminated  against  in  this 
way.  was  he,  as  a  matter  of  fact,  shipping  oil  in  tank  cars?  A.  He  had  a 
few  tank  cars  and  the  other  oil  shippers  had  tank  cars,  and  as  far  as  the 
higher  rates  on  oil  in  barrels  are  concerned,  the  Standard  Oil  Company  was 
shipping;  more  in  barrels  than  all  the  others  put  together. 

Q.  How  about  the  relative  amounts  in  barrels  and  in  tank  cars  shipped 
at  the  same  time  over  these  roads?  A.  As  I  recall  the  evidence  which  was 
given  at  that  time  and  which  is  in  this  book,  our  carload  shipments  were  in 
excess  of  our  tank  car  shipments. 

Q.  Your  barrel  shipments?  A.  Our  barrel  shipments  were  in  excess 
of  our  tank  car  shipments. 

Q.  Over  these  roads  on  which  you  said  the  discriminations  were  made? 
A.  Prior  to  the  interstate  commerce  law  the  charges  were  made  on  oil  in 
tank  cars  and  on  oil  in  barrels,  and  when  the  interstate  commerce  law  went 
into  effect,  and  the  tariffs  had  to  be  published,  they  simply  pursued  the  same 
system  in  making  rates,  and  it  was  free  to  everybody  to  ship. 

Q.  And  other  shippers  beside  the  Standard  Oil  Company  had  both 
modes  of  shipment  which  they  were  using?     A.  Absolutely. 

Mr.  Rice  refers  to  outage  of  62  gallons  and  then  42  gallons  which  was 
made  on  all  tank  car  shipments  *to  allow  for  the  loss.  This  was  an  allow- 
ance for  the  average  loss  between  the  full  shell  capacity  of  the  tank  car. 
which  tank  car  was  loaded  at  the  loading  point,  and  the  amount  that  was 
taken  by  actual  measurement  to  be  received  in  the  tank  car  at  destination. 
This  allowance  was  made  to  all  tank  car  shippers  alike  and  was  reasonable, 
as  the  actual  loss  was  in  excess  of  the  allowance.  The  allowance,  however, 
was  discontinued  in  the  summer  of  1892,  and  has  never  been  reinstated.  The 
principle  of  that  allowance  was  simply  that  the  railroad  ought  not  to  charge 
on  a  quantity  greater  than  it  delivered,  and  as  the  actual  result  and  experi- 
ence had  shown  that  there  was  a  loss  between  the  amount  of  oil  put  into 
the  tank  car  at  the  refinery  and  the  amount  delivered  at  the  point  of  desti- 
nation, an  allowance  was  made,  which  was  very  small,  at  that  time  62  gal- 
lons, and  at  another  time  42  gallons;  but  since  1892  this  has  been  done  away 
with    completely. 


♦Black   faced   type  Indicates  matter  omitted,  in  the  crurse  of  editing-,  from  the 
official  report. 


476  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

Mr.  Rice  refers  to  the  relative  charge  made  by  railroads  between  oil  ia 
tank  cars  and  oil  in  barrels  in  carloads.  The  railroads  receive  a  very  mucli 
larger  percentage  of  live  weight  on  oil  in  tank  cars  than  on  oil  in  barrels. 
Railroads  charge  and  collect  freight  on  tank  car  shipments  at  full  shell 
capacity  of  the  tank  car,  no  matter  whether  that  tank  car  is  loaded  to  its 
full  capacity  or  not.  The  average  capacity  of  the  Union  Tank  Line  Com- 
pany's cars  to-day  is  140  barrels,  and  it  is  on  that  basis  that  the  railroads 
charge  and  collect  their  freight. 

Q.  (By  Mr.  SMYTH.)  They  do  not  weigh  the  cars?  A.  The  weight  of 
the  petroleum  in  tank  cars  is  taken  on  the  basis  of  the  full  shell  capacity  of 
the  tank,  based  on  an  average  weight  of  6  4-10  pounds  to  the  gallon.  The 
reason  for  that  is  that  some  products  of  petroleum,  such  as  naphtha,  weigh 
from  51/4  to  5%  pounds  to  the  gallon;  refined  oil  weighs  6%  pounds  per  gal- 
lon; lubricating  oil  from  7%  to  TY2  pounds  to  the  gallon,  and  the  average 
weight  of  6  4-10  pounds  represents  the  actual  average  weight  of  the  various 
products  of  petroleum  as  they  are  manufactured  and  as  they  are  shipped 
throughout  the  United  States.  The  reason  the  railroads  have  made  such  a 
rule  is  to  prevent  misrepresentation  and  the  cost  that  would  be  involved 
in  weighing  every  tank  car.  You  can  see  that  it  would  be  a  very  difficult 
matter  for  a  railroad  to  get  the  actual  weight  of  tank  car  shipments,  because 
those  tank  cars  are  first  loaded  at  the  refinery  and  not  in  the  railroad  yard, 
as  ordinary  freight  is,  and  then  pulled  out  by  the  railroad.  They  could  only 
weigh,  therefore,  the  full  tank  car  with  the  weight  of  the  car  added  to  it, 
and  that  car  is  probably  destined  to  some  point  away  beyond  the  railroad 
that  receives  it  on  its  rails.  So  the  custom  has  been,  ever  since  I  have  had 
any  knowledge  of  the  business,  to  have  one  average  weight  which  applies  to 
all  products  and  to  all   shipments  alike. 

Q.  The  average  is  both  as  to  weight  and  capacity?  A.  No,  the  average 
is  as  to  weight.  The  capacity  of  the  tank  car  varies,  and  the  capacity  is 
shown  by  the  various  tank  car  owners  to  the  railroads  and  they  publish  it 
at  large  to  the  world  in  the  form  of  this  tank  gauge  handbook,  which  shows 
the  actual  number,  owner  and  capacity  of  every  tank  car  that  is  in  use 
over  the  various  lines  in  the  United  States  to-day. 

Q.  (By  Senator  KYLE.)  And  the  average  charge  is,  as  you  state,  6  4-10 
pounds  to  the  gallon?     A.  To  the  gallon. 

Q.  For  the  full  tank  capacity?     A.  Full  shell  capacity  of  the  car. 

Q.  (By  Mr.  SMYTH.)  Do  all  the  large  refining  concerns  own  tank  cars? 
A.  Very  largely.  I  will  show  you  the  tank  car  ownership  in  the  United 
States,  in  a  few  minutes.  The  same  rule  applies,  I  might  say,  to  oil  shipped 
in  barrels.  There  is  an  average  weight  of  400  pounds  applied  to  the  various 
products  of  petroleum  *when  shipped  in  barrels.  Some  weigh  less  and  some 
more,  but  400  pounds  is  the  accepted  weight  on  railroads  all  over  the 
United  States  on  all  petroleum  products. 

Q.  (By  Mr.  CLARKE.)  The  charges  which  you  have  referred  to  are 
for  freight  one  way,  I  suppose?  A.  The  freight  rate  is  charged,  of  course, 
only  on  the  freight  that  is  hauled. 

Q.  (By  Mr.  SMYTH.)  Does  the  car  come  back  empty?  A.  The  car 
comes  back  empty,  the  tank  car  as  well  as  the  box  car  very  largely,  simply 
because  the  box  cars  when  loaded  with  oil  are  imfit  for  use  for  sundry  mer- 
chandise, and  you  will  find  that  every  large  oil  carrying  railroad  in  the 
United  States  has  its  box  cars  marked  "oil,"  meaning  that  they  can  be 
used  only  for  oil.  I  do  not  mean  to  say  that  they  are  never  used  for  any 
other  freight,  but  they  are  set  aside  for  that  purpose. 

Q.  (By  Senator  KYLE.)  Is  there  any  charge  for  these  return  tanks? 
A.  No   charge;   no,    sir. 

Q.  Has  there  ever  been  a  charge  for  return  tanks?  A.  No,  sir;  not  in 
my  recollection. 

Q.  Have  they  ever  charged  the  independent  companies  outside  of  the 
Standard  Oil  Company  for  the  return  of  these  tanks?  A.  No.  sir;  unless 
they  charged  the  Standard  Oil  Company  at  the  same  time.  *l  am  answering 
as  far  as  I   know.     I  mean  to  say  that  since  the  passage  of  the  interstate 


♦Black   facerl   type  indicates  matter   omitted,  In  the  course  of  editing,  from  tlie 
cfflcial  report. 


HOWARD   PAGE.  477 

commerce  law  there  has  been  no  charge  on  the  return  of  what  is  known  as 
the  regular  tank  car,  the  cylinder  tank  car  within  the  United  States,  ex- 
cepting to  one  section. 

Q.  (By  Mr.  SMYTH.)  There  is  no  freight  charged  on  empty  coal  cars, 
is  there?  A.  No,  sir.  I  digress  some  from  this  question  as  to  the  relative 
charge.  I  have  stated  that  the  average  capacity  of  the  Union  Tank  Line  car 
to-day  is  140  barrels.  The  minimum  weight  required  by  railroads  in  the 
shipment  of  oil  in  barrels  is  60  barrels,  and  not  1  per  cent,  of  the  carloads 
of  oil  in  barrels  in  the  United  States,  are  loaded  with  over  60  barrels,  from 
the  fact  that  even  loading  60  barrels  in  an  ordinary  box  car  requires  putting 
them  on  top  of  the  lower  tier.  This  is  an  expense  to  the  owner  and  to  the 
railroad,  and  it  also  causes  leakage  from  the  rolling  of  the  barrels  on  top. 
The  result  is  that  oil  shipped  in  barrels  in  box  cars  average  60  barrels  as 
against  the  average  capacity  of  tank  cars  of  140  barrels.  Therefore,  one  tank 
car  holds  twice  as  much  as  a  box  car  when  loaded  with  oil,  and  the  rail- 
roads receive  their  pay  accordingly.    *So  naturally  they  prefer  the  tank  cars. 

Q.  It  takes  less  cars?  A.  Necessarily.  It  means  one  car  instead  of  two 
for  the  same  freight.  It  means  carrying  two  cars  for  one;  all  expenses  at- 
tending the  handling,  and  the  cost  of  two  cars,  *as  compared  to  one  to  get 
the  same  volume. 

Q.  (By  Senator  KYLE.)  And  the  expense  of  unloading  is  less?  A.  Yes; 
less  in  the  tank  car.  It  is  universally  loaded  by  the  shipper  and  unloaded  by 
the  consignee.  In  the  box  car  it  is  generally  loaded  by  the  shipper  and 
very  often  unloaded  by  the  railroad  in  their  depot.     The  tank  car  never  is. 

Q.  (By  Professor  JENKS.)  Is  the  freight  rate  the  same  per  barrel 
whether  in  barrels  or  in  tank  cars?  A.  It  is  the  same  rate  per  100  pounds. 
In  the  barrel  the  weight  of  the  barrel  is  charged  for. 

Q.  So  when  shipped  in  barrels  freight  is  charged  on  400  pounds?  A. 
Yes,  sir. 

Q.  When  it  is  shipped  in  tank  cars  it  is  320t  pounds  for  the  same  amount 
of  oil?     A.  Yes,  sir. 

Q.  That  makes  the  shipment  of  oil  cheaper  by  tank  than  by  barrel?  A. 
Absolutely,  but  the  barrel  is  an  article  of  merchandise.  When  the  oil  is  sold 
in  liarrels,  the  value  of  that  barrel  is  added  to  it.  There  is  no  ground  why 
the  railroad  should  receive  no  pay  for  an  article  of  merchandise,  which  the 
barrel  is,  especially  admitting  the  pay  on  the  weight  of  the  barrel  the  rail- 
road then  only  gets  half  as  much  revenue  on  the  oil  in  barrels  as  it  does  on 
tank  cars  of  oil. 

I\Ir.  Rice  charges  that  railroad  tariffs  were  issued  from  No.  26  Broad- 
way. I  deny  positively  that  we  have  ever  made  or  promulgated  any  railroad 
tariff  by  any  Standard  Oil  Company  interests,  and  I  deny  positively  that  any 
railroad  tariff  has  ever  been  made  or  promulgated  by  any  Standard  Oil  Com- 
pany interest. 

Vice-Chairman  PHILLIPS.  I  will  ask  Colonel  Clarke  to  take  the  chair, 
as  I  expect  to  a=k  some  questions  in  a  short  time.  I  will  be  very  much 
obli^-pd  to  von.  Cnionel,  if  you  will  take  the  chair. 

*IVIr.  CLARKE.  I  do  not  see  anything  inconsistent,  Mr.  Chairman,  with 
your  ccciinying  the  chair  and   interrogating  the  witness. 

Vice-Chairman  PHILLIPS.  I  know,  but  there  might  be  some  question 
of  order  come  up  and  in  that  case  I  would  rather  have  some  other  person 
to  rule  on  it  than  myself. 

Q.  (By  Professor  .TENKS.)  You  say  that  no  oil  tariff  has  been  made 
or  promulsated  by  any  of  the  Standard  Oil  Companies.  I  suppose  when  that 
statement  was  made  it  was  not  intended  to  be  taken  literally.  Would  you  go 
so  far  as  to  say  that  the  Standard  Oil  Company  or  the  Standard  Oil  offi- 
cials did  not  reason  with  railroad  officials  in  order  to  get  them  to  agree 
upon  what  they  considered  to  be  a  fair  and  just  rate  of  freight  on  oil?  A. 
I  certainly  do  not  wish  to  be  understood  that  I,  or  possiblv  others  of  our 
representatives,  have  not  seen  railroads  in  resrard  to  tariffs  on  the  ship- 
ments.    We  do  have  intercourse  with  railroad  officials,  as  every  large  ship- 


*Biack   faced   type  indicatep   matter   omitted,  in  the  course  of  editing,  from  the 
official  report. 

i"300"  in  official  report. 


478  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

per  probably  does,  but  that  we  have  ever  issued — Mr.  Rice's  intent  certainly 
was  to  give  the  idea  that  we  simply  named  a  rate  and  sent  it  to  the  rail- 
roads  to   accept.     It   is   not   true. 

Q.  Is  it  a  fact,  as  has  been  frequently  stated,  that  over  lines  of  rail- 
roads where  the  Standard  Oil  Company  has  very  large  shipments,  the  rates 
on  oil  are  frequently  made,  relatively  speaking,  lower  than  over  other  roads 
where  the  business  rivals  of  the  Standard  Oil  Company  have  very  large 
shipments,  and  where  the  Standard  Oil  Company's  interests  are  relatively 
small,  and  that  this  difference  in  rates  *  (perfectly  legal  of  course)  to  the 
favor  of  the  Standard  Oil  Company  is  brought  about  by  the  influence  of  the 
Standard  Oil  Company  officials?  A.  That  is  absolutely  not  true,  sir.  In 
the  first  place  I  do  not  know  of  any  railroad  on  which  competitors  of  the 
Standard  Oil  Company  ship  that  we  do  not  ship  on  ourselves,  and  the  oil 
rates  of  the  United  States  from  the  various  oil  shipping  points  are  on  a 
basis.  In  other  words,  the  same  rates  apply  from  all  of  the  Pennsylvania 
oil  fields,  both  east  and  west,  and  the  same  is  true  of  the  Lima  fields;  and 
while  we  may  not  be  located  at  the  very  point  some  competitor  is,  he  has 
the  same  rate  from  his  shipping  point  in  that  field  that  we  have  from  our 
shipping  point  in  the   same   field. 

Q.  Your  main  distributing  points  are,  I  suppose,  ordinarily  different 
from  those  of  your  chief  competitors.  Would  you  be  able  to  secure  *any 
favorable  rates  from  your  main  distributing  points,  which  would  affect  your 
business  very  favorably  and  not  affect  your  rivals  in  the  same  way?  Is  that 
frequently  true?  A.  I  do  not  think  it  is,  sir.  I  can  only  say  that  we  pay 
exactly  the  same  rate  from  the  same  point  and  to  the  same  point  that  every 
other  shipper  pays  from  and  to  that  point. 

Q.  (By  Mr.  KENNEDY.)  Are  the  Standard  Oil  Company  officials  or 
stockholders  ever  in  a  position,  as  railroad  officials,  in  which  they  can  give 
favors  to  the  Standard  Oil  Company  in  its  shipments?  A.  I  am  glad  you 
asked  that  question,  sir.  I  do  not  think,  but  I  know.  Mr.  Rice  wishes  to 
give  that  impression,  and  I  can  say  in  reply  that  since  I  have  had  any 
knowledge  of  the  railroad  rates  of  the  Standard  Oil  Company's  business  no 
official  of  the  Standard  Oil  Company  who  is  connected  with  railroads  has 
ever  made  a  rate  or  arrangement  for  the  Standard  Oil  Company;  nor  have 
any  of  those  gentlemen  who  are  connected  and  have  interests  with  rail- 
roads ever  asked  me  to  give  any  undue  or  unreasonable,  or,  in  fact,  any 
share  of  the  Standard  Oil  Company  business  over  such  a  railroad.  In  other 
words,  the  Standard  Oil  Company's  business  stands  on  its  own  merits,  and 
as  I  said  before,  none  of  these  gentlemen  who  may  or  may  not  have  in- 
terests in  these  various  railroads  have  ever  made  a  rate  or  made  an  ar- 
rangement for  Standard  Oil  Company  business.  That  business  is  done  by 
me  or  by  the  proper  party  in  whose  territory  or  district  the  question  may 
arise. 

Q.  Would  you  be  sure  to  know  whether  that  was  so  or  not?  A.  I  would 
know.  If  any  of  the  gentlemen  who  have  large  railroad  interests,  as  alleged, 
made  a  tariff  or  arrangement  with  a  railroad  for  our  business  I  certainly 
would  know  it.  I  would  be  advised  of  it,  as  I  am  the  proper  department  that 
has  a  record  of  those  rates,  and  I  would  have  to  know  necessarily. 

Q.  (By  Mr.  SMYTH.)  Do  we  understand  that  shipments  of  the  Stand- 
ard Oil  Company  have  not  been  influenced  toward  certain  lines  by  the  fact 
that  the  officers  of  the  Standard  Oil  Company  were  reputed  to  be  large 
owners  of  the  stock  in  those  lines?  A.  In  no  way,  sir.  You  can  readily  see 
that  if  the  Standard  Oil  Company's  business  was  run  on  the  basis  of  favor- 
ing the  individual  interests  of  the  different  stockholders  of  the  Standard 
Oil   Company,  the  company's  business  itself  would  necessarily  suffer. 

Q.  (By  Mr.  A.  L.  HARRIS.)  Is  it  true  that  officers  of  the  Stnndard  Oil 
Company  have  offices  in  different  railroads?  A.  It  is  true  that  Mr.  William 
Rockefeller,  for  instance,  is  a  director  in  some  of  the  railroads.  He  prob- 
ably alFO  is  a  bondholder  in  the  United  States,  but  there  is  no  connection 
between  such  interests  and  the  interests  of  the  Standard  Oil  Company,  or 
the  business  of  the  Standard  Oil  Company. 


*Black   faced    typo   indicates   matter   nniitted.   in  the  course  of  cditinp,  frum   the 
offlclal  report. 


HOWARD   PAGE.  479 

Mr.  CLARKE.    We  will  proceed,  Mr.  Page. 

The  WITNESS.  Mr.  Rice  refers  to  a  rule  of  the  Southwestern  Bureau 
In  regard  to  charging  on  the  weight  of  the  tank,  when  that  tank  is  intended 
for  storage,  at  the  same  rate  as  on  the  oil  contained  in  that  tank.  *The 
rule  referred  to  charges  the  same  rate  on  the  weight  of  a  tank  when  intended 
for  storage  as  on  the  oil  contained  in  the  said  storage  tank.  If.  as  Rice 
alleges,  the  Standard  Oil  Company  owns  nearly  all  the  sub-stations  of  the 
country,  this  rule  is  hard  upon  the  Standard  Oil  Company,  for,  if  the  rail- 
roads wish  to  discriminate  in  favor  of  the  Standard  Oil  Company,  they 
would  carry  the  weight  of  the  tank  free,  as  they  do  the  regular  tank  cars. 
Do  you  understand?  Here  is  a  tank  that  is  intended  to  be  used  as  a  storage 
tank  at  some  sub-station.  It  is  loaded  with  oil  and  sent  to  that  station.  The 
railroad  rule  referred  to  charges  the  same  rate  per  100  pounds  on  the 
weight  of  the  tank  as  it  does  on_the  oil  contained  in  the  tank.  Now,  ordi- 
narily, on  the  tank  car  there  is  no  charge  for  the  weight  of  the  tank.  If  they 
wanted  to  favor  us,  all  they  would  have  to  do  would  be  to  treat  that  tank 
containing  the  oil.  *the  tank  being  intended  for  storage,  the  same  as  they 
do  the  ordinary  tank  car. 

Q.  (By  Vice-Chairman  PHILLIPS.)  There  is  one  question  I  desire  to 
ask  you.  and  I  will  ask  it  now,  Mr.  Chairman,  if  there  is  no  ob.iection.  and 
that  is  in  regard  to  shipping  oil  by  barrel  and  by  tank  car.  Has  it  not  been 
testified  that  it  is  much  more  dangerous  to  ship  oil  in  tank  cars  than  in 
barrels  in  case  of  collision  and  fire?  A.  It  may  have  been  so  testified,  sir. 
Different  men  have  their  different  opinions,  but. the  answer  to  that  is  that 
the  tank  car  is  growing  in  favor,  not  only  in  the  shipping  of  petroleum,  but 
in  shipping  all  other  liquid  products,  which  are  open  to  the  same  ob.iection. 
I  think  the  economy  in  shipping  in  tank  cars  over  shipping  liquid  in  Ijarrels, 
which  is  being  shown  by  the  enormous  growth  in  the  use  of  tank  cars  for 
the  shipment  of  a  great  many  liquids,  proves  that  the  tank  car  is  the  better 
method  for  shipping  *in  bulk  as  compared  with  barrels.  The  General  Freight 
Association  rule  to  which  he  refers  is  entirely  proper,  as  it  is  intended  to 
prevent  the  unloading  of  bulk  petroleum  in  railroad  yards  or  depots  without 
proper  facilities,  as  such  unloading  would  increase  the  danger  of  loss  by  fire. 
The  rule  simply  means  that  they  will  not  allow  a  tank  car  to  be  held  in 
the  depot  or  in  the  yard  of  a  railroad  to  be  unloaded  by  improper  means 
into  a  tank  wagon  or  into  barrels,  as  leakage  or  accident  might  result  in  a 
large  loss  to  the  surrounding  property,  and  they  simply  require  that  proper 
facilities  should  be  at  the  point  where  the  tank  car  is  shipped  to. 

The  Southern  Pacific  tariff:  The  rule  referred  to  was  submitted  to  the 
Interstate  Commerce  Commission,  which  did  not  order  it  stopped  when  they 
decided  the  trans-continental  case  of  1890. 

Q.  (By  Professor  JENKS.)  Will  you  be  kind  enough  to  state  the  rule? 
A.  That  rule  was  simply  the  rule  by  which  the  trans-continental  lines 
charged  for  returning  the  cylinder  car,  and  did  not  charge  for  returning 
what  is  known  as  the  box  tank  car.  The  box  tank  car  is  a  car  which  has  a 
tank  in  each  end  and  loading  space  between.  There  are  other  shippers  be- 
sides the  Standard  Oil  Company  that  ship  and  own  these  cars,  and  the 
Standard  Oil  Company  ship  both  these  cars  and  cylinder  cars  to  the  trans- 
continental points,  and  they  pay  exactly  the  same  rates  on  cylinder  cars 
as  other  shippers  and  get  their  box  cars  returned  free  the  same  as  other 
shippers. 

Regarding  alleged  correspondence  from  the  Standard  Oil  Company's 
San  Francisco  ofllce,  I  would  say  I  know  nothing  about  that  correspondence 
and  cannot  verify  it.  I  would  further  say,  however,  that  I  have  full  knowl- 
eds-e  of  all  shipments  to  California,  and  I  can  say  positively  we  paid  the 
tariff  rates  in  force  at  the  time  of  shipments,  whenever  made.  Mr.  Rice's 
charge  was  that  the  rates  were  put  up  at  one  season  and  put  down  at  an- 
other from  Chicasro  and  oth^r  eastern  points  to  trans-contin(>ntnl  points.  I 
can  say.  and  the  Interstate  Commerce  Commission  can  affirm,  that  the  rates 
on  petroleum  and  its  products  from  Chicago  and  other  eastern  points  to  Cali- 
fornia   and    other    trans-continental    points    have    not    been    changed    since 


*F.Iack   facpd   type  indicate.s   matter   omitted,  in  the  course  of  editing,  from  the 
official  report. 


480  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

March  2,  1891.     The  rates  have  been  absolutely  the  same  for  nearly  nine 
years. 

Regarding  commissions  on  freight  business,  and  charges  that  the  Stand- 
ard Oil  Company  make  their  own  commission:  It  is  absolutely  false,  and  I 
state  unqualifiedly  that  the  Standard  Oil  Company  has  never  received  either 
directly  or  indirectly  a  commission  from  any  railroad  in  any  form  since 
the  passage  of  the  interstate  commerce  law. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Would  you  be  in  position  to  know 
that  they  had  absolutely  not  received  any?    A.  I  would,  sir. 

Q.  (By  Vice-Chairman  PHILLIPS.)  In  regard  to  all  the  railroads  and 
all  the  transportation?     A.     I  would,  sir. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Would  local  freights  in  certain 
sections  bar  others  than  the  Standard  Oil  Company  from  entering  those 
sections?  Would  you  be  in  a  position  to  know,  either  directly  or  indirectly, 
that  they  received  them?  A.  I  would  know  if  the  Standard  Oil  Company 
received  any  benefits  throughout  the  United  States,  and  I  would  unquali- 
fiedly    say  they  have  not. 

Q.  (By  Vice-Chairman  PHILLIPS.)  I  think  it  has  been  testified  before 
this  commission  that  in  certain  sections  of  the  country,  while  they  may 
have  a  through  rate  of  freight^  up  to  a  certain  division  of  the  United  States, 
local  rates  are  made  so  that  independent  refiners  cannot  enter  those  por- 
tions, and  in  that  way  indirectly  the  Standard  Oil  Company  has  an  advant- 
age which  would  be  similar,  and  perhaps  superior,  to  a  rebate  or  drawback? 
A.  If  you  mean  by  that,  because  we  have  refineries  at  the  Atlantic  sea- 
board to  supply  New  England  and  at  Chicago  to  supply  the  West,  *we  have 
advantages  as  compared  with  the  man  who  has  his  refinery  in  the  oil  re- 
gions and  tries  to  supply  both  the  West  and  New  England,  I  admit  we  have 
advantages,  but  I  say  we  pay  the  same  rate  of  freight  from  the  same  ship- 
ping point  to  the  same  destination  as  every  other  shipper  does. 

Q.  (By  Vice-Chairman  PHILLIPS.)  And  there  are  no  local  rates,  as 
far  as  your  knowledge  goes,  that  would  interfere  with  the  independent  en- 
tering that  sub-division?  A.  Whatever  the  local  rate  is  from  ony  point  to 
any  point  we  pay  the  same  as  any  other  shipper  pays  from  that  point  to 
that  point. 

Mr.  CLARKE.     You  may  proceed. 

The  WITNESS.  In  regard  to  the  letter  from  Receivers  Cowen  and 
Murray,  of  the  Baltimore  &  Ohio  Railroad  Company,  to  the  Interstate  Com- 
merce Commission,  in  which  they  admit  paying  rebates  since  the  passage  of 
the  interstate  commerce  law,  and  which  Mr.  Rice  assumed  meant  paying 
us  large  rebates,  I  would  say  positively  that  since  the  passage  of  the  inter- 
state commerce  law  the  Baltimore  &  Ohio  Railroad  has  not  paid  us  one 
dollar  in  rebates,  or  in  any  way  made  any  concessions  from  their  tariff  rates, 
and  Mr.  Archbold  filed  with  this  commission  a  letter  from  the  Baltimore  & 
Ohio  Railroad,  dated  Ausjust  21,  1899,  confirming  this  statement. 

Q.  (By  Mr.  KENNEDY.)  Would  you  say  that  an  inspection  of  the  books 
of  the  Baltimore  &  Ohio  Railroad  Company  would  not  show  that  rebates, 
or  discriminations,  or  commissions  or  anything  of  the  kind,  have  been  paid 
to  the  Standard  Oil  Company  since  the  passage  of  the  interstate  commerce 
law?     A.  I  would,  absolutely,  sir. 

Q.  (By  Mr.  SMYTH.)  You  know  Mr.  Rice  stated  that  rebates  were  not 
paid,  but  that  commissions  were  given  to  persons  to  secure  the  business  of 
the  Standard  Oil  Company  and  others?  You  deny  that?  A.  Previously  I 
denied  that  we  received  commissions  in  any  form  from  any  railroads. 
That  applies  particularly  to  the  Baltimore  &  Ohio  and  any  other  railroad 
you  wish  to  point  out. 

Regarding  alleged  under-weighing  of  tank  car  shipments  from  Boston 
to  Newport.  Rhode  Island:  For  most  of  the  years  1896  and  1897  we  were 
making  occasional  shipments  of  naphtha  in  tank  cars  from  Boston  to  the 
Newport  Gas  Company.  The  shipments  altogether  amounted  to  some  15 
or  20  tank  cars  during  the  pntire  period.  On  three  or  four  of  the  cars  the 
New  York.  New  Haven   &   Hartford  Railroad,  through  clerical  error,  billed 


♦Blark   faced   type  Indicates   matter   omitted,  in  the  course  of  editing,  from  the 
official   report. 


HOWARD   PAGE.  481 

these   cars   at   less  than  their   actual   weight.     This    resulted    in    an    under 
charge.     As  soon  as  it  was  discovered  the  balance  due  was  paid. 

'ihe  railroads  transporting  thcbc  shipments,  as  well  as  all  railroads  of 
the  United  States,  had  the  actual  capacity  of  all  these  cars,  and  the  error 
occurred  through  no  fault  of  the   Standard  Oil  Company. 

I  shall  hand  as  an  exhibit  Tank  Gauge  Book  No.  4,  which  is  the  fourth 
book  which  has  been  published  by  the  Central  Freight  Association,  giving 
ihe  capacity  of  all  tank  cars  of  the  Union  Tank  Line  Company.  A  similar 
publication  has  been  in  the  hands  of  the  railroads  for  the  past  10  or  15 
years.  This  book  contains  the  number  and  capacity  of  the  tank  cars  referred 
to  by  Mr.  Rice.  We  furnished  this  information  to  the  railroads  and  we  sub- 
mit that  it  is  not  likely  that,  having  furnished  the  actual  capacity  of  the 
cars  lo  the  railroads,  we  would  go  to  these  same  railroads  on  interstate  ship- 
ments and  show  a  less  rate,  because  it  would  simply  mean  that  we  would 
know  we  were  violating  the  law  and  furnishing  evidence  to  prove  that  we 
had. 

The  Interstate  Commerce  Commission,  through  Commissioner  Prouty, 
investigated  this  charge  at  Boston,  March  12,  1898,  and  after  the  investiga- 
tion dropped  it,  as  it  was  clearly  shown  by  testimony  taken  there  that  the 
mistakes  were  simply  clerical  errors  *of  the  railroads.  I  wish  to  offer  a 
sworn  statement  of  Vice-President  Hall  (now  president),  of  the  New  York, 
New  Haven  &  Hartford  Railroad,  which  was  given  in  answer  to  the  request 
of  the  Interstate  Commerce  Commission  in  regard  to  this  very  matter,  in 
which  he  gives  the  detail  of  the  shipments  for  the  two  years.  I  read  from 
his  answer  (I  refer  now  particularly  to  the  two  cases  which  Mr.  Rice  refers 
to.  He  refers  to  two  cars  containing  100,986  pounds  which  were  carried  at 
48,000  pounds),  that  the  mistakes  occurred  "through  error  of  this  (railroad") 
company's  agent  and  without  misrepresentation  or  fault  on  the  part  of  the 
shipper." 

Q.  (By  Professor  JENKS.)  Was  this  the  same  case  investigated  by 
Mr.  Prouty?  A.  Yes;  Vice-President  Hall,  who  is  now  president  of  the  New 
Haven  road,  says  this  is  his  sworn  answer:  "On  the  19th  day  of  May,  1897, 
this  company  received  from  the  Boston  &  Albany  Railroad  Company  at 
Boston  two  U.  T.  L.  cars,  Nos.  7,915  and  1,286,  consigned  to  the  Newport 
Gas  Light  Company,  containing  naphtha,  weight  48,000  pounds,  which  this 
com^pany  rebilled  from  Boston  to  Newport  at  its  rate  of  10  cents  per  100 
pounds:  total  charges,  $48.00.  Said  weight  was  that  given  in  the  way- 
bill of  the  Boston  &  Albany  Railroad  Company  as  delivered  to  this  com- 
pany and  accepted  through  error  of  this  company's  agent,  and  without  any 
misrepresentation  or  fault  on  the  part  of  the  shipper.  It  was  subsequently 
found  that  the  weight  should  have  been  100,986  pounds  and  correction  thereof 
was  made.  Its  charge  of  10  cents  per  100  pounds  on  the  difference,  amount- 
ing to  $52.98  was  collected." 

I  also  offer  in  connection  with  that  case  the  testimony  taken  before 
Commissioner  Prouty  at  the  hearing  in  Boston  March  12,  1898,  and  I  would 
like  to  read  from  Mr.  Winlock's  testimony  at  that  time.  Mr.  Winlock  was 
general  agent  of  the  New  Haven  road  at  Boston,  and  testified  that  he  had 
full  charge  of  rates  from  Boston  to  all  points  on  the  New  Haven  road. 

Mr.  Winlock  says:  "I  have  nothing  to  say  except  what  Mr.  Page  has 
said,  so  far  as  the  relations  between  the  New  Haven  road  and  the  Standard 
Oil  Company  are  concerned,  is  absolutely  true.  There  is  no  arrangement 
of  any  kind  between  the  Standard  Oil  Company  and  the  New  Haven  road  by 
which  they  can  get  any  better  rates,  whether  it  is  by  a  rebate,  or  by  tinder- 
billing,  or  by  anything  of  that  kind,  than  what  anybody  else  gets.  Our  rates 
are  published  and  posted  for  everybody.  These  under-charges  in  weights 
were  errors  of  our  local  agents  in  accepting  them  as  such.  They  should 
have  investigated  the  matter  more  than  they  did.  Instead  of  blindly  taking 
the  weights  given  by  the  Boston  &  Albany  Railroad  vouchers,  they  should 
have  taken  some  means,  as  they  did  in  nearly  every  other  case,  to  get  at 
the  proper  weights.  The  tariffs  to  Newport  were  based  on  actual  weight, 
and   instead   of  taking  this   constructive   tonnage   of  the  Boston    &   Albany 

*BIack  faced  type  indicates  matter  omitted,  in  the  course  of  editing,  from  the 
official  report. 

31 


482  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

road,  which  they  used  for  purposes  of  their  own,  they  should  have  taken,  as 
I  said,  some  means  of  ascertaining  the  weights  in  every  case.  The  other 
cases  were  errors  of  theirs." 

Q.  (By  Professor  JENKS.)  I  see  in  the  testimony  that  the  weights  are 
taken  from  the  Boston  &  Albany.  I  understand  your  shipping  point  is  in 
East  Boston?     A.  It  is. 

Q.  And  the  Boston  &  Albany  road  takes  the  oil  from  East  Boston  to 
Boston,  where  it  delivers  to  the  New  York,  New  Haven  &  Hartford?    A.  Yes. 

Q.  Is  it  true,  as  has  been  stated,  that  when  oil  is  delivered  to  the  Boston 
&  Albany  road  by  your  people  the  billing  is  done  by  your  people  directly,  and 
that  you  furnish  the  weights  to  the  Boston  &  Albany?  A.  It  is  not  true,  sir; 
as  was  shown  in  this  testimony.  I  will  explain  it.  Our  works  are  located 
at  East  Boston,  on  the  Boston  &  Albany  road.  The  Boston  &  Albany  road 
have  a  switching  charge  per  car  from  East  Boston  to  Boston,  where  the 
cars  are  delivered  to  the  New  Haven  road.  That  switching  charge,  as  I 
recall  it  is  $6  per  car;  either  $4  or  $6  per  car.  The  Boston  &  Albany  road, 
like  many  other  roads,  wishes  to  show  tonnage,  whether  their  rates  are  per 
car  or  per  100  pounds,  and  where  the  rate  is  per  car.  as  in  this  instance,  it 
probably  uses  24,000  pounds,  which  is  the  usual  carload  weight;  it  is  the 
minimum  carload  weight.  They  simply  put  in  24,000  pounds.  The  testi- 
mony shows,  and  I  swear  now,  that  we  do  not  give  the  Boston  &  Albany  road 
24,000  pounds  as  the  weight  of  those  cars,  nor  did  we  give  them  any  wei.ght. 
"We  did  notify,  not  only  directly  but  through  this  book,  the  actual  weight  of 
all  those  cars,  and  it  was  simply  an  error  of  the  New  Haven  road,  as  shown 
in  the  testimony  and  as  offered  by  Vice-President  Hall,  that  the  New  Haven 
road  took  in  error  the  constructive  weight  of  the  Boston  &  Albany  in  their 
bill,  instead  of  taking  the  actual  weight  which  they  had  in  their  power  to 
get  and  which  they  should  have  got. 

Q.  It  is  usually  the  custom  of  the  Boston  &  Albany  in  its  switching 
charge  to  put  in  the  minimum  weight  of  24.000  pounds?  A.  It  seems  to 
have  been  so  in  this  case.  I  cannot  say  what  the  general  custom  is,  but  it  is 
customary.  There  is  nothing  exceptional  in  the  Boston  &  Albany  having  a 
switching  rate  for  switching;   it  is  no  more  than  any  other  railroad  does. 

Q.  So  far  as  the  regular  custom  of  the  Boston  &  Albany  is  concerned, 
in  charging  that  rate  to  any  point  in  Massachusetts  you  would  swear  posi- 
tively that  their  shipping  rates  are  based  on  the  full  car  rates?  I  am  not 
speaking  of  interstate  traffic  now?  A.  I  say  this:  That  as  far  as  the  Boston 
&  Albany  rates  are  concerned,  whether  within  the  State  of  Massachusetts  or 
to  points  without  the  State,  we  pay  exactly  the  same  rates  as  anyone  else 
pays  from  Boston  to  the  same  destination.  I  cannot  recall  and  I  do  not  know 
every  local  rate  on  every  railroad  in  the  United  States,  but  I  do  know  that 
we  pay  the  same  rate  of  freight  from  the  same  point  to  the  same  point  as 
every  other   shipper. 

Q.  Whether  these  rates  be  local  within  the  State  or  interstate?  A.  Or 
interstate. 

Q.  (By  Mr.  A.  L.  HARRIS.)  Who  determines  the  weight  and  contents 
of  the  tank  car  as  listed  in  your  book?  A.  The  capacity  of  the  tank  car  is 
first  found  in  the  case  of  the  Union  Tank  Line  Company  by  measurement, 
and  that  is  confirmed  by  water  gauge,  and  the  Central  Freight  Association 
have  a  bureau  of  inspectors  who  go  around  and  test  the  capacity  of  those 
cars. 

Q.  Each  car  is  numbered?  A.  Each  car  is  numbered  and  each  car's 
capacity  is  given  in  gallons  and  its  equivalent  capacity  in  pounds,  based  on 
the  average  weight  of  fi  4-10  pounds  per  gallon. 

Q.  (By  Mr.  CLARKE.)  What  paper  or  voucher  passes  from  the  Boston 
&  Albany  Railroad  Company  to  the  New  York.  New  Haven  &  Hartford  Rail- 
road Comnany  in  that  case?  A.  Simply  a  bill  of  lading  that  that  car,  which 
they  received  at  East  Boston  and  which  they  delivered  to  the  New  Haven 
road  at  Boston,  was  destined  for  the  Newport  Gas  Light  Company  at  Ne'«'- 
port. 

Q.  Does  the  Boston  &  Albany  haul  this  freight  over  its  line  from  All)any 
to  Boston  at  the  lower  measurement  or  at  the  higher  measurement?  A.  This 
shipment  originated  at  East  Boston  on  the  line  of  the  Boston  &  Albany  road. 


HOWARD   PAGE.  483 

Q.  Then  the  only  haul  was  over  the  Union  Freight  Railroad  from  East 
Boston  to  Boston?  A.  I  do  not  know  the  name  of  the  local  road,  but  the 
switching  charge  is  from  Boston  to  East  Boston. 

Mr.  CLARKE.  I  will  explain  to  the  commission  (this  need  not  go  down) 
that  it  is  a  railroad  some  four  or  five  miles  long.  It  is  rather  more  than  an 
ordinary  switch.  This  used  to  pass  around  through  Cambridge  and  connect 
with  the  main  line  of  the  Albany  road,  and  then  ran  back  into  Boston  to 
connect  with  the  New   York,  New  Haven  &   Hartford. 

Q.  (By  Professor  JENKS.)  You  spoke  of  this  shipment  originating  at 
East  Boston.  Do  you  have  East  Boston  for  the  main  distributing  point  for 
all  New  England?     A.  For  a  section  of  New  England. 

Q.  How  much  of  New  England  is  covered  from  your  central  distributing 
point?  A.  I  cannot  say.  Of  course  it  is  from  Boston  proper,  and  I  know  we 
make  shipments  from  there  up  to  Portland,  and  I  know  we  make  shipments 
from  there  down  into  Massachusetts  and  Connecticut. 

Q.  Down  as  far  as  New  Haven?  A.  By  all  lines.  I  mean  as  far  down  as 
New  Haven.  It  depends  upon  what  we  may  have  in  the  Boston  tanks,  and 
what  the  order  may  be  for.  You  know  there  are  many  grades  of  petroleum, 
and  we  do  not  carry  everything  that  is  required  at  every  shipping  point. 

Q.  Do  you  suppose  your  ordinary  shipments  of  petroleum  for  lighting 
purposes,  at  New  Haven  for  example,  would  come  from  East  Boston?  A. 
No,  I  do  not  think  that  we  ship  to  New  Haven  from  East  Boston. 

Q.  You  would  to  Providence  and  Newport,  probably?  A.  Newport.  In 
these  cases  it  depends  upon  the  stock  and  depends  upon  the  situation.  I 
cannot  answer  as  to  the  exact  territory  that  may  be  supplied  from  that  sta- 
tion, but  it  would  supply  the  territory  as  far  as  its  location  and  its  stock 
would  be  able  to  do  so. 

Q.  How  do  you  supply  your  shipping  station  at  East  Boston?  A.  We 
supply  partly  by  rail  shipments  and  partly  by  steamer  shipments  from  New 
York  and  Philadelphia. 

Q.  From  your  refineries  at  Bayonne?  A.  From  the  seaboard  refineries, 
whatever  one  it  ma3'  be. 

Q.  The  statement  has  been  made  here  by  some  of  the  independent 
refiners  that  in  their  attempts  to  ship  oil  into  New  England  from  the  West, 
they  had  found  that,  although  there  were  through  rates  on  the  regular  tariff 
sheets  for  almost  all  kinds  of  goods,  there  were  no  through  rates  for  petro- 
leum on  the  New  York,  New  Haven  &  Hartford.  It  has  been  stated  several 
times,  for  example  that  when  they  shipped  corn  or  furniture,  or  almost 
anything  else,  to  Newport  or  Providence,  they  would  get  through  rates  the 
same  as  the  Boston  rates;  but  on  petroleum  no  such  through  rates  were 
given  at  all.  They  had  to  get  the  local  rate,  and  the  consequence  was  when 
they  got  this  local  rate  added  to  the  regular  rate  from  the  West,  they  found, 
that  the  rate  to  New  Haven  would  be  very  much  higher  than  to  Boston. 
The  statement  was  made  here  that  that  applied  not  merely  to  New  Haven, 
but  in  general  to  all  New  England;  in  consequence  the  shippers  of  petro- 
leum from  the  West  were  placed  at  a  decided  disadvantage  on  that  account. 
Can  you  give  any  reasonable  explanation  why  the  railroads  should  make  a 
special  exception  of  petroleum  as  to  the  furnishing  of  through  rates?  A. 
Why,  I  can  say  this — I  do  not  know  anything  about  the  corn  rates  at  all. 

Q.  As  to  what  is  the  general  rate?  A.  I  mean  to  say  that  there  are 
many  commodities  which  the  railroads  make  rates  on,  on  the  basis  of 
through  rates  or  local  rates,  whereas  they  may  be  applying  through  rates 
on  other  commodities.  I  do  not  know  that  there  is  anything  exceptional  in 
the  matter  of  oil  in  New  England,  as  compared  with  corn  in  the  West.  I  do 
know  that  we  ship  from  the  oil  regions  to  New  England  to  some  extent,  and 
we  pay  exactly  the  same  rates  as  the  other  fellow  pays. 

Q.  Can  you  mention  some  of  the  New  England  points  you  supply  regu- 
larly from  Cleveland  or  from  other  regions  of  the  West?  A.  I  cannot.  I 
mean  to  say  we  do  frequently  make  shipments  from  various  points  to 
Boston  and  New  England.  I  know  also  wo  have  made  shipments  from 
Cleveland,  and  also  as  far  as  Lima,  and  wherever  we  have  made  those  we 
pay  the  same  rates  as  other  people  do. 


484  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

Q.  Can  you  not  recollect  whether  you  have  made  shipments  from  Cleve- 
land, Lima  or  other  western  points  to  the  territory  of  the  New  Haven  road 
over  the  New  Haven?     A.  Yes,  sir;    we  have. 

Q.  The  general  fact  tha.t  you  have  a  distributing  point  at  Boston  from 
which  you  can  supply  this  territory  that  is  supplied  by  the  New  York  &  New 
Haven  road,  and  that  they  do  not  furnish  through  tariffs  from  the  West, 
would  seem  to  some  of  your  competitors,  at  any  rate,  to  give  you  some 
decided  advantage,  although  no  illegal  advantage,  over  them  in  furnishing 
the  market?  A.  We  do  not  deny  that  by  having  our  refineries  at  the  Atlan- 
tic seaboard  and  supplying  New  England  from  those  refineries  we  have  an 
advantage  over  the  man  who  ships  from  Cleveland  or  the  oil  I'egions,  but 
we  claim  no  fair  adjustment  of  rates  can  be  made  that  will  put  that  man  on 
an  equality  with  us  in  that  situation. 

Q.  Would  you  say  further  that  the  Standard  Oil  Company  officials  have 
not  represented  the  matter  to  the  New  Haven  road  in  such  a  way  that  they 
have  succeeded  in  getting  the  New  Haven  road  to  refuse  to  make  through 
rates  on  petroleum,  while  it  does  make  through  rates,  and  those  equivalent 
to  Boston  rates,  on  a  very  large  proportion  of  other  goods  that  are  shipped? 
A.  I  thing  Commissioner  Prouty  answered  that  question  by  saying  that  the 
New  Haven  road,  in  charging  arbitrary  rates  on  oil  from  Boston,  as  well  as 
from  the  Hudson  river,  were  receiving  more  money  themselves  than  they 
would  if  they  applied  the  through  rate,  and  for  selfish  reasons  they  got  the 
most  money  they  could  out  of  the  traffic. 

Q.  (By  Mr.  SMYTH.)  Is  it  not  a  fact  that  those  rates  apply  to  a  great 
many  other  commodities  besides  oil;  that  a  larger  rate  is  charged  for  the 
shorter  distance?  A.  As  I  say,  I  do  not  know  much  about  other  traffic.  I 
can  say  specifically  in  regard  to  the  difference  in  the  rate  on  corn  and  oil 
that  1  do  not  know  the  reason  for  it.  I  can  say  in  a  general  way  that  1  do 
not  know  the  reason  for  it.  I  can  say  in  a  general  way  that  I  do  not  believe 
the  railroads  make  rates  that  prohibit  business  over  their  rails.  The  pros- 
perity of  a  road  depends  upon  the  prosperity  of  the  patrons,  and  if  the  rail- 
road makes  any  arbitrary  rates  that  are  going  to  prevent  shipping  over 
their  road,  it  seems  to  me  they  are  doing  what  a  reasonable  man  would 
not  do.  and  my  experience  is  that  the  railroads  are  represented  by  as  high 
an  order  of  intelligence  in  this  country  as  any  class  that  I  know  of. 

Q.  You  have  no  reason  to  believe  that  oil  is  the  only  commodity  that  is 
charged  a  higher  rate  for  the  shorter  distance?     A.  Absolutely  none. 

Q.  I  mean  to  that  point?     A.  No,  sir;    1  only  know,  however,  about  oil. 

Q.  (By  Professor  JENKS.)  The  reason  I  put  my  question  in  the  form  I 
did  was  that  it  has  been  intimated  by  Mr.  Rice  and  others  that  this  special 
refusal  to  give  through  rates  on  petroleum  by  the  New  York,  New  Haven 
&  Hartford  Road  was  presumably  brought  about  by  the  fact,  as  I  believe 
you  stated,  that  Mr.  William  Rockefeller  was  a  director  of  the  road,  or  by 
some  other  special  influence  brought  to  bear  in  favor  of  the  Standard  Oil 
Company  to  check  these  shippers  of  the  West?  A.  I  will  say,  as  far  as  the 
New  Haven  Road  is  concerned,  and  Mr.  William  Rockefeller,  that  absolutely 
I  do  not  know  of  any  arrangement  or  any  tariff  or  any  change  in  tariff  that 
Mr.  William  Rockefeller  has  ever  suggested  or  influenced  on  the  part  of 
the  New  Haven  Road  or  any  other  road.  I  do  not  believe  that  Mr.  Rocke- 
feller knows  who  the  traffic  manager  for  the  New  Haven  Road  is  to-day, 
and  would  not  if  he  was  in  this  room. 

Q.  (By  Mr.  KENNEDY.)  I  see  that  your  testimony  relates  principally 
or  nearly  altogether  so  far.  in  rebuttal  of  Mr.  Rice.  There  was  another 
witness  before  the  commission  who  made  a  statement  that  I  should  like  to 
hear  you  say  something  about,  and  he  is  the  gentleman  to  whom  you  have 
just  alluded,  an  interstate  commerce  commissioner.  He  made  a  statement 
before  the  commission  which  seemed  to  show  that  the  Standard  Oil  Com- 
pany had  an  advantage  in  shipping  from  its  Whiting  works  down  the  Missis- 
sippi Valley  to  New  Orleans,  over  the  independent  shippers  or  refiners  of 
Cleveland,  Ohio.  1  do  not  know  just  what  the  figures  were,  but  they  struck 
me  at  the  time,  if  true,  as  indicating  that  the  Standard  Oil  Company  did 
have  an  advantage  in  the  rates  that  were  made,  a  great  advantage  over  the 
refiners  of  Cleveland.     As  traffic  manager  of  this  tank  line  association,  do 


HOWARD   PAGE.  485 

you  know  anything  about  those  rates?  A.  I  know  what  the  rates  are  from 
Cleveland  and  from  Lima  to  New  Orleans.  They  are  based  on  the  local 
rate  to  the  Ohio  river  plus  the  rate  from  the  Ohio  river  to  New  Orleans. 
The  rate  thus  figures  out,  as  I  recall,  less  than  half  a  cent  a  ton  a  mile.  The 
haul  from  Cleveland  to  New  Orleans  is  over  a  thousand  miles  and  has  a  low 
rate.  As  to  the  rate  from  Whiting  to  New  Orleans,  we  have  an  advantage. 
Whiting  is  some  400  or  500  miles  nearer  New  Orleans  than  Cleveland.  The 
rate  from  Whiting 

Q.   (Interrupting.)     Not  that  much  nearer,  is  it? 

*Mr.   FARQUHAR.     Three   hundred   and  fifty   miles. 

The  WITNESS.  Well,  I  do  not  know  that  it  is,  l)ut  it  is  appreciably 
nearer.  And  the  rate  from  Cleveland  to  Whiting  plus  the  rate  from  Whiting 
to  New  Orleans  is  higher  than  the  rate  from  Cleveland  to  the  Ohio  river 
plus  the  rate  from  the  Ohio  river  to  New  Orleans.  In  other  words,  I  mean 
to  say  that  we  are  paying  a  higher  rate  in  proportion  from  Whiting  to  New 
Orleans,  when  you  consider  the  haul  from  Cleveland  to  Whiting. 

Q.  (By  Professor  JENKS.)  The  rate  from  Whiting,  as  you  say,  is  con- 
siderably lower  than  it  is  from  Cleveland.  Do  you  know  whether  the  rate 
from  Whiting  on  other  similar  products  like  linseed  oil,  for  example,  is 
lower  than  the  rate  from  Cleveland  to  New  Orleans?  A.  I  do  not  know 
what  the  rates  are  on  linseed  oil,  either  from  Whiting  or  from  Cleveland. 

Q.  Stai  ements  have  been  made  to  this  effect — I  do  not  mean  to  say  that 
those  figures  are  absolutely  exact,  but  approximately  exact — that  on  linseed 
oil  the  rate  from  Cleveland  to  New  Orleans  would  be  possibly  28  cents,  and 
from  Chic  ago  it  would  be  somewhat  less,  say  26.  but  on  petroleum  the  differ- 
ence would  be  as  great  as  from  31  to  23  cents,  showing  that  there  would  be 
a  decided  advantage  given  petroleum  as  compared  with  a  somewhat  similar 
product,  like  linseed  oil?  A.  I  cannot  testify  on  that:  but  I  can  testify  that 
you  cannot  pick  out  any  two  commodities  and  say  that,  because  there  is  a 
difference  on  one  between  two  points  the  same  relative  difference  should 
apply  to  other  commodities.  The  reasons  governing  commodities  are  very 
often  different  in  the  matter  of  their  manufacture,  of  the  territory  that  they 
go  over,  and  the  cost  in  getting  them  up  to  that  point,  and  various  and  sundry 
reasons,  which  are  good  reasons  from  the  railroad  standpoint;  and  as  they 
have  the  authority,  we  accept  them  as  good  reasons. 

Q.  (By  Mr.  CLARKE.)  Are  linseed  oil  shipments  made  in  tank  cars? 
A.  Yes,  sir. 

Q.  (By  Mr.  FARQUHAR.)  Is  there  a  large  shipment  of  linseed  oil 
from  Whiting?  A.  Without  being  an  expert  on  linseed  oil,  let  me  call  your 
attention  to  the  difference.  Linseed  oil  is  grown  very  largely  in  the  West. 
At  Chicago  linseed  oil  is  nearer  the  point  of  production  than  it  is  at  Cleve- 
land. Now,  there  may  be  very  good  reasons  why  the  rate  from  Chicago  to 
New  Orleans  on  linseed  oil  might  be  higher  than  it  is  from  Cleveland,  sim- 
ply because  the  traffic  could  stand  more  from  that  point. 

Q.  The  natural  distributing  point  for  linseed  oil  is  east  of  Cleveland, 
rather  than  west  of  it?  A.  The  natural  distributing  point  on  linseed  oil  is 
weft  of  Cleveland,  rather  than  east,  because  linseed  oil  is  grown  in  the 
West. 

Q.  Would  not  the  same  reason  hold  good  in  respect  to  linseed  oil 
shipped  from  Buffalo.     A.  Yes,  sir;  I  think  it  would. 

Q.  Now.  does  this  commission  understand  you  to  say  that  the  position 
of  the  Standard  Oil  Company  on  the  seaboard,  having  an  inside  line  of  dis- 
tribution, is  an  advantage  that  you  get  over  all  competitors,  and  that  that 
one  is  just  the  one  that  you  have?  A.  I  do  not  understand  what  you  mean 
by  the  inside  advantage. 

Q.  By  the  shorter  line  of  distribution,  geographical  position?  A.  At  the 
seaboard  for  the  East  and  at  Chicago  for  the  West,  as  I  have  said,  we  have 
an  advantage  over  the  man  who  is  shipping  from  some  interior  point  and 
who  tries  to  ship  both  east  and  west. 

Q.  And  the  Standard  would  have  a  decided  advantage  over  all  other 
competitors  on  an  even  tariff?     A.  No. 


*Black   faced   type  indicates  matter  omitted,  In  the  course  of  editing,  from  the 
official  report. 


486  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

Q.  On  an  even  tariff  for  all  from  the  same  point?  A.  *0n  an  even  tariff 
for  all  from  the  same  point.  Yes.  I  say  we  are  on  an  even  tariff  for  all. 
We  ship  from  Cleveland,  where  our  competitor  is,  and  we  ship  from  the 
oil  region,  where  our  competitor  is,  and  we  have  competitors  on  the  Atlantic 
seaboard  and  we  pay  the  same  rates  as  they  do.  We  endeavor  to  supply 
each  point  from  our  nearest  refinery. 

Q.  (By  Mr.  CLARKE.)  Do  you  know  why  your  company  located  their 
refinery  at  Whiting?  A.  Because  it  was  nearer  the  great  West,  which  is  a 
large  consumer  of  oil.  Mr.  Farquhar,  I  do  not  know  whether  you  were  here 
when  I  made  the  explanation  in  regard  to  the  Newport  case. 

Mr.  P^ARQUHAR.  1  do  not  care  to  have  it  repeated;  I  will  take  the 
record  as  it  came  on  that. 

The  WITNESS.  I  will  call  your  attention  to  the  fact  that  the  Standard 
Oil  Company  has  shipped  thousands  of  carloads  of  freight  every  year  to  all 
points  in  the  United  States  over  nearly  every  railroad  line  in  the  country, 
and  the  freight  bills  for  its  cars  pass  through  the  hands  of  numberless 
employes,  both  of  the  railroads  and  the  shippers  who  have  such  large  and 
divei-sified  shipments  scattered  throughout  the  United  States,  *and  within 
the  knowledge  of  so  many  persons,  it  would  have  been  impossible  to  keep 
such  rebates  secret  had  any  such  been  granted,  especially  since  Mr.  Rice 
and  others  like  him  have  been  on  the  constant  lookout  for  something  tangi- 
ble by  which  to  prove  their  oft  repeated  allegations  that  the  Standard  Oil 
Company  has  been  violating  the  interstate  commerce  law.  That  law  has 
been  in  effect  for  more  than  12  years,  and  at  the  end  of  this  period  the  best 
case  that  the  opponents  of  the  Standard  Oil  Company  can  produce  is  that 
involving  a  clerical  error  in  the  billing  of  three  or  four  cars  shipped  from 
Boston  to  Newport;  and  I  would  like  to  see  somebody  else  equal  that 
record. 

Mr.  Rice  makes  the  statement  that  the  mileage  paid  the  Union  Tank 
Line  Company  of  three-fourths  of  a  cent  a  mile  pays  back  the  investment 
every  three  years.  I  would  say  that  since  the  formation  of  the  Union  Tank 
Line  Company,  August  1.  1891,  that  company  has  never  paid  a  dividend,  and 
that  the  earnings  of  that  company  for  the  eight  years,  1891  to  1898  inclu- 
sive, have  shown  an  average  yearly  return  on  the  capital  invested  of  4^^ 
per  cent,  per  annum.  This  return  has  been  figured  without  charging  any- 
thing off  for  depreciation,  although  according  to  master  car  builders'  rules 
(on  which  railroads  base  their  settlements  between  each  other)  a  deprecia- 
tion of  6  per  cent,  per  year  is  deducted  in  case  one  railroad  destroys  another 
railroad's  cars.  The  three-fourths  of  a  cent  mileage  paid  the  Union  Tank 
Line  Company  is  exactly  the  same  as  is  paid  all  other  tank  car  owners,  and 
there  are  in  the  United  States  between  170  and  180  individuals  and  com- 
panies, entirely  outside  of  the  Standard  Oil  Company,  owning  an  aggregate 
of  7,420  tank  cars,  while  the  Union  Tank  Line  Company's  equipment,  No- 
vember 1,  1899,  was  5,8.51  cars. 

I  offer  a  statement,  made  up  from  the  very  best  records  we  have,  giving 
the  names  and  owners  of  cars  outside  of  the  Union  Tank  Line  Company, 
showing  an  aggregate  ownership  of  nearly  2,000  cars  more  than  the  Union 
Tank  Line  Company  has.T- 

Q.  (By  Mr.  KENNEDY.)  Do  these  tank  line  companies,  outside  of  the 
tank  line  you  are  speaking  for,  carry  oil  for  the  Standard  Oil  Company?  A. 
The  Standard  Oil  Company  ship,  as  far  as  they  can,  in  Union  Tank  Line 
cars.  They  do  use  outside  cars  when  they  cannot  get  the  LTnion  tank  cars, 
and  need  them. 

Q.  The  testimony  is  that  the  Standard  Oil  Company  does  pretty  nearly 
90  per  cent  of  the  business  in  the  United  States,  and  it  would  look  a  little 
curious  that  they  could  do  that  business  with  40  per  cent,  of  the  tank  line 
cars  of  the  country,  unless  they  are  using  the  cars  of  some  other  company 
to  a  very  large  extent?  A.  The  explanation  of  that  is  that  the  tank  cars 
used   by   other   individuals   are   not   confined    to   the   use   of  petroleum,   but 


♦Black  faced  type  indicates  matter  omitted,  in  the  course  of  editing,  from  the 
offleial    report. 

iTliis  statem<nit  is  iniblished  on  pages  779,  780  and  7S1  of  the  official  report  of  the 
Industrial  Commission. 


HOWARD   PAGE.  487 

other  tank  cars  receive  exactly  the  same  mileage  basis  as  is  paid  to  the 
Union  Tank  Line  Company;  and  that  company,  I  say  as  vice-president  of  it, 
has  shown  an  average  earning  of  4^/^  per  cent,  per  annum,  charging  off 
nothing  for  depreciation.  It  ought  to  be  borne  in  mind  in  connection  with 
the  Union  Tank  Line,  that  owing  to  the  fact  that  during  the  summer  the 
consumption  of  petroleum  is  small,  a  large  part  of  the  equipment  of  the 
Union  Tank  Line  Company  is  idle,  and  during  that  time  the  cars  earn  no 
mileage  whatever;  and  at  other  times  the  volume  of  the  business  requires 
the  whole  number  of  cars  owned. 

Q.  (By  Professor  JENKS.)  What  did  you  say  was  the  number  of  cars 
owned  by  the  Union  Tank  Line  Company?  A.  Five  thousand,  eight  hundred 
and  fifty-one,  November  1. 

Regarding  the  statement  that  in  1894,  an  expert  accountant  discovered 
that  $7,000,000  in  rebates  had  been  paid  by  the  Atchison,  Topeka  &  Santa 
Fe  Railroad,  of  which  Mr.  Rice  alleged  the  Standard  Oil  Company  received 
a  large  part,  1  would  say  that  the  Standard  Oil  Company  did  not  receive 
one  dollar  of  that  money. 

Mr.  Conger  referred  to  the  statement  of  the  witness  that  the  Union 
Tank  Line  Company  had  paid  no  dividend,  having  paid  only  4V2  per  cent, 
per  annum  on  the  capital  invested  in  it,  and  asked  how  it  was  that  that  busi- 
ness had  been  conducted  so  long  a  time  when  it  was  not  profitable.  The 
witness  replied  that  the  tank  cars  were  necessary  in  the  economical  distri- 
bution of  the  oil  and  its  products,  and  for  that  reason  they  had  been  contin- 
ued. He  said  the  owners  of  the  Union  Tank  Line  Company  to  a  large 
extent  were  the  same  as  the  owners  of  the  Standard  Oil  Company. 

Mr.  Conger  also  wanted  to  know  why  the  tank  car  business  w^as  con- 
ducted by  an  independent  company,  instead  of  by  the  Standard  Oil  Com- 
pany. 

The  witness  said  that  that  was  a  convenient  manner  in  which  to  serve 
the  Standard  Oil  Company  with  cars.  He  said  the  cars  of  this  company 
stand  in  the  same  relation  to  the  railroad  as  other  private  cars  in  the 
country  do.  The  Union  Tank  Line  Company  gets  nothing  from  the  Standard 
Oil  Company,  but  it  gets  mileage  from  the  railroads  when  their  cars  are  run 
over  their  lines.  Nor  does  the  Tank  Line  Company  pay  any  of  its  earnings 
to  the  Standard  Oil  as  a  commission  for  getting  its  business.  He  said  that 
the  rate  of  three-quarters  of  a  cent  a  mile  on  these  tank  cars  might  be 
profitable  if  a  car  was  continued  in  constant  use  throughout  the  year  on 
long  trips,  but  that  was  not  the  case.  The  Union  Tank  Line  Company  has 
nothing  to  do  with  foreign  shipments. 

The  commission  took  a  recess  from  1  until  2  o'clock  and  was  then  called 
to  order  by  Mr.  Clarke. 

Q.  (By  Mr.  SMYTH.)  Mr.  Page  has  testified  in  reference  to  the  Chess- 
Carley  "Turn-another-screw"  letter  to  John  M.  Culp.  who  was  at  that  time 
general  freight  agent  of  the  Louisville  &  Nashville  Railroad  and  is  now 
general  traffic  manager  of  the  Southern  Railroad  Company.  I  want  to  ask 
Mr.  Page  if  he  knows  in  what  way  Mr.  Rice  came  into  possession  of  that 
original  letter  written  by  Chess,  Carley  &  Co.  to  Mr.  Culp?  A.  My  informa- 
tion and  belief  in  regard  to  that  is  that  Mr.  Rice,  in  making  some  shipments 
after  the  time  of  the  shipment  which  was  referred  to  in  that  letter,  was 
charged  the  regular  tariff  rate  which  all  other  shippers  were  paying,  and 
which  was  more  than  he  paid  on  that  shipment,  *and  which  had  been  billed 
at  practically  less  than  tariff  rates.  He  made  a  claim  on  the  later  shipment, 
claiming  the  same  rate  as  had  been  paid  on  the  shipment  which  Chess.  Car- 
ley  &  Co.  complained  of.  The  claim  w^as  sent,  as  I  understand,  in  the 
regular  way  to  the  railroads,  and  as  is  customary  with  railroads,  the  billing 
of  the  car  and  the  correspondence  in  connection  with  the  shipment  were  all 
gathered  together  in  one  folder  and  attached  to  this  folder  was  this  letter 
written  by  Mr.  Hathaway,  of  Chess,  Carley  &  Co.  That  letter  was  attached 
to  the  papers  and  the  claim  w'hen  it  was  returned  to  Mr.  Rice  with  the 
claim  refused,  and  he  got  that  letter  in  that  way.  It  showed  that  the  rail- 
road people  did  not  construe  it  in  any  such  way  as  Mr.  Rice  has  tried  to  put 
it,  because  if  they  had.  they  certainly  would  not  have  sent  it  broadcast  and 
attached  it  to  the  papers  and  sent  them  back  to  Mr.  Rice. 


*BIack   faced   type  indicates  matter   omitted,   in  the  course  of  editing,  from  the 
official   report. 


488  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

Q.  Mr.  Gulp,  I  believe,  testified  that  he  never  had  seen  the  letter  per- 
sonally? A.  He  testified  in  the  proceedings  before  the  Bacon  Committee  in 
1888  that  he  had  never  seen  the  letter,  and  if  he  had  he  would  have  under- 
stood it  as  has  been  explained — that  it  was  simply  calling  attention  to  an 
error,  and  that  Mr.  Hathaway  used  the  same  expression  that  was  current 
in  the  Louisville  &  Nashville  office  when  an  error  occurred,  that  the 
machinery  was  loose  and  ought  to  be  tightened  up. 

Q.  There  was  apparently  no  effort  on  the  part  of  the  Louisville  &  Nash- 
ville Railroad  officials  to  suppress  the  letter  or  destroy  it;  it  went  in  the 
ordinary  course  with  the  other  papers  in  the  case?  A.  Exactly.  And  I 
might  further  add  that  Chess,  Carley  &  Co.'s  offices  in  Louisville  at  the 
time  that  letter  was  written  were  at  the  corner  of  Fourth  and  Main  streets, 
and  the  Louisville  &  Nashville  office,  where  Mr.  Culp  was  located,  was  on 
the  corner  of  Second  and  Main  streets,  two  squares  away,  and  I  think  it  is 
fair  to  assume  if  it  had  ever  been  intended  that  an  order  was  to  be  given 
to  the  Louisville  &  Nashville  Road  to  advance  rates  in  any  such  way  as 
Mr.  Rice  has  tried  to  show,  a  letter  that  had  to  go  only  two  squares  would 
not  have  been  written.     It  would  have  been  attempted  in  some  other  way. 

Mr.  Rice  refers  to  ghost  trains  as  a  means  of  discrimination  in  favor  of 
the  Standard  Oil  Company.  I  wish  to  say  that  the  Standard  Oil  Company 
has  never  shipped  a  pound  of  freight  on  such  a  train,  even  if  there  has  ever 
been  such  a  train  in  existence,  which  we  doubt. 

Mr.  Rice  states  that  Mr.  F.  B.  Squire,  of  the  Standard  Oil  Company  of 
Ohio,  made  him  an  offer  of  $250,000  for  his  oil  properties.  I  beg  to  offer  an 
affidavit  from  Mr.  Squire  denying  this,  and  affirming  that  Mr.  Rice  offered 
him  his  oil  properties  at  one  time  for  $24,000,  and  several  years  afterwards 
Mr.  Rice  again  offered  to  sell  his  oil  properties  and  stop  prosecutions,  etc., 
for  the  sum  of  $2.^0.000;  and  offered  to  give  Mr.  Squire  $.50,000  of  this  sum  if 
he  could  bring  about  this  sale.  In  other  words,  Mr.  Rice  offered  to  pay  a 
part  of  the  money  that  he  was  to  receive  from  the  Standard  Oil  Company 
to  an  employe  of  the  Standard  Oil  Company,  if  that  employe  could  bring 
about  the  sale  of  the  property  to  the  Standard  Oil  Company. 

Q.   (By  Mr.   KENNEDY.)      Had  you  not  better  read  that  afl[idavit?     A. 

(The  witness  read  the  affidavit,  as  follows:) 
State  of  Ohio,  County  of  Cuyahoga— ss. 

On  this  1st  day  of  December,  1S99,  personally  appeared  before  me  F.  B.  Squire, 
who.  being-  duly  sworn,  deposeth  and  salth  that  in  the  fall  of  1876  I  lived  on  Forty- 
second  street,  New  York  City,  and  while  there  I  was  introduced  to  Mrs.  George  Rice, 
who  stated  that  her  husband  wanted  to  sell  his  oil  property,  consisting  of  production 
of  crude  oil,  storage  tanks  for  same,  pipe  lines  and  refinery.  The  result  of  the  con- 
versation was  a  30  days'  option  which  she  secured  for  me  to  present  to  the  Standard 
Oil  people  for  $24,000  for  the  entire  property.  I  presented  the  proposal  to  the 
Standard  people,  but  it  was  promptly  declined,  they  claiming  it  was  only  worth  half 
the  money.  I  so  advised  Mrs.  Rice.  She  stated  that  the  Standard  Oil  Company 
vould  be  sorry. 

I  met  Mr.  Rice  several  times  after  this,  and  he  kept  urging  the  matter.  In  the 
summer  of  1881  or  18.82  he  invited  me  to  meet  him  and  his  wife  at  Asbury  Park.  I 
did  so.  They  there  made  me  an  offer  to  sell  the  property,  stop  all  prosecutions  and 
be  friendly  to  the  Standard  Oil  Company  for  $250,000,  $50,000  to  go  to  me  for  my  good 
offlces  if  I  could  bring  it  about.  I  reported  the  result  to  Mr.  Archbold,  including 
the  offer  to  me,  and  it  was  immediately  declined.  I  advised  Mr.  Rice,  who  called  at 
my  office  the  next  day,  and  he  stated  that  the  company  would  regret  this  act.  Im- 
mediately after  this  Mr.   Rice  published  the  pamphlet  called  "Black  Death." 

F.  B.  SQUIRE. 
Sworn  and  subscribed  before  me  the  date 

aforesaid. 

F.    W.   LOTHMAN, 

(Notorial  Seal)  Notary  Public. 

Q.  (By  Mr.  FARQUHAR.)  Is  there  any  means  of  impeaching  the  cred- 
ibility of  the  man  who  makes  this  affidavit? 

Q.  (By  Mr.  SMYTH.)  Is  he  still  in  the  employ  of  the  Standard  Oil 
Company?     A.  Yes. 

Q.  What  position  does  he  occupy?  A.  He  is  one  of  the  officers  of  the 
Standard  Oil  Company  of  Ohio.  Whether  vice-president  or  treasurer  I  do 
not  recall,  but  he  is  an  officer  of  the  Standard  Oil  Company  of  Ohio. 


HOWARD   PAGE.  489 

Q.  (By  Mr.  SMYTH.)  Occupying  a  position  of  trust  and  responsibility? 
A.  Yes. 

Q.  He  lives  in  Ohio?    A.  Yes. 

Q.  (By  Mr.  A.  L.  HARRIS.)  Of  the  former  Standard  Oil  Company  of 
Ohio;  have  you  a  Standard  Oil  Company  in  Ohio  now?    A.  Yes. 

Q.   (By  Mr.  SMYTH.)     Standard  Oil  Company  of  Ohio?    A.  Of  Ohio. 

Q.   (By  Mr.  A.  L.  HARRIS.)     Of  Ohio?    A.  Of  Ohio. 

Q.  Organized  under  the  laws  of  Ohio?     A.  Yes. 

Q.  Doing  business  in  Ohio?     A.  Yes. 

Q.  As  such?  A.  Yes;  he  is  the  man  Mr.  Rice  refers  to  as  having  made 
him  the  offer. 

Q.  (By  Mr.  CLARKE.)  Did  Mr.  Rice  increase  the  capacity  of  his  refin- 
ery and  the  value  of  his  property  between  the  times  of  those  two  proposi- 
tions?    A.  I  do  not  know. 

In  the  foregoing  I  have  tried  to  pick  out  and  deny  positively  the  differ- 
ent allegations  made  by  Mr.  Rice  in  regard  to  freight  discriminations  by 
various  devices,  which  railroads,  both  prior  to  and  since  the  passage  of  the 
interstate  commerce  law  have  given  to  the  Standard  Oil  Company,  against 
himself  and  other  oil  shippers.  I  would  say  that  since  .July,  1889,  as  vice- 
president  of  the  Union  Tank  Line  Company,  I  know  the  facts  regarding  the 
freight  business  of  the  Standard  Oil  Company,  rates,  shipments,  etc.,  with 
the  various  railroads  of  the  United  States.  I  wish  to  deny  positively  that 
during  that  time  we  have  received  any  rebates  or  concessions  from  tariff 
rates  contrary  to  either  the  letter  or  spirit  of  the  interstate  commerce  law. 
While  from  Mr.  Rice's  testimony  one  might  assume  that  the  oil  tonnage  of 
the  United  States  was  about  the  only  tonnage  transported,  yet  the  total 
consuni])tion  of  oil  in  tons  in  the  United  States  is  less  than  one-half  of  1 
per  cent,  of  the  total  tonnage  moved  by  the  railroads  of  the  United  States, 
and  it  is  absurd  to  either  argue  or  conclude  that  so  small  a  percentage  of 
the  traffic  moved  by  the  railroads  of  the  United  States  should  be  of  such 
controlling  influence  over  railroads  and  their  officials  as  is  so  often  alleged 
by  Mr  Rice.  I  wish  to  present  a  letter  to  Mr.  Moseley,  secretary  of  the 
Interstate  Commerce  Commission,  dated  December  1,  and  his  reply  on 
December  6,  1899,  in  which  he  refers  to  the  statistics  compiled  by  the  Inter- 
state Commerce  Commission  for  the  year  ending  June  30,  1898,  showing 
that  the  tons  carried  by  the  railroads  of  the  United  States  were  879,006,307 
tons.  The  total  consumption  of  the  petroleum  produced  in  the  calendar 
year  of  1898.  from  the  very  best  sources  that  can  be  obtained,  was  a  little 
less  than  24,000,000  barrels;  24,000,000  barrels  is  equivalent  to  about  4,000,- 
000  tons;  and  4,000,000  tons  is  less  than  one-half  of  1  per  cent,  of  the  total 
tonnage  carried  by  the  railroads. 

December  1,  1S99. 
E.  A.  Moseley,  Esq.,  Secretary  Interstate  Commerce  Commission,  Washington,  D.  C: 

Dear  Sir— In  the  advance  copy  of  your  twelfth  annual  report,  dated  January  11, 
lSf.9,  you  ^ve  the  earnings  of  the  railways  of  the  United  States.  On  page  79  of  this 
report  you  say  that  you  have  returns  of  720  lines,  representing  97  per  cent,  of  the 
operated  mileage  in  the  United  States.  You  then  show  that  of  the  earnings  there 
was  $874,865,487  received  from  freight  service. 

Have  you  any  tonnage  figures,  showing  the  number  of  tons  carried  by  the  rail- 
roads, which  earned  this  $874,000,000?  If  so,  I  would  be  very  much  obliged  if  you 
would  advise  me  of  the  number  of  tons  (2,000  pounds  to  the  ton)  at  your  early  con- 
venience. 

Yours  truly, 

HOWARD  PAGE. 

Interstate  Commerce  Commission, 
Office  of  the  Secretary, 
Washington,  December  6,  1899. 
Mr  Howard  Page,  26  Broadway,  New  York,  N.  Y. : 

Dear  Sir— I  beg  to  acknowledge  the  receipt  of  your  letter  of  1st  instant,  requesi- 
Ing  certain  tonnage  information  bearing  upon  the  freight  earnings  nf  railways  as 
shown  in  the  advance  copy  of  the  twelfth  annual  report  of  the  Interstate  Com- 
merce Commission.  In  reply,  I  would  say  that  we  have  not  the  exact  tonnage 
figures  referred  to,  as  such  data  are  not  cdrnjiiled  for  the  preliminary  report. 


490  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

On  page  67  of  the  advance  copy  of  the  "Statistics  of  Railways  in  the  United 
States"  for  tlie  year  ending  June  30,  1898,  tons  carried  as  reported  are  shown  as 
879,006.307;  tons  carried  one  mile,  114,077,576,305. 

A  copy  of  the  volume  referred  to  is  ^ent  you  under  a  separate  cover,  page  67  of 
"Which  is  attached  hereto. 

Very  respectfully, 

EDW.  A.  MOSELEY, 

Secretary. 

Mr.  Archbold  filed  with  you  letters  from  abotit  20  of  the  principal  rail- 
roads of  the  United  States,  in  which,  without  exception,  they  stated  that 
since  the  passage  of  the  interstate  commerce  law  no  concessions  or  allow- 
ances from  tariff  rates  had  been  made  to  the  Standard  Oil  Company  in  any 
manner  or  form.  It  is  impossible  to  believe  that  men  of  the  character  of 
President  Callaway,  of  the  New  York  Central;  President  Newman,  of  the 
Lake  Shore;  President  Mellen,  of  the  Northern  Pacific;  Mr.  A.  J.  Earling, 
vice-president  then,  and  now  president  of  the  St.  Paul  Road;  President 
Burt,  of  the  Union  Pacific,  and  the  chief  traffic  officials  of  lines  like  the 
Burlington,  Pennsylvania,  Baltimore  &  Ohio,  Cleveland,  Cincinnati,  Chi- 
cago &  St.  Louis.  Atchison,  Topeka  &  Santa  Fe,  Southern  Pacific,  Louis- 
ville &  Nashville,  Boston  &  Maine,  and  other  railroads,  whose  letters  were 
presented,  would  all  unanimously  state  that  we  had  obeyed  the  law, 
both  in  letter  and  spirit,  if  the  facts  were  to  the  contrary. 

We  might  be  asked  why  (in  view  of  the  known  fact  that  some  of  the 
railroads,  since  the  passage  of  the  interstate  commerce  law,  have  paid 
rebates  to  large  shippers)  we  have  not  received  same?  We  have  not  done 
so  because,  in  the  first  place,  it  was  against  the  law,  and,  secondly,  because 
we  knew  from  past  experience  that  if  we  received  cut  railroad  rates,  other 
oil  shippers  would  receive  the  same,  and  we  felt,  as  we  now  feel,  that  from 
a  business  standpoint  alone  it  has  been,  and  is  now,  to  our  interest  to  have 
tariff  rates  maintained. 

The  Standard  Oil  Company  does  not  need  any  freight  advantages  to 
maintain  its  business,  and  all  it  wants  and  asks  is  to  be  required  to  pay  the 
same  rates  as  other  oil  shippers  from  and  to  the  same  points. 

In  reference  to  the  remarks  of  Interstate  Commerce  Commissioner 
Prouty  in  regard  to  the  Standard  Oil  Company,  when  he  appeared  before 
the  commission  early  in  October,  which  testimony  I  heard:  Commissioner 
Prouty"s  arguments  seem  to  be  to  the  effect  that  the  Standard  Oil  Company 
has  advantages,  as  against  its  competitors,  by  reason  of  having  its  refiner- 
ies and  distributing  plants  at  Chicago  and  the  Atlantic  seaboard,  as  well  as 
at  Lima,  Buffalo  and  other  Middle  State  points,  as  compared  with  a  refiner 
who  had  his  works  only  at  Cleveland  or  in  the  Pennsylvania  oil  regions. 
We  admit  that  by  having  refineries  and  distributing  plants  at  Chicago  for 
the  West,  at  Buffalo,  Lima  and  Parkersburg  for  the  Middle  States  and  the 
South,  and  at  the  Atlantic  seaboard  for  the  East  and  New  England,  we  have 
decided  advantages  over  a  refiner  who  has  his  works  only  at  one  point  and 
who  tries  to  compete  with  us  in  selling  oil  throughout  the  country.  We  claim, 
however,  that  such  an  advantage  is  a  fair  one  and  cannot  be  overcome  by 
any  fair  or  reasonable  ad,iustment  of  freight  rates.  We  further  claim  that 
by  having  our  refineries  and  distributing  plants  located  at  various  points 
throughout  the  country,  we  can  and  do  distribute  more  cheaply  and  sell  the 
oil  at  a  less  cost  to  the  consumer,  and  it  is  more  to  the  interest  of  the 
country  at  large  for  the  consumer  of  oil  to  get  it  at  a  low  cost  than  it  is  to 
try  to  fix  freight  rates  *or  make  laws  on  any  basis  that  will  permit  one 
manufacturer  at  one  point  distributing  his  products  throughout  the  United 
States. 

That,  gentlemen,  closes  all  that  I  have  prepared.  I  am  perfectly  open 
and  glad  to  answer  any  questions  you  gentlemen  have. 

Q.  (By  Professor  .JENKS.)  We  had  some  testimony  here  a  little  time 
ago,  with  reference  to  the  freight  rates  from  the  United  States  into  Canada 
on  American  oils,  in  which  it  was  said  that  comparatively  lately  there  had 
been  a  very  decided  increase  in  the  freights  on  American  oil  going  into 
Canada,  which  was  decidedly  to  the  disadvantage  of  those  who  had  to  ship 
oil  from  the  United  States  into  Canada.     Can  you  explain  to  us  that  matter 


*BIack   faced   type   indicates  matter   omitted,  in  the  couise  of  editing,  from  the 
official   report. 


HOWARD   PAGE.  491 

of  freight  rates?  A.  I  can  say  that  I  know  there  was  an  advance  in  freight 
rates  from  Detroit  and  Toledo  and  Buffalo  and  other  frontier  points  on  oil 
from  the  United  States  into  Canada.  I  can  further  add  that  we  pay  those 
advanced  rates,  and  that  we  ship  80  per  cent,  of  the  oil  that  is  exported 
from  the  United  States  into  Canada.  We  therefore  pay  four  times  as  much 
as  all  the  balance  of  the  oi!  shippers  together. 

Q.  What  proportion  of  your  sales  in  Canada  are  shipped  from  the 
United  States,  and  what  proportion  are  sales  from  the  Canadian  product? 
1  understand  that  the  Standard  Oil  Company  owns  practically  all  of  the 
Canadian  refineries.  A.  I  do  not  so  understand  it,  and  I  do  not  know  the 
relative  shipments  from  the  United  States,  compared  with  the  consumption 
of  oil  manufactured  in  Canada.  I  do  know,  though,  that  shipments  from  the 
United  States  into  Canada  have  increased  in  the  last  year;  in  fact,  since 
that  advance  in  rates  as  compared  to  the  old  oil  situation. 

Q.  Do  you  know  what  proportion  of  the  refining  industry  of  Canada  is 
owned  by  the  Standard  Oil  Company?  A.  No,  I  do  not;  I  do  not  know  that 
the  Standard  Oil  Company  owns  any  interest  in  Canada. 

Q.  We  have  had  some  evidence  with  reference  to  suits  that  were 
brought  against  the  railroads  by  independent  refiners  in  Western  Pennsyl- 
vania, in  which  they  claimed  that  the  railroads  had  been  dealing  unfairly 
■with  them  in  the  charging  of  freight  rates — suits  that  are  still  pending.  Can 
you  tell  us  anything  with  reference  to  those  suits?  A.  I  do  know  that  sev- 
eral years  ago — I  do  not  recall  how  many — the  Interstate  Commerce  Com- 
mission decided  that  the  weight  of  the  barrel,  when  loaded  with  oil,  should 
be  carried  by  the  railroad  free.  In  other  words,  they  should  not  charge  for 
the  barrel,  when  it  contained  oil.  An  order  was  entered  to  that  effect, 
which  the  railroads  declined  to  obey.  The  Interstate  Commerce  Commis- 
sion have  since  that  time  gotten  some  evidence  from  the  plaintiffs  in  that 
case  as  to  the  volume  of  their  shipments  in  barrels  within  a  certain  period, 
and  fixed  the  amount  of  damages  which  they  claim  the  railroad  should  pay 
"back  to  those  shippers  of  oil  in  barrels.  The  railroads  also  declined  to  pay 
that,  and  that  case  is  now,  I  believe,  before  the  United  States  Court  in  Pitts- 
burg and  is  still  pending.  I  would  say  in  connection  with  it  that  at  the  time 
the  shipments  were  made  in,  barrels  by  these  plaintiffs,  and  the  rate  of 
freight  was  charged  on  the  weight  of  the  wood,  the  Standard  Oil  Company 
was  making  shipments  of  oil  in  barrels  and  paying  for  the  weight  of  the 
wood.  In  other  words,  there  was  no  difference  in  the  rule  or  the  rate  that 
was  applied  on  the  shipments  of  the  plaintiffs  and  on  the  shipments  of  the 
Standard  Oil  Company. 

Q.  Was  this  custom  of  the  roads  one  that  was  brought  about  in  any 
"way,  to  your  knowledge,  by  the  action  of  the  Standard  Oil  Company?    A.  No. 

Q.  What  was  it?  A.  In  the  first  decision  of  the  Interstate  Commerce 
Commission  in  regard  to  the  relative  rates  that  should  be  charged  on  oil  in 
barrels  and  on  oil  in  tank  cars,  the  commission  decided,  by  Judge  Cooley, 
that  the  rate  per  100  pounds  in  carloads,  on  oil  in  tank  cars  or  on  oil  barrels, 
including  the  weight  of  the  barrels,  should  be  alike.  The  railroads  adopted 
that  order.  Then,  on  the  second  case,  after  Judge  Cooley  had  left  the  bench, 
some  other  commissioner  decided  that  the  barrel  should  be  carried  free,  and 
that  the  railroads  declined  to  follow. 

Q.  The  commission  practically  reversed  its  own  decision?  A.  They 
tried  to  enforce  it  before  the  United  States  Circuit  Court  at  Pittsburg. 

Q.  I  say  practically  reversed  its  former  decision?     A.  Yes.  they  did. 

Q.  But  it  was  under  the  first  decision  that  the  charges  were  made?  A. 
Under  the  first  decision  that  the  charges  were  made. 

Q.  Do  you  recall  what  proportion  of  the  shipments  of  the  Standard  Oil 
Company  at  that  time,  before  the  second  decision  was  rendered,  was  in 
tank  cars  and  what  in  barrels?  A.  Your  question  involves  the  whole  coun- 
try, and  I  should  say  that  the  shipments  as  a  whole  of  the  Standard  Oil 
Company  in  barrels  exceed  the  shipments  of  the  Standard  Oil  Company  in 
bulk  in  tank  cars.  You  must  bear  in  mind  that  when  the  Standard  Oil 
Company  ships  its  oil  in  tank  cars  to  a  distributing  station,  it  is  barreled 
there  to  a  very  large  extent,  and  it  goes  out  in  barrels,  and  it  is  a  part  of 
the  barrel  sales  of  oil.  1  think  1  am  correct  in  that  statement,  and  it  is  the 
best  I  can  give;  that  is  all. 


492  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

Q.     That  is  so  at  the  present  time?    A.  It  is  true  still. 

Q.  (By  Mr.  CLARKE.)  Therefore  very  much  of  the  oil  which  is 
shipped,  is  shipped  part  way  in  tanks  and  the  rest  of  the  way  in  barrels? 
A.  It  is  when  it  comes  to  local  country  points  on  the  line  of  the  railroad. 
The  rule  that  the  commission  made  there,  if  applied  to  oil,  would  naturally 
apply  to  every  other  package  that  might  be  put  around  any  other  com- 
modity that  was  susceptible  of  any  other  mode  of  shipment. 

Q.  (By  Mr.  SMYTH.)  Lubricating  oil,  I  suppose,  is  shipped  in  barrels, 
is  it  not?    A.  It  is  shipped  in  tank  cars  to  some  extent — yes. 

Q.  (By  Vice-chairman  PHILLIPS.)  You  admit,  Mr.  Page,  that  the 
Standard  Oil  Company  did  receive  large  rebates  before  the  passage  of  the 
interstate  commerce  act?     A.  I  admit  that. 

Q.  (By  Vice-Chairman  PHILLIPS.)  From  you  knowledge  and  belief 
and  information?  A.  My  knowledge  and  belief  and  actual  experience,  Mr. 
Phillips,  was  that  prior  to  the  interstate  commerce  law  we  got  as  low  rates 
as  we  could. 

Q.  (By  Vice-Chairman  PHILLIPS.)  That  amounted  to  a  very  consider- 
able revenue  to  the  Standard  Oil  Company  during  that  period,  no  doubt? 
A.  It  meant  that  we  got  lower  than  tai-iff  rates,  the  same  as  all  other  ship- 
pers; not  only  shippers  of  oil,  but  all  other  people.  We  could  get  them  and 
did  get  them.  I  can  add  this,  that  as  far  as  my  own  experience  goes,  prior 
to  the  interstate  commerce  law,  when  we  secured  lower  than  tariff  rates,  it 
never  was  in  any  instance  a  part  of  the  agreement  what  the  railroads 
should  charge  *any  other  oil  shipper.  Any  other  cil  shipper  could  get  as 
low  a  rate  as  v,-e  could,  or  lower,  if  the  railroad  saw  fit  to  give  it.  We 
attended  simply  to  our  own  business. 

Q.  (By  Mr.  A.  L.  HARRIS.)  That  was  the  universal  rule  of  the  Stand- 
ard Oil  Company?     A.  Which? 

Q.  Not  to  interfere  with  the  rates  of  anyone  else?  A.  I  can  only  speak 
in  that  regard  so  far  as  my  own  knowledge  goes;  and  so  far  as  my  own 
knowled2;e  goes,  it  is  true. 

Q.  You  do  not  know  anything  about  the  rule  which  seemed  to  have  pre- 
vailed in  what  is  known  as  the  Marietta  &  Cleveland  Railroad,  do  you?  A. 
I  have  no  knowledge  of  that  rule.  I  believe  that  case  has  been  fully 
explained,  and  prior  to  the  interstate  commerce  law  my  residence  and 
knowledge  was  confined  to  the  business  of  the  Standard  Oil  Company  in 
Louisville — in  Kentucky. 

Q.  The  only  reason  that  I  asked  the  question  was  that  you  made  your 
answer  broad.     A.  I  answered  from  my  own  knowledge. 

Q.  (By  Mr.  SMYTH.)  Do  you  know  of  any  other  oil  company  besides 
the  Standard  Oil  Company  that  received  rebates  prior  to  the  interstate 
commerce  law?     A.  I  do,  sir. 

Q.  You  think,  then,  that  it  was  the  general  custom  prior  to  the  passage 
of  the  interstate  commerce  law?  A.  I  know  it,  and  I  know  in  some  cases 
we  found  where  they  had  a  lower  rate  than  we  did. 

Q.  You  believe,  then,  that  it  was  the  general  custom  prior  to  the  pass- 
age of  the  interstate  commerce  law?  A.  That  every  shipper  got  the  lowest 
rates  he  could  from  the  railroads. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Can  you  name  any  of  those  com- 
panies who  received  it?  I  am  not  doubting  the  truth  of  your  statement, 
*but  can  you  name  any  companies  that  received  rebates  outside  of  the 
Standard  Oil  Company?  A.  I  know  it  was  shown  that  in  some  other  cases 
that  Schofiekl,  Shurmer  &  Teagle,  of  Cleveland,  had  some  lower  rates  than 
the  tariff.  It  has  been  10  years,  Mr.  Phillips,  and  I  do  not  know  that  I  can 
recall  the  names,  but  I  recall  very  distinctly  that  in  one  instance  it  was 
shown  that  some  large  shippers  of  oil  from  Memphis  to  Nashville,  out  on 
the  roads  leading  from  there,  had  special  rates  as  against — had  lower  rates 
than  we  were  paying  from  the  same  points  to  the  same  points.  We  found  it 
out  because  people  were  selling  oil  cheaper  than  we  were  at  the  same 
points. 


♦Bl.Tck   faced   typo  indicates   matter  omitted.  In  the  course  of  editing,  from  the 
cfRcial   report. 


HOWARD   PAGE.  493 

Q.  (By  Vice-Chairnian  PHILLIPS.)  Do  you  know  of  any  instance 
where  there  was  a  higher  rate  charged  to  the  independent  refiners  than 
to  the  Standard,  and  that  was  divided  between  the  Standard  and  the  rail- 
roadri?  Is  there  any  such  testimony?  A.  I  do  not  know  of  any  instance. 
I  will  say  no;  I  do  not  know  of  any  case.  In  fact,  I  do  not  believe  there 
ever  was  a  case  where  the  Standard  Oil  Company  received  from  the  rail- 
road a  share  of  the  rate  that  was  paid  by  independent  shippers.  I  know 
it  was  not  so  in  the  territory  which  I  had  anything  to  do  with,  and  it  has 
never  been  so  since  I  have  been  in  New  York. 

Q.  (By  Vice-Chairman  PHILLIPS.)  You  are  connected  with  the  trans- 
portation and  know  something  about  the  pipe  line  business,  I  presume  also, 
of  the  Standard  Oil  Company?  A.  No,  sir;  I  know  very  little  about  pipe 
line  matters. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Do  you  know  whether  the  Standard 
Oil  Company  ever  placed  a  premium  on  oil  in  special  fields  where  there 
were  independent  pipe  lines,  and  by  this  means  caused  them  to  suspend 
business,  or  bought  them  out?  A.  I  know  nothing  whatever  as  to  any  prices 
paid  for  crude  oil. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Or  about  the  pipe  line  business  in 
that  regard?    A.  No,  sir;   I  do  not. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Do  you,  or  do  you  not.  know 
whether  the  Standard  Oil  Company  opposed,  after  having  their  pipe  line 
to  the  seaboard,  the  passage  of  the  free  pipe  line  law  in  the  State  of  Penn- 
sylvania or  in  New  Jersey?     A.  I  know  nothing  whatever  about  it.  sir. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Do  you  know  whether  the  Stand- 
ard Oil  Company  opposed,  directly  or  indirectly,  the  United  States  Pipe 
Line  in  securing  the  right  of  way  through  the  State  of  New  Jersey?  A.  I 
know  nothing  whatever  about  it. 

Q.  (By  Vice-chairman  PHILLIPS.)  You  do  not  know  about  that?  A. 
No,  sir.  I  am  not  connected  with  the  pipe  line  department  in  any  way,  Mr. 
Phillips. 

Q.  (By  Vice-Chairman  PHILLIPS.)  *l  was  not  certain  whether  you 
looked  after  that  end  of  the  transportation  or  not.  I  know  they  had  others 
more  directly  interestea  in  that.  This,  of  course,  is  not  to  be  noted.  Well, 
when  independent  companies  shipped  abroad,  did  the  Standard  Oil  Com- 
pany ever  obstruct  ocean  transportation  in  any  way,  or  obstruct  them  in 
securing  ocean  and  steamship  service?  A.  Not  to  my  knowledge  in  any 
way. 

Q.  (By  Vice-Chairman  PHILLIPS.)  *Well,  being  connected  with  the 
transportation  department  of  the  Standard  Oil  Company,  have  you  knowl- 
edge or  infoi'mation  as  to  the  installation  plants  or  receiving  tanks  in  Ger- 
many or  other  countries?    A.  I  have  not,  sir. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Have  you  any  information  in  re- 
gard to  the  agents  who  transferred  and  sold  the  Standard  oil  in  foreign  coun- 
tries— Standard  agencies  abroad?  A.  I  know  there  are  some  Standard 
agencies  abroad,  yes. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Well,  have  you  any  information 
in  regard  to  this,  in  regard  to  a  man  in  Germany,  or  who  was  in  Germany, 
recently  deceased,  by  the  name  of  Poth,  who  handled  oil  of  the  independent 
companies  in  Germany?     A.  Never  heard  the  name  before,  sir. 

*Q.  (By  Vice-Chairman  PHILLIPS.)  You  do  not  know,  then,  that  he 
ceased  to  do  business,  of  course  for  the  independent  companies?  A.  Never 
having  heard  of  his  name,  I   do  not  know  that  he  ever  existed.       (Laughter.) 

Q.  (By  Vice-Chairman  PHILLIPS.)  Well,  you  have  no  knowledge  then, 
of  their  purchasing  all  these  installation  plants  abroad,  almost  wholly  in  Ger- 
many?    A.  I  have  no  knowledge. 

*Vice-Chairman  PHILLIPS.  Now,  of  course,  I  had  a  number  of  ques- 
tions along  this  line  that  I  wished  to  ask.  I  supposed  your  information  was 
more  wide  than   it  is  in   regard  to  the   handling  of  the  oil   abroad,  and  I    had 


*Black   faced   type  indicates  matter  omitted,  In  the  course  of  editing,  from  the 
official  report. 


494  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

*a  number  of  questions  in  regard  to  that  and   in   regard  to  tine  independents 
handling  their  oil  abroad,  which,  of  course,  I  will  not  ask  at  present. 

Q.  (By  Mr.  KENNEDY.)  As  long  as  you  are  at  that  point  and  have 
brought  up  that  subject,  may  I  ask  a  question  pertinent  right  there? 

Iv'ir.   FARQUHAR.      I   should   like  to   ask  two  or  three,    I    think. 

Q.  (By  Mr.  KENNEDY.)  Have  you  knowledge  of  the  relative  value  and 
prices  of  oil  exported?  A.  I  only  know  in  a  general  way  that  the  exports  of 
petroleum  products  produced  by  the  Standard  Oil  Company  are  in  excess  of 
their  sales  within  the  United  States.  In  other  words,  a  large  share  of  the 
Standard  Oil  Company's  business  is  outside  of  the  United  States. 

In  regard  to  the  relative  prices,  I  would  say  that  the  consumer  of  oil  in 
the  United  States  gets  his  oil  for  very  much  less  than  the  consumer  of 
that  same  oil  abroad,  and  that  is  due  principally  to  the  fact  that  we  have 
facilities  within  the  United  States  for  cheaply  distributing  the  oil  to  the 
consumer,  that  the  company  has  not  got  on  the  other  side.  Mr.  Rice  refers 
to  the  price  of  oil  at  New  York  for  export  as  compared  with  the  price  of  oil 
in  Montana  and  Idaho,  and  tries  to  convey  the  idea  that  we  sell  our  oil 
abroad  for  less  money  than  we  sell  it  to  the  consumer  within  the  United 
States.  I  submit  that  the  price  of  export  oil  at  New  York  is  the  price  for 
cargoes  at  the  mouth  of  the  refinery,  whereas  the  price  of  oil  in  Montana 
and  Idaho  must  necessarily  have  added  to  it  the  cost  from  Chicago,  for  in- 
stance, to  those  western  States,  and  he  compares  in  one  case,  the  price  to 
the  consumer  of  a  barrel  of  oil  out  in  the  mountain  districts  of  Idaho  and 
Montana,  with  the  cargo  price  of  export  oil  at  New  York,  which  is  manifestly 
unfair. 

Q.  Have  you  any  knowledge  of  the  Standard  Oil  Company  selling  oil 
in  the  German  market  below  the  point  of  profit  for  the  purpose  of  driving 
other  dealers  of  oil  out  of  that  market,  and  of  their  being  curbed  in  that 
practice  by  the  German  government?  A.  I  have  no  such  knowledge,  sir. 
I  have  heard,  and  I  believe,  that  the  German  government  issued  an  order 
within  the  last  year  or  so  requiring  the  railroads  of  Germany,  which  are 
under  governmental  control,  to  burn  exclusively  Russian  oil,  and  not  Ameri- 
can. 

Q.  (By  Mr.  SMYTH.)  Is  it  not  a  fact  that  the  great  competition  you 
have  in  England  and  on  the  continent  is  with  the  Russian  oil,  which  is 
backed  by  the  Rothschilds?  A,  The  Russian  field  is  a  great  competitor  of 
the  American  petroleum  field.  The  production  of  oil  in  Russia  to-day  is,  I 
believe,  equal  to  that  of  the  United  States  and  at  times  has  been  in  excess 
of  it.  In  fact,  I  have  known  of  reports  of  one  well  in  Russia  that  produced  a& 
much  as  100,000  barrels  per  day,  which  is  as  much  as  the  entire  Pennsyl- 
vania oil  field  in  certain  sections,  and  the  price,  I  do  know,  of  Russian 
crude  oil,  is  very  much  lower  than  the  price  of  American  crude  oil. 

Q.  (By  Mr.  A.  L.  HARRIS.)  What  about  its  quality?  A.  Its  quality  is 
not  so  good  as  the  Pennsylvania  oil.     It  is  more  like  the  Ohio  crude. 

Q.  (By  Vice-chairman  PHILLIPS.)  Do  you  know  whether  the  Russian 
oil  is  extensively  sold  now  in  Germany?  A.  It  is  sold  in  Germany,  it  is 
sold  in  Italy,  and  it  is  sold  in  England. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Is  it  sold  to  any  great  extent  in 
Germany?     A.  To  as  great  an  extent  as  they  can  sell  it,  sir. 

Q.  (By  Mr.  FARQUHAR.)  I  would  like  to  ask  a  question  there.  Does 
the  Standard  Oil  Company  own  their  own  ocean  lines  for  transportation  of 
oil  to  Europe?  A.  I  am  not  very  familiar  with  that  part  of  it.  Mr.  Farquhar, 
but  I  know  in  a  general  way  that  they  do  own,  or  have  interest  in,  certain 
bulk  tank  ships  and  also  some  schooners.  The  tank  ships  are  used  for  the 
transportation  of  the  bulk  oil  from  the  United  States  to  certain  points  in 
Europe,  where  there  are  tank  facilities  for  receiving  it,  and  the  ships  are 
used  for  the  shipment  of  case  oil  to  the  far  East. 

Q.  Can  you  tell  the  commission  how  many  countries  in  the  world  the 
Standard  Oil  Company  sells  its  oil  to?  A.  I  think  it  would  be  easier  to 
name  those  that  we  do  not,  or  that  we  do  not  try  to.  I  think  we  sell,  sir,  all 
over  the  world,  as  far  as  we  can. 


*Black   faced   type  indicates  matter  omitted,  in  the  course  of  editing,  from  the 
official  report. 


HOWARD   PAGE.  495 

Q.  Will  you  kindly  state  the  means  of  transportation  for  the  Asiatic 
trade?  Is  that  by  steamer  or  sail?  A.  By  sail  usually,  and  against  very 
severe  competition  of  the  Russians.  They  have  tank  steamers  by  which 
they  transport  tank  oil  from  Batoum  to  India  and  even  to  China  and  Japan. 

Q.  The  statement  has  been  made  that  the  Standard  has  sold  oil  in  for- 
eign markets,  not  in  Europe,  but  Asiatic  markets,  where  they  have  had  a 
return  of  only  one-third  of  the  price  of  the  oil  in  the  market  itself?  Do  you 
know  anything  about  that?  A.  I  do  not  know  as  to  that,  sir. 

Q.  You  know  nothing  about  the  price  of  oil,  and  competition  of  other  oils 
used  in  Asiatic  countries?  A.  I  only  know  we  ship  oil  there,  and  sell  it 
as  against  Russian  competition.  As  to  what  the  prices  are  there,  I  do  not 
know,  but  I  do  know  from  information  and  belief,  as  I  have  before  stated, 
that  the  consum,er  of  oil  abroad  pays  very  much  more  for  his  oil  than  the 
consumer  within  the   United    States. 

Q.  (By  Mr.  SMYTH.)  Testimony  has  been  given  here  that  the  Stand- 
ard Oil  Company  has  over  360  agencies  throughout  the  world,  every  one  of 
which  is  in  charge  of  an  American  citizen.  Do  you  think  that  is  correct? 
A.  I  do  not  know.  I  do  know  that  we  have  many  agencies,  but  how  many 
I  do  not  know.  I  do  know  in  a  general  way  that  we  send  Americans  to  take 
charge  of  those  departments,  but  how  many  there  are  I  cannot  say. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Do  they  exert  a  very  considerable 
influence  in  appointing  consuls  abroad?*     A.  I  have  no  knowledge  of  it,  sir. 

Q.  (By  Vice-Chairman  PHILLIPS.)  You  spoke  some  time  ago  in  regard 
to  the  advantage  the  Standard  Oil  Company  has  over  others  by  having  re- 
fineries at  many  different  points  in  the  United  States,  in  lessening  of  freights, 
etc.  There  are  quite  a  number  of  the  independents  that  have  such  ad- 
vantage, too,  in  localities;  that  have  advantages,  perhaps,  over  the  Standard 
Oil  Company  in  certain  localities.  Is  it,  or  is  it  not,  has  it,  or  has  it  not, 
been  the  practice  of  the  Standard  Oil  Company,  where  independent  oil  was 
being  distributed,  to  ship  their  oil  in  and  sell  it  lower  than  the  usual  price 
or  make  it  unprofitable  for  others?  Do  you  know  of  any  such  instance  as 
that?  A.  I  can  only  say  in  a  general  way,  Mr.  Phillips,  that  we  doubtless 
ship  the  oil  from  the  nearest  point  and  try  to  sell  it. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Do  you  know,  or  do  you  not  know, 
that  when  the  independent  refiners  recently  began  to  distribute  oil  in  New 
York  that  the  Standard  Oil  Company  dropped  prices  very  greatly  so  as  to 
make  it  unprofitable?     A.  I  do  not  know  that,  sir. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Or  in  Philadelphia  the  same?  A.  I 
do  not  know  it. 

Q.    (By   Professor   JENKS.)      You   said   a   moment  ago   that   it   was   the 

practice A.   (Interrupting)      It  goes  without  saying  that  we  are  in  the 

business  and  we  try  to  keep  our  trade,  and  we  make  prices  that  will  also 
keep  it. 

Q.  So.  speaking  generally,  you  would  presume  it  was  true  that  at  com- 
petitive points  your  rates  are  lower  than  where  you  have  no  competition? 
A.  To  a  reasonable  degree,  yes;  but  I  will  say  that  the  object  and  the  success 
of  the  Standard  Oil  Company  has  been  due  to  the  fact  that  their  effort  is 
being  aimed  to  continually  reduce  the  cost  of  manufacturing  and  distributing 
oil,  and  we  sell  it  as  cheaply  as  we  can,  based  on  that  cost  to  the  consumer, 
and  thereby  increase  the  volume  of  our  business  by  cheapening  the  cost  to 
the  consumer. 

Q.  (By  Vice-Chairman  PHILLIPS.)  I  am  informed  that  the  independent 
companies  have  recently  made  a  statement  of  their  business  affairs  to  this 
commission  through  Professor  Jenks.f  Would  you  be  willing  to  advise  the 
Standard  Oil  Company  to  make  such  a  statement  of  their  business?  A.  I  do 
not  know  what  kind  of  a  statement  the  independent  people  have  made,  and 
I  would  not  take  it  upon  myself  to  do  so.  I  think  it  would  be  rather  im- 
pertinent for  me,  as  a  subordinate,  to  advise  the  oflicials  in  charge  of  the 
Standard  Oil  Company  business  what  kind  of  a  report  they  should  make. 


*In  the  oflRcial  report  of  the  commip.sinn  this  question  is  reported  as  follows: 
"Do   they   exert   a   very   considerable   influence  on  our  consuls  abroad"" 

tThis  statement,  according  to  a  footnote  in  the  official  report,  was  filed  with 
the  commission,   but  it  was  not  published  in   its  report. 


496  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

*Vice-Chairman  PHILLIPS.  Such  a  report  has  been  made  by  the  direc- 
tors and  stockholders  of  these  companies,  full,  clear  and  complete. 

Ivir.  FARQUHAR.  I  submit  that  instead  of  making  this  part  of  the  testi- 
mony mat  we  should  inquire  from  Professor  Jenks  how  he  got  the  informa- 
tion from  the  independent  companies,  and  as  Professor  Jenks  is  the  agent  of 
this  cciTimission  probably  he  could  make  it  from  the  stand,  instead  of  this 
gentleman,  who  is  a  witness  and  has  nothing  to  do  with  it.  I  merely  suggest 
that  the  questions  put  to  him  are  totally  irrelevant. 

Vice-chairman  PHILLIPS.  I  do  not  think  it  is  unfair  to  ask  a  gentle- 
man connected  with  the  Standard  Oil  Company,  after  the  independent  com- 
panies were  charged  with  doing  certain  sundry  and  divers  things,  to  make  a 
full  and  complete  statement.  I  do  not  think  it  would  be  unfair  to  ask  the 
gentleman  whether,  in  his  opinion,  it  is  a  proper  and  rightful  thing  to  do  it, 
but  he  has  already  answered. 

IVir.  FARQUHAR.  The  gentleman  is  not  expected  to  answer  these  ques- 
tions. 

Mr.  SiVIYTH.     Perhaps  Professor  Jenks  has  the  statement. 
Vice-Chairman    PHILLIPS.      I    am   informed   that   there    is   such    a   state- 
ment. 

Mr.  SMYTH.  Perhaps  he  has  that  in  reference  to  the  Standard  Oil  Com- 
pany;   I   don't  know  whether  he  has  or  not. 

Mr.  FARQUHAR.  We  don't  know  whether  he  has  or  not;  it  has  not 
been  submitted  to  this  commission  and  it  is  time  enough  when  we  see  it. 

Professor  JENKS.  Perhaps  I  might  say,  Mr.  Chairman,  that  one  of  the 
witnesses  of  the  independents  suggested  that  they  were  willing  to  make 
such  statements,  and  the  statements  were  afterwards  filed  with  the  com- 
mission in  accordance  with  the  statement  the  witness  made  on  the  stand. 
Mr.  KENNEDY.  Mr.  Chairman,  I  suggest  further  that  Professor  Jenks 
has  not  reported  to  the  commission  as  to  any  of  the  testimony  he  has  taken, 
and  if  he  reported  to  one  member  of  the  commission  the  other  members  have 
not  the  benefit  of  it,  and  such  questions  ought  not  to  be  taken  advantage  of 
by  us  in  the  commission.  We  do  not  know  anything  about  what  Professor 
Jenks  has. 

Representative  OTJEN.  It  seems  to  me  when  we  are  looking  for  in- 
formation we  get  it  from  whatever  source  we  can,  and  if  Mr.  Phillips  has 
information  along  certain  lines,  it  is  perfectly  proper  for  him  to  inquire 
about  it. 

Mr.  FARQUHAR.  I  want  to  say  we  do  not  take  our  information  from  the 
back  door.  We  are  going  to  have  front  door  information  in  this  commission. 
Vice-Chairman  PHILLIPS.  I  had  a  number  of  questions  I  desired  to 
ask,  supposing,  as  I  remarked  before,  that  Mr.  Page  had  quite  a  knowledge 
of  the  general  business,  and  therefore,  I  am  through,  as  far  as  I  am  con- 
cerned, asking  questions  of  Mr.  Page. 

The  WITNESS.  My  knowledge,  Mr.  Phillips,  in  regard  to  the  transpor- 
tation of  the  company   refers  only  to  the   United   States. 

Q.  (By  Vice-chairman  PHILLIPS.)  But  you  did  state,  did  you  not,  that 
they  had  much  better  facilities  for  selling  oil  abroad  than  others?  A.  No, 
sir.  I  said  we  had  much  better  facilities  for  selling  oils  within  the  United 
States  than  we  had  abroad. 

Vice-Chairman  PHILLIPS.  I  understood  the  other  way;  I  misunder- 
stood  you. 

The  WITNESS.  And  it  was  for  that  reason  that  we  were  able  to  sell  oil 
cheaper  to  the  consumer. 

Representative  LORIMER.  Before  closing  this  matter,  Mr.  Chairman, 
I  should  like  to  ask  Mr.  Phillips  to  read  over  the  first  three  questions  in  his 
paper,   as   1   would   like  to  ask   him  a   question   covering  those  questions. 

Vice-Chairman   PHILLIPS.     I  am  not  on  the  witness  stand,  Mr.  Lorimer. 
Representative  LORIMER.     Just  for  information. 

Vice-Chairman  PHILLIPS.  This  is  just  for  the  information  of  the  com- 
mission and  not  to  be  taken  note  of,  understand.  This  is  information  for  the 
commission   and   not  to  be  taken   by  the   reporters. 

*Hlack  faced  type  indicates  matter  or.iittiil,  in  the  eour^-e  of  editing,  from  tlie 
mittcd,  in  tiie  course  of  editing,  from  tlie 


HOWARD   PAGE.  497 

*Mr.  A.   L.   HARRIS.     This  don't. go  down. 

Vice-Chairman  PHILLIPS.  My  first  question  was,  whetiier  the  Standard 
received  large  rebates  from  railroads  during  its  early  history?  The  second 
question  was:  Did  it,  or  did  it  not  receive  rebates  from  independent  refiners 
through  the  railroads  (that  is,  that  the  independent  refiners  were  taxed  by 
the  railroads,  for  instance,  from  50  to  75  cents  to  $1  a  barrel  more  for  ship- 
ping oil  from  Pennsylvania  than  the  Standard  Oil  Company  was  taxed). 

Mr.  SMYTH.     This  was  all   previous  to  the  interstate  commerce  act? 

Vice-Chairman  PHILLIPS.  Yes,  but  it  was  a  tax  through  the  railroads 
on  the  independent  refiners,  and  it  has  been  stated  that  was  divided  with  the 
Standard  Oil  Company.  Ther^  the  next  question  was  whether  it  (the  Stand- 
ard) has  caused  many  independent  pipe  lines  to  sell  or  suspend  business  by 
placing  premiums  on  oils  in  the  district  where  those  lines  were  doing  busi- 
ness. Then  the  next:  Did  the  Standard  oppose  the  passage  of  the  free  pipe 
line  law  or  the  legislation  in  Pennsylvania  or  New  Jersey  after  it  had 
secured  pipe  line  privileges  to  the  seaboard.  Next:  Did  the  Standard  Oil 
Company  oppose,  directly  or  indirectly,  the  United  States  Pipe  Line  in  secur- 
ing a   right-of-way  through  the  State  of   New  Jersey. 

Representative  LORIMER.  These  are  the  questions  I  wanted  to  talk 
with  you  about. 

The  WITNESS.  I  would  like  to  be  excused,  Mr.  Chairman,  because  this 
is  informal.     I   don't  know. 

Mr.  CLARKE.  Are  there  any  further  questions  to  be  propounded  to  this 
witness? 

Q.  (By  Mr.  KJilNNEDY.)  I  want  to  ask  one  question.  Mr.  Page,  I 
should  like  to  ask  you  something  about  the  new  Texas  oil  field.  I  suppose 
you  have  information  in  regard  to  it.  Does  the  Standard  Oil  Company  own 
that  field?  Where  is  the  product  refined  and  to  wliat  part  of  the  country 
is  it  shipped?  A.  I  do  not  know  that  the  Standard  Oil  Company  owns  that 
field.     I  know  there  is  a  refinery  at  Corsicana,  Texas. 

Q.  The  Standard  refinery?  A.  It  is  not  known  in  any  way  as  the  Stand- 
ard Oil  Company,  and  I  do  not  know  that  it  is. 

*Representative  LORIMER.  This  is  not  to  go  in  the  record.  I  just  want 
to  ask  Mr.  Phillips  a  question  and  that  will  determine  whether  1  want  to  ask 
Mr.  Page  a  question  or  not.     This  is  not  to  go  down;   it  is  just  for  information. 

Mr.  FARQUHAR.  I  would  indicate  to  Mr.  Lorimer  that  there  are  short- 
hand men  here  taking  every  line  spoken  at  this  table;  they  are  not  in  the 
employ   of  the  commission. 

Representative  LORIMER.  (Speaking  to  Mr.  Phillips.)  Those  queries 
would  indicate  that  the  Standard  Oil  Company  probably  has  taken  a  hand 
in  preventing  legislation.  As  a  matter  of  fact,  do  you  know  whether  they 
have  or  not? 

Vice-Chairman  PHILLIPS.  I  have  been  so  informed,  very  credibly  in- 
formed, sir,  and  for  a  series  of  years  by  a  person  who  spent  a  great  deal  of 
time  in  urging  the  passage  of  the  free  pipe  line  law  of  New  Jersey  and  Penn- 
sylvania. 

Representative  LORIMER.     I   have  no  question  to  ask. 

Q.  (By  Mr.  A.  L.  HARRIS.)  I  understood  the  witness  to  say  that  he 
knew  of  no  instance  in  which  the  Standard  Oil  Company  had  interfered  in 
any  way  or  concerned  themselves  in  any  way  with  what  other  companies 
might  get  in  the  way  of  rebates,  etc.  Is  that  true?  A.  I  said  that  no  ar- 
rangement prior  to  the  interstate  commerce  law,  through  which  we  got  lower 
than  tariff  rates,  was  predicated  in  any  way  upon  what  that  same  railroad 
should  give  in  the  way  of  rates  or  rebates  to  other  oil  shippers. 

Q.  Do  you  know  anything  about  the  case  of  Handy  and  others,  trustees, 
against  the  Cleveland  &  Marietta  Railroad  Company?     A.  I  do  not. 

Q.  Would  you  care  to  have  the  syllabus  of  that  case  read  so  as  to  get 
it  in  evidence?  A.  As  I  have  no  knowledge  of  it,  Mr.  Harris,  I  do  not  know 
what  my  testimony  would  be  worth  on  the  subject. 

Q.  It  would  be  merely  to  show  that  your  statement  in  regard  to  the 
action  of  the  Standard  Oil  Company  against  other  companies  was  probably 

*Black  faced  type  indicates  matter  omitted,  in  the  course  of  editing,  from  the 
official   report. 

32 


498  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

not  entirely  correct.  A.  I,  of  course,  can  speak,  and  only  can  speak  of  my 
own  knowledge,  and  my  knowledge  at  the  time  prior  to  the  passage  of  the 
interstate  commerce  law  was  confined  to  the  Louisville  business  and  ter- 
ritory south  of  that. 

Q.  You  desire  to  have  your  testimony  limited  then  to  your  own  knowl- 
edge?    A.  Yes,  sir. 

Q.  And  not  to  be  broader  than  your  own  knowledge?  A.  I  supposed  that 
went  without  saying. 

Q.  I  would  like  for  the  benefit  of  the  commission  to  read  the  syllabus. 

*Mr,  SMYTH.     We  had  that  with  George  Rice. 

Mr.  A.  L.  HARRIS.  *No.  This  syllabus  is  a  statement;  but  it  is  the  find- 
ing of  the  court,  and  it  is  only  two,  three  or  four  lines,  and  I  would  like  to 
read  it.  Case  of  Handy  and  others,  trustees,  vs.  Cleveland  &  Marietta  Rail- 
road Company  and  others.  Circuit  Court,  Southern  District  Ohio,  E.  D.  1887. 
(Reading.) 

"1.  Railroad    Companies — Receivers — Discrimination. 

"The  receiver  of  an  insolvent  railroad  company  cannot  unjustly  dis- 
criminate in  the  charges  imposed  upon  rival  shippers  over  his  road  in  order 
to  increase  his  revenues,  and,  if  guilty  of  discrimination,  may  be  removed 
by  the  court  therefor. 

"2.  Same — Removal. 

"The  Standard  Oil  Company  having  threatened  to  store  its  oil  until  it 
could  lay  a  line  of  pipes  to  Marietta  unless  the  receivers  of  a  railroad  com- 
pany should  give  it  a  special  rate,  the  receiver  agreed  to  carry  its  oil  at  10 
cents  per  barrel,  to  charge  rival  shippers  35  cents  per  barrel  and  to  pay  25 
cents  per  barrel  of  the  sum  collected  from  rival  shippers  to  the  Standard  Oil 
Company.  Held  to  be  such  gross  and  wanton  discrimination  on  the  part  of 
the  receiver  as  to  require  his  removal." 

Mr.  FARQUHAR.     What  is  the  date  of  that? 

Mr.  A.  L.  H.'VRRIS.  This  is  on  page  575  of  the  proceedings  in  relation 
to  trusts,  of  1888. 


CHAPTER  XXL 

TESTIMONY  OF  MR.  PATRICK  C  BOYLE,  STATISTICIAN 

OF  OIL  INDUSTRY  AND  EDITOR  AND  PROPRIETOR 

OF  THE  OIL  CITY  DERRICK,  OIL  CITY,  PENN^A. 

Mr.  Patrick  C.  Boyle,  editor  and  proprietor  of  the  Oil  City  Derrick, 
and  publisher  of  the  Derrick's  Handbook  of  Petroleum,  of  Oil  City,  Penn- 
sylvania, appeared  before  the  commission  on    September  6,   1899. 

The  tender  care  accorded  the  Pure  Oil  Trust  is  again  shown  in  the 
preparation  of  the  testimony  of  Mr.  Boyle  for  publication.  Professor  Jenks 
had  asked  the  witness  a  question  in  regard  to  companies  that  went  into  the 
Pure  Oil  Trust,  but  before  the  question  was  given  official  publication  it  was 
delicately  amended  by  the  insertion  of  a  phrase  stating  that  they  were  "com- 
pelled to"  go  into  a  trust.  The  testimony  of  the  Standard  Oil  Company  wit- 
nesses generally  was  to  the  effect  that  that  company  was  "compelled  to" 
seek  combination  because  of  the  necessities  of  the  business  and  of  trade, 
but  neither  Professor  Jenks  nor  any  commissioner  sought  to  eject  a  refer- 
ence to  any  such  necessity  in  their  questions.  Of  course  due  allowance 
should  be  made  because  of  the  possibility  that  this  change  in  Professor 
Jenks'  question  may  have  been  the  result  of  a  clerical  error.  At  the  same 
time  if  this  view  of  the  numerous  significant  discrepancies  between  the 
stenographic  and  official  reports  is  taken,  the  method  in  these  errors  be- 
comes highly  interesting. 


*Black   faced    typp  indic-atcs   matter   oinittod,   in  the  course  of  editing:,  from  the 
official   report. 


PATRICK   C.    BOYLE.  499 

Just  before  this  question  Mr.  Phillips  had  excused  the  methods  of  the 
Pure  Oil  Trust,  referring  especially  to  its  act  in  excluding  Colonel  Carter, 
by  stating  that  it  was  sometimes  necessary  "to  fight  the  devil  with  fire."  Of 
course  Mr.  Phillips'  argument,  together  with  other  arguments  that  might 
have  been  made  to  influence  the  opinion  of  members  of  the  commission,  was 
not  allowed  to  go  into  the  official  report  of  Mr.  Boyle's  testimony.  Sugges- 
tions that  had  been  made  on  previous  occasions  by  members  of  the  com- 
mission that  statements  of  witnesses  sljould  be  met  either  by  cross-examina- 
tion or  by  testimony  given  in  due  form,  appeared  to  have  no  influence  in 
preventing  Mr.  Phillips,  the  vice-chairman,  from  making  "points,"  as  he  pos- 
sibly considered  them,  whenever  he  had  an  opportunity. 

Such  discrepancies  and  incidents  are,  of  course,  of  no  consequence,  and 
they  are  only  referred  to  here  as  examples  of  the  great  consideration  that 
was  accorded  the  thriving  young  trust  in  which  the  vice-chairman  was  so 
deeply  interested. 

Whatever  degree  of  consideration  was  extended  to  some  witnesses  there 
was  apparently  very  little  effort  made  to  permit  Mr.  Boyle  to  correct  even 
some  of  the  palpable  mistakes  made  in  reporting  his  testimony.  During 
the  first  months  of  the  commission's  work  the  custom  prevailed  to  permit 
the  correction  of  testimony  by  witnesses  immediately  after  it  left  the  hands 
of  the  stenographers  and  before  it  had  been  sent  to  the  printers.  Mr.  Lee, 
the  president  of  the  Pure  Oil  Trust,  it  is  understood,  corrected  his  testimony 
before  it  was  printed,  and  it  was  in  his  hands  for  several  months.  Later 
a  new  rule  was  adopted,  according  to  which  the  testimony  was  first  cor- 
"rected  by  the  commission's  editor,  was  then  printed  and  proof  sheets  of  the 
same  were  sent  to  witnesses.  Mr.  Boyle  received  the  proof  of  his  testimony 
and  found  it  to  contain  numerous  palpable  errors.  He  corrected  these  errors, 
but  was  never  furnished  a  revised  proof  in  order  that  he  might  see  whether 
the  corrections  he  had  indicated  were  actually  made  in  the  proof.  The  first 
he  saw  of  his  testimony  after  he  had  corrected  it  was  when  it  was  published 
officially  by  the  commission,  and  he  then  discovered  that  only  about  one-half 
of  the  corrections  of  palpable  errors  had  been  made.  Whether  or  not  this 
method  of  handling  Mr.  Boyle's  testimony  was  the  result  of  an  oversight 
can  only  be  surmised,  but  the  fact  concerning  it  is  interesting,  as  it  is  quite 
in  accord  with  many  of  the  practical  results  attending  the  handling  of  the 
testimony  generally.  It  is  understood  that  Mr.  Boyle  confined  his  corrections 
to  palpable  errors  made  in  the  report. 

The  testimony  which  is  shown  by  a  comparison  of  the  stenographic  and 
official  reports  to  have  been  changed  so  that  Professor  Jenks'  question  is 
made  to  state  that  the  companies  in  which  the  vice-chairman  was  interested 
were  "compelled  to"  go  into  a  trust,  and  that  contains  Mr.  Phillips'  argu- 
ment which  was  eliminated,  follows: 

STENOGRAPHIC  REPORT.  OFFICIAL  REPORT   (p.  444). 

Q.  (By  Vice-chairman  PHILLIPS.)  Q.  (By  Vice-Chairman  PHILLIPS.) 
Then  you  think  that  a  man  holding  Then  you  think  that  a  man  holding 
stock  in  a  company  has  no  right  to  stock  in  the  company  has  no  right  to 
know  anything  about  the  amount  know  anything  about  the  amount  be- 
that  company  earns,  or  whether  its  ing  earned  or  whether  or  not  its 
means  are  being  squandered  or  not?  means  are  being  squandered?  As  a 
It  is  not  the  rule  of  other  corpora-  rule,  do  other  corporations  exist 
tions  to  exist  without  making  state-  without  making  a  statement  to  their 
ments  to  their  stockholders,  is  it?  stockholders?  A.  If  the  act  of  the 
A.  If  the  chairman  can  justify  the  Pure  Oil  Company  in  excluding 
act  of  his  own  company  in  excluding  Colonel  Carter  is  justified,  I  do  not 
Colonel  Carter,  I  do  not  see  how  he  see  how  other  concerns  can  be  cen- 
can  censure  the  other  concern  for  sured  for  what  they  have  done, 
what  it  has  done.  Q.  (By  Professor' JENKS.)  What 
Mr.  FARQUHAR.  That  is  fair.  has  been  the  effect  of  the  independ- 
Q.  (By  Vice-Chairman  PHILLIPS.)  ent  oil  movement  upon  the  prices  of 
There  are  some  times  when  it  is  ab-  refined  petroleum  to  the  consumers? 
solutely  essential  to  defend  yourself,  You    state   that   these   various   inde- 


500  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

and  there  is  an  old  adage  that  the     pendent  organizations  that  were  corn- 
way  to  fight  the  devil  is  with  fire,      pelled   to   go   into   a  trust  made   no 
These   gentlemen    pursued   the  busi-      profits    and   declared    no    dividends, 
ness  themselves,  but  the  others  had     and  that  you  regard  the  investment 
better  weapons,  and  secured  better     of  that  money  as  a  practical  waste, 
means.     The  opposition  in  that  case     because  they  had  been  of  no  service 
is    very    liable    to    take    that    same      to  the  oil  producers?     A.  Yes. 
course  to  defend  themselves  and  are 
impelled  to  do  so,  or  they  would  be 
absorbed  as   one   company  was   and 
as  the   other   was   attempted   to  be. 
Q.   (By  Professor  JENKS.)    May  I 
ask  you  a  question  or  two  in  refer- 
ence   to    the    independent    oi]    move- 
ment?    What  has  been  the  effect  of 
this  independent  oil  movement  upon 
the  prices  of  refined  petroleum  to  the 
consumers?      You    said    that    these 
various     independent     organizations 
that  had  come  back  into  the  trust, 

as    you    call    it,    had    not    made   any  ' 

profits,  had  declared  no  dividends, 
and  that  you  considered  that  in  con- 
sequence the  investment  of  that 
money  was  a  practical  waste,  be- 
cause they  had  been  of  no  service  to 
the  oil  producers  in  the  region.  That 
is   what  I  understood?     A.  Yes,  sir. 

The  stenographic  report  shows  that  members  of  the  commission  re- 
minded Mr.  Phillips  that  his  questions  were  in  the  form  of  arguments,  and 
that  there  was  a  rule  of  the  commission  which  did  not  permit  the  asking 
of  leading  questions;  also  that  he  was  himself  giving  testimony  in  his  ques- 
tions, without  being  sworn.  This  controversy  among  members  of  the  com- 
mission will  be  read  with  interest,  especially  in  view  of  Mr.  Phillips'  re- 
markable question  which  had  preceded  and  caused  it.  Many  of  these  argu- 
ments of  the  vice-chairman,  who  was  supposed  to  be  questioning  the  wit- 
ness in  order  to  draw  information  from  him,  were  turned  into  questions  be- 
fore they  were  printed  in  the  official  report  of  the  commission.  Of  course, 
under  the  rules  of  the  commission,  the  protests  of  commissioners  against 
Mr.  Phillips'  manner  of  asking  questions  were  stricken  from  the  record,  but 
they  will  be  found  in  this  chapter. 

Mr.  Boyle's  thorough  acquaintance  with  the  oil  industry,  practically 
dating  from  its  inception  in  Pennsylvania,  especially  qualified  him  to  speak 
regarding  its  history.  His  review  of  this  industry  was  very  complete,  only 
a  summary  of  his  testimony  being  given  in  this  chapter. 

Mr.  Boyle,  in  reply  to  questions  by  Mr.  Phillips,  said  there  were  five 
stockholders  in  the  Oil  City  Derrick,  all  except  four  shares  of  the  stock  be- 
ing held  by  himself.  The  other  four  stockholders  each  owned  only  enough 
stock  to  qualify  them  as  directors.  He  said  that  no  one  of  the  Standard 
Oil  Company  was  interested  in  "The  Derrick,"  nor  had  they  been  since  he 
had  purchased  the  paper,  in  188.5.  He  knew  very  little  about  the  paper 
from  1879  to  1885,  which  was  before  he  purchased  it.  "The  Derrick"  was 
the  organ  of  the  oil  producers.  It  was  started  as  a  producers'  newspaper 
and  it  had  been  the  firm  and  steadfast  friend  of  the  producing  interests  ever 
since.  There  had  been  adverse  criticisms  in  "The  Derrick"  of  the  Standard 
Oil  Company,  but  within  the  last  10  years  there  had  been  no  occasion  for 
such  criticism,  although  there  would  have  been  criticism  had  there  been 
cause  for  it.  He  said  the  paper  was  friendly  to  the  entire  oil  trade,  and  as 
the  Standard  Oil  Company  was  a  part  or  a  division  of  that  trade  it  was 
also  friendly  to  that  interest.  "The  Derrick"  had  not  been  opposed  to  inde- 
pendent movements  in  the  oil  industry,  and  especially  not  to  independent 
pipe  lines,  except  in  the  case  of  projects  which  involved  unnecessary  outlay 


PATRICK   C.   BOYLE.  501 

of  money  and  tax  upon  the  producers.  He  did  not  think  it  was  desirable  to 
duplicate  pipe  lines  when  an  efficient  service  was  performed  at  the  same 
cost  of  a  proposed  new  service.  He  had  been  sustained  in  that  position  by 
the  fact  that  pipe  lines  erected  nearly  10  years  ago  had  never  paid  a  cent 
in  the  form  of  dividends. 

Questions  bringing  out  the  foregoing  information  were  asked  by  Mr. 
Phillips.  Mr.  Smyth  suggested  that  Mr.  Phillips  allow  the  witness  to  pro- 
ceed in  his  own  way  and  to  cross-examine  him  afterwards. 

*IVIr.  SMYTH.  I  submit,  Mr.  Chairman,  that  we  had  better  allow  the 
witness  to  go  on  with  his  statement  and  cross-examine  him  afterwards.  There 
has  been  no  statement  made  by  the  witness  up  to  this  time  and  we  are  at  a 
loss  to   understand   it. 

Vice-Chairman  PHILLIPS.  I  will  state  for  the  information  of  the  com- 
mission that  I  thought  possibly  before  Mr.  Boyle  proceeded  with  his  testi- 
mony you  might  want  to  know  something  about  his  status,  and  the  status  of 
his  paper,  and  his  criticisms,  and  I  thought  it  was  competent  to  ask  the 
questions  that  I  have  been  asking,  owing  to  the  history  of  the  Oil  City  Der- 
rick in  the  independent  movements,  as  I  knew  it,  and  I  thought  it  was  en- 
tirely competent. 

Mr.   KENNEDY.     Well,   let  that  come   in   his  cross-examination. 

Mr.  FARQUHAR.     Yes,  that  is  good  enough. 

Mr.  SMYTH.  Well,  that  is  the  point  I  make;  let  him  make  his  state- 
ments, and  then   ask  him   any  questions  you   desire. 

Mr.  BOYLE.      I  am  entirely  satisfied  with  this  course  of  procedure. 

Vice-Chairman  PHILLIPS.  All  right;  I  simply  wanted  to  get  Mr.  Boyle's 
status  before  the  commission  before  he  proceeded  with  his  testimony.  This 
is  not  for  the  reporters,  and  I  may  have  asked  questions  that  I  did  not  de- 
sign to  ask 

Mr.  FARQUHAR.  Well,  Mr.  Phillips,  the  newspapers  will  take  all  you 
say;   you  need  not  be  afraid  of  that. 

Vice-Chairman  PHILLIPS.  This  is  not  given  as  testimony.  I  simply 
wished  to  define  Mr.  Boyle's  status  before  the  commission  and  before  he 
proceeded  to  give  his  testimony,  so  that  the  members  of  the  commission 
would  know  who  Mr.  Boyle  is  and  what  his  status  is. 

Mr.  KENNEDY.  I  move  that  Mr.  Boyle  be  requested  to  go  on  with  his 
statement. 

Q.  (By  Vice-Chairman  PHILLIPS.)  *lt  is  not  necessary  for  a  motion. 
Now,  Mr.  Boyle,  you  can  just  proceed  in  your  own  way  and  state  to  the 
commission  the  facts.  But  there  is  one  other  question  that  I  will  take  the 
liberty  of  asking  before  Mr.  Boyle  proceeds  with  his  examination.  I  will 
ask  by  whose  solicitation  did  you  come  before  this  commission  to  give  testi- 
mony?    A.  My  own. 

Q.   (By  Vice-Chairman  PHILLIPS.)    Your  own  solicitation?    *A.  Yes,  sir. 

Q.  (By  Vice-Chairman  PHILLIPS.)  And  did  you  have  any  conversation 
with  the  members  of  the  Standard  Oil  Company  about  coming  before  this 
commission?  A.  None  whatever,  before  nor  since;  and  I  would  like  to 
state,  by  way  of  explanation,  that  it  was  the  outrageous  testimony  which  I 
had  heard  given  here  by  previous  witnesses  which  impelled  me  to  ask 
the  privilege  to  come  before  you  as  a  person  who  was  in  the  position  to 
know  the  facts,  and  to  make  some  statements  in  that  connection. 

Mr.  Boyle  proceeded  to  review  the  history  of  the  oil  industry  from  its 
beginning  in  France  by  the  manufacture  of  shale  oil  in  1840.  Ten  years 
later  it  extended  to  England  and  three  years  after  that  to  America.  With 
the  discovery  of  petroleum  by  Drake,  in  1859,  the  coal  oil  industry  of  this 
country  within  a  year  or  two  practically  ceased  to  exist,  and  plants  con- 
structed for  the  distillation  of  oil  from  shale  were  converted  into  refineries 
for  the  crude  petroleum.  By  this  means  the  I'efinin.g  industry  was  fully  es- 
tablished when  petroleum  appeared  to  claim  the  attention  of  commerce.  The 
crude  product  from  the  wells  found  a  ready  market  at  remunerative  prices. 
Petroleum  was  produced  from  gravel  beds,  salt  wells  and  oil  springs  long 
before  it  was  obtained  by  the  artesian  process,  and  a  considerable  commerce 


*Black   faced   type  indicates  matter  omitted,  in  the  course  of  editing,  from  the 
official  report 


502  REVIEW  OF  TH3TIM0NY— INDUSTRIAL   COMMISSION. 

was  established  by  Kier,  Badger,  Ferris,  Peterson,  Lockhart  and  others  when 
the  Drake  well  came  to  increase  the  production.  In  the  early  days  of  the 
industry  ihe  petioei.m  was  highly  valued  as  a  liniment,  although  it  was 
not  at  once  i;sed  ai  the  arts. 

The  WITNESS.  Prof.  S.  F.  Peckham  describes  at  some  length  in  the 
tenth  census  lepcns  the  process  employed  by  Colonel  Ruffner,  the  pioneer 
salt  well  driller,  in  1808.  Colonel  Ruffner  is  given  credit  by  this  writer  of 
having  devised  drilling  tools  not  differing  materially  in  form  from  those  now 
in  use.  The  jars,  an  essential  implement  in  the  oil  well  driller's  outfit,  are 
said  to  have  been  devised  and  first  used  by  Colonel  Ruffner,  and  every  salt 
well  borer  since  his  time  has  laid  claim  to  the  use  of  this  indispensable  im- 
plement. As  a  matter  of  fact,  drilling  tools  substantially  the  same  in  form 
were  employed  by  the  English  coal  hunters  a  hundred  years  before.  This, 
however,  does  not  detract  in  the  least  from  the  credit  due  to  Colonel  Ruffner, 
who  unquestionably  never  had  seen  or  even  heard  of  an  English  rock-boring 
outfit.  *His  success  demonstrates  rather,  the  truth  of  the  old  adage  that 
necessity  is  the  mother  of  invention.  Many  of  the  early  oil  wells  were 
drilled  after  the  manner  of  Ruffner,  and  those  who  succeeded  him,  with 
lights  tools,  depending  from  the  end  of  a  flexible  pole,  which  rose  and  fell  by 
hand  power.  Oil  often  in  very  considerable  quantity  was  noticed  in  salt 
wells,  in  some  of  which  the  flow  was  so  free  as  to  interfere  with  the  opera- 
tion for  brine.  The  demand  for  salt,  about  1810  to  1814,  along  the  entire 
western  slope  of  the  Alleghenies,  from  New  York  State  to  Alabama,  was 
so  great  as  to  excite  adventure  in  many  parts,  and  salt  wells  were  bored 
simultaneously  in  widely  separated  localities  on  the  Ohio,  Monongahela,  Alle- 
gheny and  Kanawha  rivers  and  their  tributaries,  in  large  numbers  and  with 
what  might  pass  for  spontaneous  effort.  Every  district  so  explored  has  its 
traditions  of  oil  discoveries,  and,  singular  to  say,  the  later  oil  develop- 
ments, in  almost  every  instance,  have  been  faithfully  outlined  by  the  salt" 
wells.  In  the  absence  of  surface  indications,  at  one  time  much  in  demand, 
all  the  earlier  oil  developments  were  conducted  in  the  vicinity  of  salt  dis- 
tricts, with  the  single  exception  of  Oil  creek,  and  here  it  was  found  exuding 
from  the  crevices  of  rock  or  from  gravel  bed  deposits.  Rev.  S.  J.  M.  Eaton, 
one  of  the  most  intelligent  observers  among  the  early  writers  of  oil  topics, 
reports  the  first  shipment  of  petroleum  from  the  region  of  Oil  creek  to  con- 
sist of  two  five-gallon  kegs,  conveyed  to  Pittsburg  on  horseback  by  a  Mr. 
Carey,  one  of  the  first  settlers  in  Venango  county.  General  Samuel  Hays, 
another  pioneer  settler  of  Venango  county,  at  a  later  period,  purchased  the 
oil  product  of  the  county.  16  barrels  in  all,  representing  a  year's  production, 
which  was  conveyed  to  Pittsburg  by  raft  and  sold  to  apothecaries  at  $1  a 
gallon.  Previous  to  1820  the  production  of  oil  from  salt  wells,  added  to  a 
somewhat  extensive  dipping  interest  in  various  parts  of  several  States,  had 
reached  to  very  considerable  proportions:  so  large  indeed  that  the  supply 
seemed  inexhaustible,  and  a  writer  in  the  Pittsburg  Gazette,  in  1828,  agitated 
the  use  of  petroleum  for  street  lighting  purposes.  His  observations  are 
worthy  of  note. 

*"l  see,"  he  wrote  to  the  editor,  "that  the  corporation  has  at  last  de- 
termined to  light  the  city.  It  is  a  very  sensible  determination,  for,  indeed, 
few  places  will  need  it  more.  I  fear  that  lighting  with  gas  will  be  found 
troublesome  and  expensive,  in  spite  of  the  vast  supply  and  cheapness  of  coal, 
but  I  will  tell  you  what  is  the  best,  cheapest  and  most  economical  light  you 
can  use.  It  is  called  West  Seneca  oil,  which  is  petroleum.  This  substance, 
were  there  a  ready  market  for  it,  might  be  supplied  at  your  very  doors  to 
an  almost  unlimited  extent.  At  present  it  is  almost  useless,  being  used  only 
as  an  ingredient  in  what  is  called  British  oil,  and  as  a  medicine  (in  which, 
by  the  way,  it  is  very  useful).  The  price  of  it  is  very  low  because  a  few 
barrels  glut  the  demands  of  the  apothecaries,  but  if  the  city  would  take  a 
large  quantity,  or  if  it  were  brought  into  use  otherwise,  I  think  it  could  be 
supplied  for  25  cents  per  gallon.  The  salt  wells  may  be  cleared  of  what 
floats  by  letting  a  blanket  down  every  quarter  of  an  hour,  and  this  will  also 
apply  to  the  springs  where  it  is  discovered.     Let  anyone  who  doubts  that  it 


*Rlack   faced    type   indicatrs   matter   omitted,   in  the  rniirpo  nf  editing,   fiom   tlie 
ofTicial   report. 


'•'      PATRICK   C.   BOYLE.  503 

*is  a  perfectly  good  oil  for  lamps,  send  to  the  apothecaries  for  half  a  pint 
and  burn  it  one  night  in  a  lamp  of  any  kind,  precisely  as  fish  or  spermacetti 
oils  are  burned,  observing  only  that,  to  avoid  smoke,  it  is  necessary  that  the 
length  of  the  wick  be  diminished.  I  have  tried  it  and  found  it  to  succeed 
perfectly.  There  is  no  reason  why  it  should  not  be  clarified  as  well  as  any 
other  oil  (and  it  will  then  burn  free  from  smoke)  by  filtering  or  precipitat- 
ing the  gross  particles  contained  in  what  is  now  brought  to  the   market." 

This  is  interesting  as  embodying  the  first  suggestion  of  producing  oil  by 
capillary  attraction.  Some  years  later  in  a  somewhat  different  form  this 
idea  was  proposed  to  be  applied  to  the  production  of  oil  from  oil  wells,  but 
because  of  the  great  depth  of  the  wells  no  experiment  was  carried  to  a  con- 
clusion. The  lime  may  come,  when  the  wells  decline  to  the  fraction  of  a 
barrel,  that  oil  may  be  less  expensively  produced  by  capillary  attraction  than 
the  method  now  in  use,  but  it  does  not  seem  to  be  near  at  hand  at  this 
writing.  The  first  flowing  oil  well  anywhere  was  the  famous  American  well 
near  Burkesville,  on  the  Cumberland  river,  in  Kentucky.  It  was  drilled  for 
brine  in  1829,  on  the  land  of  Mr.  Lemuel  Stockton,  who  passes  into  history 
as  the  first  of  his  race  to  literally  "set  the  river  on  fire."  Niles'  Register 
(1829)    says: 

"Some  months  since,  in  the  act  of  boring  for  salt  wells,  in  Cumberland 
county,  Kentucky,  a  veiA  of  pure  oil  was  struck  from  which  it  is  almost 
incredible,  the  quantity  of  the  substance  issued.  The  discharges  were  by 
floods  at  intervals  of  from  two  to  five  minutes  between  each  flow,  vomiting 
forth  many  barrels  of  pure  oil.  These  floods  continued  for  three  or  four 
weeks,  when  they  subsided  to  a  constant  stream,  affording  many  thousand 
gallons  per  day." 

Another  writer  says:  "The  oil  found  its  way  into  the  Cumberland  river, 
was  set  on  fire  and  is  said  to  have  burned  on  the  surface  for  a  distance  of 
40  miles  below." 

In  1833  Professor  Silliman  described  a  visit  to  the  oil  springs  near  Cuba, 
New  York,  and  the  manner  of  collecting  the  oil  from  the  surface  of  the 
water.  Charles  B.  Tergo,  in  his  Geography  of  Pennsylvania,  1843,  describes 
the  oil  springs  on  Oil  creek,  from  each  of  which  from  two  to  ten  barrels  of 
oil  were  collected  in  the  season  by  the  proprietors.  In  1845  petroleum  was 
obtained  from  Peterson's  salt  wells  at  Tarentum  and  was  experimentally  used 
as  a  lubricant  at  the  Hope  cotton  factory,  in  Allegheny.  Two  years  later 
Thomas  and  Samuel  M.  Kier  produced  oil  from  salt  wells  in  the  vicinity  of 
Peterson's  wells,  and  Samuel  Kier,  deeming  the  oil  more  important  than  salt, 
set  about  to  find  a  market  for  it.  A  description  of  his  efforts  in  this  direc- 
tion is  fully  set  forth  in  the  Derrick  Handbook,  pages  947-955,  No  one  who 
is  familiar  with  the  history  of  the  petroleum  industry  can  withhold  from 
Kier  the  credit  of  being  the  first  trader,  and  one  of  the  earliest  manu- 
facturers of  mineral  oil.  His  efforts  in  behalf  of  an  infant  industry  merits 
more  than  a  passing  notice,  and  his  contributions  to  it  should  be  perp,etuated 
in  permanent  form  by  a  grateful  people. 

The  first  organized  effort  to  produce  petroleum,  Mr.  Boyle  said,  appeared 
to  have  been  set  on  foot  in  1853  by  .Jacob  D.  Angler,  of  Titusville,  Pennsyl- 
vania. The  lease  under  which  Angier  operated  provided  that  he  should  re- 
pair and  keep  in  good  order  the  old  oil  spring  on  land  in  Cherrytree  town- 
ship, or  dig  and  make  springs,  the  expense  to  be  deducted  from  the  proceeds 
of  the  sales,  and  the  balance,  if  any,  to  be  equally  divided  between  J.  B.  An- 
gier and  Brewer,  Watson  &  Co.  for  a  term  of  five  years  if  profitable.  The 
royalty  or  rental  fixed  in  this  lease  served  as  a  model  for  oil  leases  later  on, 
and  the  terms  were  adopted  to  a  very  considerable  extent  during  the  earlier 
periods  of  the  oil  development.  Under  this  agreement  Angier  dug  ditches 
and  pits  and  frequently  struck  pockets  of  oil  in  the  gravel  a  few  feet  below 
the  surface.  When  the  ditches  were  first  opened  a  production  of  from 
four  to  six  gallons  a  day  was  collected  from  the  surface  of  the  water,  but 
the  labor  required  to  keep  the  oil  fiowing  consumed  the  entire  profit,  and 
after  a  few  months  the  experiment  was  abandoned.  Angier  appears  to  have 
been  imfortunate  only  in  his  location.     A  slight  change  of  a  very  few  rods 

*Black  faced  type  indicates  matter  omitted.  In  the  course  of  editing,  from  tlie 
official  report. 


504  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

north  and  westward  would  have  brought  him  to  the  vicinity  of  what  was 
subsequently  known  as  the  Bonanza  district,  where,  in  1877,  oil  springs 
were  developed  at  a  depth  of  15  feet  in  a  bed  of  gravel  confined  above  and 
below  by  a  casing  of  clay  impervious  to  water,  from  which,  in  the  course  of 
a  very  few  months  thousands  of  barrels  of  oil  were  obtained 

The  WITNESS.  The  next  organized  effort  to  obtain  oil  from  the  springs 
was  by  George  H.  Bissell  and  Jonathan  G.  Eveleth,  who  in  1854  purchased 
135  acres  in  Cherrytree  township,  Venango  county,  Pa.,  from  Brewer,  Wat- 
son &  Co.,  upon  which  the  subsequent  experiments  of  Drake  were  con- 
ducted. Preliminary  to  the  boring  of  the  Drake  well  a  lease  was  effected 
by  and  between  the  Pennsylvania  Rock  Oil  Company,  dated  December  30, 
1857,  and  B.  B.  Bowditch  and  E.  L.  Drake,  conveying  the  same  land  pur- 
chased by  Bissell  &  Eveleth  from  Brewer,  Watson  &  Co.  As  the  first  oil 
lease  under  which  operations  were  actually  conducted,  it  is  worthy  of  notice. 
The  lease,  in  substance,  makes  acknowledgment  of  the  payment  of  $1  in 
hand;  then  is  mentioned  the  demise  and  let  of  the  lands  "owned  or  held 
under  lease  by  the  said  company  in  the  County  of  Venango,  in  the  State  of 
Pennsylvania,  to  bore,  dig,  mine,  search  for,  obtain  oil,  salt,  coal  or  other 
minerals  existing  in  and  upon  said  land  and  to  take  and  remove  and  sell 
such  for  the  exclusive  use  and  benefit,  for  the  term  of  15  years,  with  the 
privilege  of  renewal  for  the  same  term.  Rental,  one-eighth  of  all  the  oil 
collected  from  the  springs  in  barrels,  furnished  or  paid  for  by  lessors.  The 
lessees  may  elect  to  purchase  the  said  one-eighth  royalty  at  45  cents  a 
gallon,  but  when  such  election  be  made  it  shall  remain.  On  all  other  min- 
erals, 10  per  cent,  of  the  net  profit.  Lessees  agree  to  prosecute  operations 
as  early  in  the  spring  of  1858  as  the  season  will  permit,  and  the  failure  to 
work  the  property  for  an  unreasonable  length  of  time,  or  failure  to  pay  rent 
for  more  than  60  days,  the  lease  to  be  null  and  void." 

By  agreement  February  12,  1858,  the  lease  was  amended  so  that  12 
cents  for  every  gallon  of  oil  should  be  payment  in  full  for  all  rental;  the 
amendment  also  gave  the  lessees  the  privilege  of  renewal  for  25  years. 

The  experimental  boring,  the  witness  said,  was  begun  in  1858  and  was 
not  carried  to  a  successful  conclusion  until  the  latter  part  of  August,  1859. 
The  excitement  attending  the  success  of  Drake's  experiment  found  a  paral- 
lel in  the  gold  discoveries  in  California,  to  which  it  was  second  only  in 
degree,  and  not  importance.  Oil  creek  being  the  more  accessible,  the  region 
filled  rapidly  with  speculators  and  prospectors.  Other  wells  were  begun 
within  a  few  days  and  one  or  more  completed  during  the  same  year.  The 
initial  production  of  the  Drake  well  is  variously  stated  to  be  12  and  20  bar- 
rels. It  probably  commenced  with  the  smaller  yield,  and  increased  to  the 
latter.  The  fact  that  the  oil  could  be  obtained  by  artesian  boring,  with  so 
little  labor  and  expense,  was  sufficient  to  create  a  demand  for  territory  in 
that  vicinty  and  to  inspire  others  to  follow  Drake's  example.  During  this 
and  the  year  following,  wells  were  completed  along  the  entire  length  of  Oil 
creek  south  of  Titusville  and  extending  to  Franklin,  below  its  mouth  and  to 
Tldioute  above.  The  oil  produced  did  not  go  begging  for  a  market;  buyers 
came  begging  for  the  oil.  Colonel  A.  C.  Ferris  claims  to  have  purchased  the 
first  1,000  barrels  produced  from  the  Drake  well,  which  he  distributed 
among  the  New  York  refineries. 

The  early  writers,  Gesner,  Hodge,  Redwood,  Antisell  and  others  state 
that  the  art  of  refining  coal  oil  had  attained  an  advanced  state  before  petro- 
leum was  commercially  known.  Both  Gesner  and  Antisell  published  lists  of 
patents  covering  almost  every  process  of  manufacture,  as  practiced  by  the 
oil  refiner  of  the  present  day,  all  known  and  many  of  them  issued  prior  to 
1860.  Steam  was  freely  used  in  distillation  and  suggestions  were  offered  for 
various  processes  of  continuous  distillation.  In  1860,  Joshua  Merrill  took 
out  letters  patent  for  a  process  of  "cracking"  oil,  which  demonstrates  that 
chemistry  was  abreast  of  the  drill  in  devising  useful  methods  of  manufac- 
ture. 

The  efforts  of  Kier.  Ferris.  Austen  and  Atwood  in  opening  markets  had 
paved  the  way  for  the  distribution  of  nature's  new  light,  even  before  Drake 
had  advanced  the  industry  by  using  the  artesian  well  as  a  means  for  get- 
ting oil. 


PATRICK   C.   BOYLE.  505 

The  oil  district,  then  30  miles  from  the  nearest  railways,  was  dependent 
upon  teams  for  an  outlet.  Oil  refineries  arose  as  if  by  magic  throughout  the 
region.  Before  the  first  year  of  this  newly  developed  industry  had  ended,  it  is 
said  there  were  upwards  of  a  dozen  so-called  refineries  in  Erie,  50  miles 
from  the  fields  of  production. 

The  demand  for  barrels  outgrew  the  supply,  and  any  cask  fit  to  retain 
fluid  was  impressed  into  the  service  of  the  oil  producer.  The  whaling 
industry,  at  that  time  unprofitable  owing  to  the  extended  voyages  and  hard- 
ship of  the  chase,  had  a  fully  developed  cooperage  industry  and  mechanics 
drawn  from  this  trade  found  employment  in  all  the  oil  producing  countries. 
The  unit  of  measure  at  the  outset  being  the  gallon,  sales  were  made  on  that 
basis.  The  inequality  in  the  size  of  barrels  used  for  the  transportation  of 
crude  oil  caused  a  great  deal  of  dissatisfaction,  and  as  a  result  of  the  dis- 
cussions held  on  that  subject,  the  trade  adopted  a  barrel  of  40  gallons.  This 
continued  to  be  the  standard  size  from  1860  to  1866,  during  which  period  oil 
was  sold  by  the  barrel.  In  the  latter  year,  there  still  being  a  great  deal  of 
inequality  in  the  size  of  the  barrels,  the  producers  resolved  to  make  a  gallon 
the  unit  of  measure  for  sales  of  oil,  allowing  two  gallons  on  the  gauge  of 
every  40  gallons  in  favor  of  the  buyer  for  tare  and  waste.  Later  on,  after 
the  establishment  of  pipe  lines,  buyers  began  to  demand  42  gallons  net,  with 
the  addition  of  2  per  cent,  for  tare,  which  is  the  accepted  barrel  of  to-day. 
During  the  period  of  excise,  from  April  1,  1865,  to  March,  1866,  the  govern- 
ment collected  a  duty  of  $1  on  any  vessel  containing  not  more  than  45  gal- 
lons and  not  less  than  28  gallons.  When  shipments  in  bulk  began,  the  rail- 
roads, for  transportation  purposes,  construed  the  barrel  to  be  45  gallons, 
and  it  so  remains.     But  the  barrel  of  commerce  is  42  gallons. 

There  was  no  systematic  effort  at  collecting  the  statistics  of  rigs,  drill- 
ing wells  and  completed  wells,  except  by  spasmodic  efforts,  until  May,  1875, 
when  the  Oil  City  Derrick  commenced  to  publish  its  regular  monthly  report 
of  oil  developments.  On  November  21,  1860,  the  Venango  Spectator  pub- 
lished a  list  of  wells  in  the  Venango  oil  region,  which  numbered  74,  with  a 
combined  daily  production  of  1,165  bai'rels.  On  May  IS,  1863,  the  Oil  City 
Register  made  a  careful  estimate  of  the  entire  oil  fields  and  gave  the  follow- 
ing  results: 

"Number  of  producing  wells,  75;  number  of  wells  that  had  formerly 
flowed  and  pumped,  62;  wells  drilling,  358;  total,  495." 

On  January  1,  1869,  according  to  Cone  &  Johns,  in  "Petrolia,"  there 
were  1,186  producing  wells  in  the  oil  region.  About  150  of  these  wells  pro- 
duced less  than  two  barrels.  The  production  of  200  of  them  was  less  than 
five  barrels  a  day.  Of  the  entire  number  on  the  producing  list,  724  were 
completed  in  1868.  The  remainder  were  completed  during  the  preceding 
years,  as  follows:  1867,  148;  1866,  92;  1865,  99;  1864,  46;  1863.  29;  1862.  20; 
1861,  17;   1860,  10;   1859,  1. 

These  figures  do  not  include  the  dry  holes  that  have  been  drilled  or  the 
producing  wells  that  have  been  abandoned  between  1859  and  1869.  In  1868 
the  total  number  of  wells  completed  is  estimated  at  991,  which  gives  a  dry 
list  of  267.  In  this  record  the  wells  completed  in  West  Virginia  and  North- 
ern Ohio  and  the  wells  that  have  been  drilled  in  Beaver  and  Greene  counties 
and  various  other  points  on  what  is  now  considered  reliable  oil  territory, 
were  likewise  included. 

The  total  number  of  wells  drilled  in  the  oil  region  from  1859  to  1869,  as 
given  by  Henry  E.  Wrigley,  in  the  Second  Geological  Survey,  was  5,560. 
This  would  show  that  4,374  wells  had  been  completed  and  abandoned  as  dry 
or  unprofitable  during  the  first  10  years  of  the  industry.  Before  the  closing 
of  Professor  Wrigley's  report,  the  oil  business  had  become  firmly  established 
and  thoroughly  systematized  in  all  its  departments. 

At  the  close  of  1860,  fully  500  teams  found  employment  in  the  transpor- 
tation of  oil  from  the  wells  and  the  movement  of  supplies,  in  addition  to  a 
number  of  flat  boats  and  barges  employed  on  the  creek  and  river  to  the 
number  of  100  or  more. 

In  1861  flowing  wells  appeared  to  vex  the  producer  and  embarrass  the 
trade.  In  April  of  that  year,  the  first  flowing  well,  which  was  also  the 
scene  of  the  first  tragedy  in  connection  with  oil  development,  was  struck 


506  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

by  Little  &  Merrick,  on  the  Johu  Buchanan  farm,  Rouseville,  three  miles 
above  the  mouth  of  Oil  creek,  and  12  miles  below  the  Drake  well.  Hun- 
dreds of  people  were  attracted  to  the  scene,  and  while  looking  on  in  amaze- 
ment, fire  was  communicated  to  the  floating  gas  from  a  nearby  boiler,  when 
a  terrific  explosion  occurred,  and  in  the  conflagration  that  resulted  17  per- 
sons lost  their  lives,  among  them  Hon.  Henry  R.  Rouse,  ex-member  of  the 
Legislature  and  one  of  the  leading  spirits  in  the  oil  development.  In  June 
following,  the  Funk  well,  about  midway  between  Rouseville  and  the  Drake 
well,  began  to  flow  and  in  September  of  that  year  Phillips  &  Co.  No.  2,  on 
the  Tarr  farm,  about  midway  between  the  two  flowing  wells,  began  to  flow 
at  the  unheard  of  rate  of  4,000  barrels  a  day.  In  December,  the  Woodford 
well,  400  feet  from  Phillips  &  Co.  No.  2.  was  flowing  at  the  rate  of  3,000 
barrels  a  day.  The  effect  of  the  flowing  wells  upon  the  oil  trade  was  little 
short  of  disastrous  to  the  smaller  producers,  and  for  the  time  being  were 
not  a  little  embarrassing  to  the  owners  thereof.  The  scarcity  of  barrels  and 
the  absence  of  tankage  made  it  extremely  difficult  to  save  the  oil,  but  as 
fortune  would  have  it  all  these  flowing  wells  were  located  on  the  banks  of 
Oil  creek  and  the  barges  became  available  to  store  the  surplus  production. 
One  of  the  effects  of  the  enormous  production  was  to  smash  the  market, 
which  at  the  close  of  1860  was  not  very  strong,  having  declined  from  $20  a 
barrel  in  .January  to  $2  in  December.    Mr.  Boyle  said: 

"In  January.  1861.  prices  opened  at  $1.75.  The  market  continued  to 
soften  until  the  advent  of  the  gushers,  when  it  went  off  to  nominally  nothing, 
flve  and  ten  cents  a  barrel  being  offered.  The  condition  of  the  trade  at  the 
close  of  1861  was  very  much  worse  than  it  was  at  the  beginning,  and  this 
period,  owing  to  over-production  and  the  political  disturbance  due  to  the 
opening  of  the  rebellion,  was  one  of  the  worst  known  in  the  history  of  the 
business.  One  of  the  results  of  the  flowing  wells  was  to  create  a  corner  on 
oil  barrels,  coopers  refusing  to  sell  except  for  cash.  The  value  of  a  barrel 
at  this  time,  expressed  in  terms  of  oil,  was  as  20  to  1. 

"Unremunerative  prices  checked  production,  and  the  spring  of  1862  wit- 
nessed a  gradual  rise  in  the  price  of  oil.  The  suspension  of  specie  payment 
and  the  rapid  advance  in  the  price  of  gold  caused  a  general  advance  in  the 
value  of  all  kinds  of  commodities." 

Petroleum  was  in  good  demand  and  better  prices  began  to  prevail.  Oil 
at  the  wells  rose  from  10  cents  a  barrel  in  January,  1862,  to  $1  in  June  and 
$2. .50  in  December.  The  most  reliable  estimate  of  the  average  for  the  year 
is  $1.05  per  barrel. 

The  development  work  in  1862,  while  not  large,  was  exceedingly  im- 
portant in  the  discovery  of  large  wells.  Operations  for  the  most  part  were 
conflned  to  the  upper  Allegheny,  that  is,  Tidioute,  Oil  and  French  creeks. 
Smith's  Ferry  obtained  considerable  prominence  during  this  year,  more, 
perhaps,  on  account  of  its  remoteness  from  the  oil  producing  centers  than 
the  quantity  of  oil  produced.  Smith's  Ferry  is  100  miles  in  a  bee  line  from 
the  Drake  well,  and  marks  the  first  important  extension  of  the  oil  develop- 
ment. The  state  of  intelligence  as  to  oil  at  the  time'  led  producers  to 
believe  that  all  the  intervening  territory  was  productive,  and  led  to  much 
experimental  work  later  on  on  this  theory. 

The  cost  of  sending  a  barrel  of  oil  to  New  York  from  the  producing  field 
in  January,  1862,  was  $7.45:  the  cost  of  delivering  a  barrel  of  oil  in  Pitts- 
burg, by  steamboat.  $2;  teaming  from  Oil  creek  to  Meadville.  $2.25.  There 
was  little  demand  for  oil  at  the  wells;  the  price  was  10  cents  per  barrel, 
with  few  f  ales.  The  producers  held  a  meeting  and  resolved  to  sell  no  oil  at 
less  than  $4  per  barrel. 

A  bill  was  this  year  introduced  in  the  Legislature  of  Pennsylvania  for  a 
pipe  line  from  the  upper  oil  farms  to  the  mouth  of  the  creek,  and  a  charter 
was  granted,  under  the  title  of  the  Oil  Creek  Transportation  Company,  to 
carry  oil  in  pipes  or  tubes  from  any  point  on  Oil  creek  to  the  mouth  of  that 
creek,  or  to  any  point  on  the  Erie  Railroad.     No  line  was  built. 

Very  little  attention  was  paid  to  the  Sabbath  during  this  time.  A 
meeting  was  held  at  Plumer  early  in  the  year  and  resolutions  were  adopted 
to  discourage  the  violation  of  Sunday  by  the  teamsters  whose  business 
went  on  from  day  to  day  uninterrupted,  without  regard  to  anything  except 
the  condition  of  the  roads. 


PATRICK   C.   BOYLE.  507 

In  March  of  1862,  owing  to  the  stagnant  condition  of  the  trade,  stop- 
cocks were  turned  on  the  wells  and  production  ceased  for  a  considerable 
peiiod,  this  being  the  first  shut-in  movement  for  ihe  betterment  of  prices. 

Congress,  during  this  year,  imposed  a  tax  of  10  cents  a  gallon  on  refined 
oil.  and  proposed  to  tax  crude  oil  five  cents  per  barrel,  but  the  producers, 
conscious  of  the  power  to  be  attained  by  uniting,  held  a  town  meeting  in 
Titusville,  where  resolutions  were  adopted  and  Congress  was  petitioned  to 
lay  a  tax  on  refined  only,  and  for  the  benefit  of  refiners  they  recommended 
a  draw-back  on  all  oil  exported  to  foreign  countries.  Congress  assenting, 
laid  a  tax  of  10  cents  a  gallon  upon  refined  oil,  and  absolved  the  producer 
from  any  levy  of  taxes. 

The  first  successful  pipe  line  was  constructed  during  this  year  by  J.  M. 
Barrows,  to  convey  oil  from  the  Densmore  wells  on  the  Tarr  farm,  to  his 
refinei-y,  1,000  feet  away.  This  was  the  first  successful  pipe  line,  "Correct 
in  principle  and  successful  in  operation."  About  the  same  time,  a  pipe  line 
two  and  a  half  miles  long,  was  constructed  from  the  Tarr  farm  to  the  Hum- 
boldt refinery.  Cast  iron  pipes  with  lead  joints  were  used.  The  loss  from 
leakage  at  the  lead  joints  was  proved  greater  than  the  cost  of  transportation 
by  team,  and  the  enterprise  was  abandoned. 

No  other  attempt  "was  made  to  solve  the  great  problem  of  transportation 
by  pipe  line  until  Van  Sickle's  experiment,  two  and  a  half  years  later.  Rail- 
ways were  now  being  extended  into  the  oil  regions,  by  means  of  which  the 
Cleveland  refining  interest  received  its  first  great  impulse.  As  it  was  impos- 
ble  to  receive  oil  at  any  other  place  direct  from  the  wells  by  rail,  without 
trans-shipment,  the  advantage  thus  derived  gave  Cleveland  a  trade  position 
which  later  on  was  practically  impregnable. 

On  the  other  hand,  Samuel  Downer,  availing  himself  of  the  advantage 
of  rail  transportation,  located  an  oil  refinery,  the  largest  of  its  day,  at  Corry, 
a  poirt  most  admirably  adapted  because  of  the  facilities  afforded  by  two 
competing  railroads.  Operations  during  1863  were  confined,  for  the  most 
part,  to  Oil  creek  and  Allegheny  river  territory  about  Franklin  and  Tidioute. 
The  production  of  the  large  wells  had  greatly  fallen  off.  In  1863,  the  total 
yield  of  oil  was  hardly  one-half  of  what  it  was  at  the  beginning  of  1862,  and 
the  developments  throughout  the  year  did  not  materially  add  to  the  produc- 
tion. The  development  work  of  the  year  was  neither  large  nor  important. 
Though  not  entirely  lacking  in  sensational  features,  as  attested  by  the 
striking  of  the  Noble  &  Delamater  well,  on  the  Farel  farm.  upp"er  Oil  creek, 
which  started  with  an  initial  production  of  3,000  barrels  and  maintained 
the  average  of  1,000  barrels  per  day  throughout  the  year.  This  was  fol- 
lowed in  midsummer  by  the  Maple  Shade  well,  on  the  Hyde  &  Egbert  farm, 
which  started  with  an  initial  production  of  1,000  barrels  a  day.  During  this 
year  the  "pond  fresh"  obtained  its  highest  development.  A  conservative 
estimate  of  the  number  of  boats  plying  on  Oil  creek  at  this  time  would  be 
300,  and  upon  the  Allegheny  river  700,  making  a  total  of  1,000  boats  em- 
ployed in  transporting  oil. 

The  "pond  fresh,"  a  unique  method  for  transporting  oil  in  l)oats  from 
points  on  Oil  creek  to  the  Allegheny  river,  was  described  by  Mr.  Boyle. 
Water  was  confined  in  dams,  all  of  which  were  cut  at  a  given  time,  letting 
out  a  vast  quantity  of  water,  thus  creating  a  boating  stage  that  continued 
from  two  to  three  hours,  during  which  time  hundreds  of  boats  would  float 
out  with  the  tide  and  reach  the  Allegheny  river.  As  many  as  two  a  week 
would  be  arranged  when  water  was  plentiful,  but  during  the  dry  season  it 
was  generally  limited  to  one  day.  Friday  was  usually  the  one  selected.  It 
was  not  unusual  for  20,000  to  60,000  barrels  of  oil  to  pass  out  of  the  creek 
upon  one  of  these  artificial  freshets.  Much  oil  was  wasted  by  this  method. 
a  careful  writer  having  estimated  that  one-seventh  of  the  oil  was  so  lost. 
Transportation  by  teams  and  boats  received  its  first  effective  blow  in  1863 
by  the  completion  of  the  Atlantic  &  Great  Western  Railroad  to  Franklin 
and  the  Oil  Creek  Road  from  Corry  to  Titusville. 

During  1864,  the  Oil  creek  developments  were  extended  to  upper  Cherry 
run.  This  was  the  beginning  of  the  era  of  oil  stock  companies,  and  every 
part  of  the  known  oil  region  was  purchased  or  leased  by  oil  companies.  In 
July.   1864,    the   Reed    &    Criswell    well,   on    the   Reed    lot.    Cherry   run,    was 


508  REV'IEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

struck,  and  flowed  from  280  to  300  barrels  a  day.  A  quarter  of  the  land" 
interest  in  this  well  was  sold  for  $280,000  and  the  first  purchasers  realized- 
nearly  $1,000,000.  Oil  in  July  sold  as  high  as  $13.75  a  barrel.  In  this  year 
the  export  trade  began  to  assume  large  proportions  and  the  total  shipment 
of  reflned  oil  abroad  amounted  to  nearly  three  and  a  half  times  as  much  as 
it  was  in  1863.  Prices  reached  the  highest  point  this  year  since  1859  and 
1860,  and  have  not  been  paralleled  in  the  history  of  any  succeeding  year. 
The  fluctuations  in  the  price  of  crude  oil  in  1864  were  very  great.  Oil  sold 
at  $4  a  barrel  in  January  and  in  July  some  sales  were  made  at  $14.  In  the 
following  October  the  price  fell  to  $6.50  a  barrel,  and  at  the  close  of  the 
year  oil  was  bringing  from  $10.50  to  $12  a  barrel.  These  prices  gave  enor- 
mous margins  of  profit,  and  were  responsible  for  the  craze  for  speculation 
in  oil  stock  companies  that  proved  so  disastrous  a  year  or  two  later. 

In  July,  1864,  the  Oil  Creek  Railroad  was  completed  from  Titusville  to 
Shaffer  farm.  During  1864  drilling  was  extended  to  the  hill  slopes  and  the' 
hill  tops  and  the  use  of  machinery  for  drilling  purposes  became  more  gen- 
eral. The  cost  of  drilling  a  well  to  a  depth  of  600  feet  at  that  time,  as  given 
by  Eaton,  was  $4,290. 

At  this  time  the  oil  business  was  an  enormous  one,  yielding  enormous 
profits.  John  W.  Forney  is  responsible  for  the  statement  made  by  Governor 
Curtin,  at  Titusville,  at  that  time,  that  1,000,000  barrels  were  required  to 
handle  the  oil  and  that  $6,000,000  was  invested  in  barrels,  teams,  and  so 
forth,  used  in  the  transportation  of  oil;  that  4,000  teams  were  employed  in 
the  transportation  of  oil  and  supplies  in  the  oil  field  and  1,000  boats,  em- 
ploying from  2,000  to  4,000  men  and  as  many  horses,  found  employment 
upon  the  creek  and  river.  Transportation  had  so  fully  kept  pace  with  field 
developments  that  the  cost  of  moving  a  barrel  of  oil  to  the  river  or  railroad 
exceeded  that  of  producing  it. 

The  speculative  oil  bubble  collapsed  in  1865.  Pipe  lines  came  into  use 
and  revolutionized  the  transportation  business.  On  April  1,  there  was  an 
excise  tax  of  $1  per  barrel  on  crude  oil,  which  must  be  deducted  from  the 
price  of  this  oil  when  the  price  actually  realized  by  the  producer  is  reck- 
oned. In  January,  1865,  oil  was  $10  a  barrel.  In  August  it  was  $4,  and  ia 
October  $9.50,  the  year  closing  at  $5  a  barrel.  The  statisticians  of  the  New 
York  financial  journals  placed  the  average  price  realized  for  oil  in  1865  at 
$4.27  in  gold,  and  $6.61  to  $7  in  currency.  At  New  York,  the  average  price 
for  refined  oil  in  1865  was  87%  cents  per  gallon. 

It  was  not  unusual,  previous  to  the  establishment  of  pipe  lines,  to  find 
a  difference  of  50  per  cent,  between  the  ruling  prices  on  Oil  creek  and  those- 
at  the  wells  at  Pithole,  the  difference  being  due  to  the  cost  of  transportation. 

In  many  respects  1865  stands  forth  as  the  red  letter  year  in  the  oil  busi- 
ness. During  this  ye?r  casing  was  introduced,  by  which  life,  so  to  speak, 
of  an  oil  well,  was  greatly  prolonged,  and  its  production  materially  in- 
creased, by  excluding  surface  water  and  permitting  the  free  escape  of  gas 
in  such  a  manner  that  it  could  be  utilized  for  fuel  purposes  in  the  produc- 
tion of  steam.  Tank  cars  appeared  on  the  railroads,  due  to  the  inventive 
genius  of  the  Densmores,  admitting  of  bulk  shipments  for  the  first  time  by 
rail,  and  dispensing  with  the  cumbrous  barrel,  which  had  proved  both  an 
incubus  and  an  embarrassment  to  the  trade.  There  were  sundry  improve- 
ments in  drilling,  a  notable  increase  in  the  weight  of  the  tools:  the  torpedo 
appeared  as  an  aid  to  production,  upon  the  appearance  of  which  the  crevice 
searcher,  sand  scraper,  volcano  burner,  steam  injectors  and  various  other 
devices  for  increasing  production,  disappeared.  The  cylinder  gas  pump 
came  into  limited  use  this  year,  displacing  the  rotary  gas  blowers  and 
atmospheric  injectors  previously  in  use.  The  use  of  benzine  as  a  dissolvent 
for  parafRne  was  beginning  to  attract  public  notice.  Careful  observers  esti- 
mate that  in  the  five  years  ending  1870,  a  million  barrels  of  benzine  that 
went  into  oil  wells  to  dissolve  parafline,  came  out  as  crude  oil.  and  was  sold 
back  to  the  refiners  at  an  advance  of  300  and  400  per  cent,  on  the  original 
cost.  Shippers  eventually  were  compelled  to  apply  a  gravity  test  upon  all 
oils  to  protect  themselves  from  the  benzine  habit,  and  for  many  years  high 
gravity  oils,  now  so  much  in  demand,  were  not  considered  a  good  delivery 
at  export  points.     I  think  that  the  limit  was  placed  at  48°  on  oil;   the  limit 


PATRICK   C.   BOYLE.  509 

of  specific  gravity  for  good  delivery.  Oils  above  48°  were  not  a  good 
delivery  at  export  points. 

During  1864  and  1865  the  increase  in  the  refining  capacity  was  very 
great.  Eaton  estimates  that  in  1865  there  were  90  refineries  in  the  oil 
region,  with  a  crude  capacity  of  18,000  barrels  a  week,  costing  on  an  aver- 
age $10,000  each.     He  roughly  estimated  the  whole  as  being  worth  $1,000,000. 

Mr.  Boyle,  referring  to  the  statement  that  had  been  made  before  the 
commission,  that  the  piping  of  refined  oil  was  a  recent  affair,  said  that  in 
1865  refined  oil  was  successfully  transported  by  pipe  lines  a  distance  of 
three  miles  by  John  Warren  &  Bro.,  from  the  Osceola  refinery  at  Plumer  to 
McMahan's  run,  on  the  Allegheny  river,  near  Oleopolis. 

In  1865  there  were  five  pipe  lines  centering  in  Pithole  and  competing 
for  a  business  that  was  scarcely  sufficient  for  one.  In  the  following  year, 
Yandergrift  &  Forman's  pipe  line  was  built  and  it  made  the  sixth  pipe  line 
competing  for  business  in  the  Pithole  watershed.  The  effect  of  these  pipe 
lines  was  to  reduce  the  cost  of  delivering  oil  to  shipping  points  from  $2  to 
$3  a  barrel  to  a  uniform  price  of  $1  per  barrel,  which  was  the  fixed  price 
established  by  the  pipe  lines. 

When  pipe  lines  were  first  established,  they  did  not  reach  out  to  the 
producers'  wells  but  established  a  tank  at  a  fixed  point,  at  which  the  pro- 
ducer was  obliged  to  deliver  his  oil  in  barrels.  Smiley  &  Coutant's  pipe 
line  was  the  first  to  connect  with  the  producers'  wells,  for  which  service 
they  charged  25  cents  a  barrel,  which  was  slightly  below  the  cost  of  deliv- 
ery by  team  in  barrels.  The  cost  of  moving  a  barrel  of  oil  from  Pithole  to 
New  York  in  December,  1865,  was  $5.55  via  Corry.  and  $4.59  via  Pittsburg. 
The  first  named  price,  $5.55.  was  made  up  of  the  following  items:  Pipe 
transportation  from  Pithole  to  Miller  farm,  $1:  barreling,  shipping,  etc.,  at 
Miller  farm,  25  cents,  freight  to  Corry,  by  the  Oil  Creek  Railroad,  80  cents; 
freight  from  Corry  to  New  York,  $3.50.  The  Pithole  &  Oleopolis  Road  was 
opened  for  business  toward  the  close  of  1865.  The  price  of  moving  a  barrel 
of  oil  from  any  part  of  the  oil  region  to  the  seaboard  to-day  is  50  cents  or 
less,  owing  to  the  existence  of  pipe  lines,  the  price  for  rail  and  pipe  being 
the  same  since  1879. 

The  excise  tax  of  $1  per  barrel  on  crude  oil,  which  went  into  effect 
April  1,  1865.  was  repealed  in  May,  1866,  but  it  did  not  stop  the  downward 
tendencj^  in  prices.  Under  the  impetus  of  high  values,  production  had  been 
increasing  and  the  daily  yield  for  the  winter  of  1866  was  at  least  12,000 
barrels.  The  falling  off  of  the  output  of  the  wells  at  Pithole  began  to 
strengthen  prices,  but  the  collapse  of  numerous  oil  companies  and  the  gen- 
eral scare  over  the  bursting  of  the  great  oil  bubble,  exercised  a  depressing 
influence.  The  construction  of  pipe  lines  created  ill  feeling  among  the 
teamsters  who  had  been  thrown  out  of  work,  and  in  April,  1866,  the  oil  tanks 
of  Henry  Harley  &  Co.,  at  Shaffer,  were  set  on  fire  by  an  incendiary  mob 
composed,  it  was  said,  of  these  teamsters. 

In  July,  1866,  the  Titusville  Pipe  Company  perfected  arrangements 
whereby  oil  shippers  could  have  their  product  shipped  direct  to  New  York 
via  the  Empire  Line,  the  pipe  line  lading  bill  answering  for  the  entire  dis- 
tance. The  effect  of  that  innovation  of  the  Empire  Line  in  1866,  was  to 
make  one  rate  on  the  oil  from  the  wells  to  the  seaboard  or  to  the  refinery, 
a  matter  which  caused  a  great  deal  of  disturbance  later  on  between  the 
shippers,  the  producers  and  the  railroad. 

The  Oil  City  Register  estimated  that  the  loss  of  oil  by  fire  during  the 
first  six  months  of  1866  amounts  to  70,000  barrels,  which  was  a  great  loss  in 
those  days. 

The  Warren  &  Franklin  Railroad  was  completed  to  Oleopolis.  where  it 
connected  with  the  Oil  City  &  Pithole  Railroad. 

A  well  was  shot  in  July.  1866,  with  one  of  Professor  Hamar's  torpedoes. 
It  was  an  abandoned  well,  known  as  the  Tanney  well,  on  the  Tarr  farm,  and 
it  was  reported  to  have  started  off  with  a  production  of  300  barrels  a  day. 

The  advent  of  railroads  and  the  established  success  of  the  pipe  line 
system  had  greatly  improved  the  method  and  lessened  the  cost  of  oil  trans- 
portation in  1867.  The  decline  in  the  cost  of  transportation  by  pipe  line  in 
this  year  vras  50  per  cent. 


510  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

West  Virginia  had  in  this  year  assumed  greater  prominence  as  an  oil  field, 
the  first  discovery  having  been  at  Burning  Springs,  on  the  Little  Kanawha, 
which  was  almost  contemporary  with  the  operations  on  Duck  creek  in  Ohio. 

The  year  1S67  proved  to  be  one  of  low  prices  and  general  depression, 
owing  to  ovei'-production.  In  March,  1867,  John  Ponton,  a  statistician  of 
considerable  note,  in  his  pamphlet,  "The  Crisis  in  the  Oil  Region,"  esti- 
mated the  stock  of  oil  in  the  United  States  on  March  10  to  be  386,105  bar- 
rels; stock  in  Europe,  325,000  barrels;  total,  711,105  barrels.  He  figured  the 
foreign  and  home  consumption  of  oil  during  1866  at  8,577  barrels  per  day, 
and  declared  that  it  would  require  a  net  daily  production  of  11,237  barrels 
to  supply  the  probable  demand  of  the  year.  The  production  he  placed  at 
about  6.000  barrels  a  day,  showing  a  deficit  of  over  5,000  barrels.  At  an  esti- 
mated value  of  $2  a  barrel  for  crude  oil  for  that  period  Ponton  proceeded 
to  demonstrate  by  figures  that  the  production  of  oil  was  a  losing  business. 
Ponton  drew  a  very  gloomy  picture  of  the  oil  business,  but  his  theories  were 
never  realized. 

Owing  to  the  general  improvements  in  the  means  of  transportation,  the 
decline  in  the  prices  of  oil  machinery  of  all  kinds,  and  the  uniform  success 
of  drilling  operations,  1868  proved  highly  prosperous  in  the  oil  industry. 
Large  casing  was  introduced  for  drilling  during  this  year,  though  to  some 
little  extent  it  was  used  in  the  preceding  year.  Casing  was  used  to  exclude 
fresh  water.  In  .January  the  Titusville  Herald  estimated  the  production  of 
the  oil  region  at  11,035  barrels  a  day  with  182  wells  drilling. 

On  February  3  a  convention  of  Oil  creek  refiners  was  held  at  Petroleum 
Center  and  resolutions  were  passed  demanding  that  the  tax  on  refined  oil 
be  repealed.  The  production  was  greatly  in  excess  of  the  demand  and  the 
price  consequently  declined  below  the  cost  of  placing  the  refined  product  on 
the  market. 

On  July  16,  1866,  Congress  repealed  the  tax  on  petroleum  and  its  prod- 
ucts.   At  that  time  refined  oil  was  subject  to  a  tax  of  20  cents  a  gallon. 

Q.  (By  Vice-Chairman  PHILLIPS.)  How  much  tax  had  crude  been 
subjected  to  by  the  government  before  that?  A.  One  dollar  a  barrel  for 
over  a  year. 

Q.  (By  Vice-Chairman  PHILLIPS.)  About  a  year?  A.  About  a  year; 
[the  tax  on  refined  oil]  lasted  six  years. 

Vice-Chairman  PHILLIPS.  That  tax  ruined  quite  a  large  number  of 
small  producers,  who  were  not  able  to  pay  such  taxes  on  small  wells,  did 
it  not? 

Representative  LIVINGSTON,     What  was  the  question,  Mr,  Chairman. 

Vice-Chairman  PHILLIPS.  In  regard  to  the  government  war  tax  on 
petroleum  of  $1  a  barrel,  which  remained  about  one  year  on  crude  petro- 
leum. It  worked  very  unequally.  I  say  that  simply  for  information,  because 
small  producers  could  not  afford  to  pay  it;  whereas  if  a  man  struck  a  very 
large  well,  500  barrels  or  upwards,  he  could  afford  to  pay  it.  A  large  number 
of  farms  that  were  only  capable  of  producing  say  from  10  to  25  barrels 
every  day,  could  not  pay  the  tax;  whereas  farms  having  a  larger  producing 
capacity  could  easily  afford  to  pay  it.     It  operated  very  unequally. 

'^Representative  LIVINGSTON.  You  mean  to  say  that  it  cost  more  to 
produce  25  barrels  relatively  than  it  did  a  larger  amount,  and  they  could 
not  afford   to   pay  the   dollar  a   barrel. 

Vice-Chairman    PHILLIPS.     Yes,   sir. 

Representative  LIVINGSTON.  And  for  that  reason  the  tax  was  un- 
equal ? 

Vice-Chairman  PHILLIPS.  Yes,  sir;  a  certain  class  of  territory  could 
not  afford  to  pay  it,  nor  could  the  farmers  on  whom  it  devolved,  while  the 
tax  existed. 

Mr.  SMYTH.     That  was  a  war  tax.  was  it  not? 

Vice-Chairman   PHILLIPS.     That  was  a  war  tax;    yes,  sir. 

Representative  LIVINGSTON.  Then  would  not  your  theories  result  in 
this;  that  combinations  are  good,  from  the  fact  that  they  produce  things 
cheaper? 

*Klack  faced  typp  indicates  matter  umittefl,  in  the  conrse  of  editing,  from  the 
official  report. 


PATRICK   C.   BOYLE.  511 

Vice-Chairtnan  PHILLIPS.  That  has  nothing  to  do  with  combinations 
on  this  point,  as  far  as  that  is  concerned. 

The  WITNESS.  Mr.  Chairman,  my  answer  to  that  would  be  that  the 
I'eriod  of  the  tax  on  oil  was  three  years,  nearly  four  years,  before  it  was 
repealed  on  refined,  and  that  there  certainly  were  a  great  many  failures 
during  that  period,  but  coincident  with  those  failures  was  the  bursting  of 
the  oil  bubble — a  great  number  of  bubble  companies  that  started  about  that 
time.  There  were  so  many  of  them;  there  was  so  much  disaster  all  the  way 
through,  that  it  is  pretty  difficult  to  tell  just  what  was  the  cause  of  it.  I 
cannot  say,  of  my  own  knowledge,  that  any  producing  well  ever  stopped 
pumping  on  account  of  the  oil  tax.  I  never  knew  the  extent  of  it,  and  iu 
that  connection  I  would  say  that  my  knowledge  comes  from  hearsay,  as  my 
experience  does  not  go  back  that  far.  I  came  in  the  year  the  tax  law  was 
repealed;  I  came  in  there  the  year  the  tax  was  repealed  on  crude  oil. 

Q.  (By  Representative  LIVINGSTON.)  Why  was  the  tax  levied?  A. 
It  was  an  excise  war  tax;  an  excise  tax. 

Q.  What  is  the  tax  now  on  oil?     A.  There  is  no  tax. 

Q.  Why  not?  A.  Well,  that  is  beyond  my  knowledge.  There  is  no  tax 
on  any  manufactured  product  except  whisky,  cigars  and  tobacco,  that  I 
know  of. 

Q.  Wouldn't  it  be  a  good  source  of  revenue  if  we  should  levy  a  small 
tax  on  oil;  wouldn't  it  be  a  good  source  of  revenue?  A.  It  would  be  a  source 
of  revenue.  *but  the  quality,  as  to  good  or  bad,  I  couldn't  say.  It  would  be 
bad  for  the  consumer,  because  the  price  would  follow. 

Q.  Would  it  be  good  for  the  people  that  burn  it?  A.  No,  it  would  be 
bad  for  the  consumer,  because  the  price  would  follow. 

*Q.  (By  Vice-chairman  PHILLIPS.)  It  would  be  in  keeping  with  levy- 
ing it  on  coa!  or  any  other  mineral?  A.  Yes,  sir.  This  subject  was  pretty 
thoroughly  discussed,  I  think,  in  Congress  before  levying  the  tax. 

*Representative   LIVINGSTON.     Yes,   I   remember. 

The  amount  of  oil  produced  up  to  the  beginning  of  the  year  1869,  which 
would  cover  the  first  10  years  of  the  business,  was  about  25,700,000.  On 
January  30,  1869,  the  Pittsburg  Commercial  reported  68  refineries  in  opera- 
tion in  Pittsburg  and  stated  that  the  petroleum  trade  of  the  city  amounted 
to  $13,000,000  a  year. 

On  February  12,  1869,  a  meeting  of  all  the  oil  producers  was  held  at 
Titusville,  and  the  Petroleum  Producers'  Association  of  Pennsylvania  was 
organized.  This  was  the  first  association  of  producers  and  it  was  called 
into  existence  to  take  cognizance  of  the  statistics  of  the  oil  region  for  the 
better  protection  of  the  trade.  The  shippers  and  buyers  of  that  day  had 
begun  to  influence  the  speculative  market  by  reports  and  by  bulling  and 
bearing  it  to  their  advantages.  The  purpose  of  this  association  was  to 
gather  statistics  and  to  inqire  into  the  general  condition  of  the  trade  for 
the  betterment  of  the  producers.  Mr.  Boyle  thought  this  action  on  the  part 
of  the  producers  was  necessary.  This  association  was  not  a  chartered  com- 
pany at  that  time,  and  no  stock  was  issued,  but  it  led  to  other  associations 
and  agencies  for  which  stock  was  issued. 

On  .July  1,  1869.  work  was  begun  on  the  extension  of  the  Jamestown  & 
Franklin  Railroad  from  Franklin  to  Oil  City,  providing  a  shorter  route  to 
Cleveland. 

At  the  close  of  1869,  the  New  York  Daily  Bulletin  said:  "The  price  of 
petroleum  ruled  higher  during  1869  than  during  any  of  the  three  previous 
years,  and  those  engaged  in  the  production  of  oil  have  received  larger 
profits  in  comparison  with  the  capital  employed  than  during  any  previous 
year.  The  profits  of  the  refiners  and  dealers  have  been  fair,  but  very  much 
less  than  those  of  the  class  first  mentioned.  Speculation  has  been  pursued 
on  a  colossal  scale,  and  prices  underwent  great  and  violent  fluctuations; 
but  notwithstanding  this  the  year  closed  with  a  very  much  smaller  volume 
of  failures  than  usual,  and  on  the  whole  was  singularly  exempt  from  any 
serious  financial  disaster." 


*BIack    faced    t>  pe  indicates   matter   omitted,   in  the  course  of  editing,  from  the 
official  report. 


512  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

Values  showed  a  downward  tendency  in  1870,  and  the  market  steadily 
declined  from  the  prices  established  during  1869.  The  extreme  range  was 
from  $4.90  per  barrel  in  January  to  $2.75  in  August.  The  year  1870  closed 
with  petroleum  at  from  $3  to  $3.50  a  barrel.  That  decline  may  be  accounted 
for  in  a  great  measure  by  the  breaking  out  of  hostilities  between  Germany 
and  France,  and  the  closing  of  the  ports  in  those  countries  against  us,  both 
being  large  consumers  of  our  product. 

There  were  in  1870,  12  or  15  separate  pipe  lines.  Three  pipe  lines  were 
competing  for  800 — not  to  exceed  1,000 — barrels  of  oil  a  day.  By  October, 
1870,  the  total  production  of  the  oil  region  was  nearly  20,000  barrels  a  day. 
The  J.  S.  McCray  farm  had  a  daily  production  for  October  of  2,686  barrels 
and  declined  to  1,944  barrels  in  November,  a  falling  off  of  742  barrels  a  day. 
The  important  development  of  the  year  was  at  Armstrong  run,  eight  miles 
southwest  of  Parkers  Landing,  in  April,  which  had  an  initial  production  of 
1,000  barrels  a  day.  The  production  declined  rapidly,  but  other  wells  equally 
productive,  with  better  staying  qualities,  came  in  later  on.  In  1870  the 
refiners  formed  an  association. 

In  1871,  the  Titusville  Oil  Exchange  was  organized,  this  being  the  first 
regularly  organized  exchange  in  the  oil  country,  although  the  trade  at  Pitts- 
burg had  been  organized  some  years  previously.  Exchanges  were  also  or- 
ganized in  Oil  City  and  in  Franklin.  The  Titusville  Herald  places  the  daily 
production  of  the  Pennsylvania  fields  on  April  11,  1871,  at  13,531   barrels. 

The  WITNESS.  A.  D.  White,  reporter  for  the  Petroleum  Producers' 
Association  for  the  lower  district,  issued  the  following  report  for  July,  in 
the  Parkers  Landing  district: 

"There  are  441  producing  wells,  of  which  63  produce  *one-half  of  all 
the  oil,  and  average  10  1-10  barrels  per  day,  while  the  daily  average  of  all 
wells  is  five  and  one-half  barrels.  The  average  depth  of  the  wells  is  1,060 
feet,  and  the  average  cost  of  completing  a  well  $5,200." 

Hints  of  speculation  by  pipe  lines  in  the  production  of  oil  increased; 
there  were  more  than  hints;  there  were  rumors  and  in  some  instances 
^verified,  the  result  of  that  being  that  oil  was  not  held  the  same  by  any 
two  of  the  existing  lines.  There  were  scarcely  any  two  of  them  that  offered 
the  same  prices  for  oil.  The  price  was  dependent  very  largely  upon  the 
reputation  of  the  line  for  integrity.  Those  lines  having  a  reputation  for 
integrity — that  is  to  say,  oil  put  in  their  custody  would  be  found  when 
wanted — got  the  highest  price.  Those  lines  which  were  sometimes  consid- 
ered short,  got  a  lower  price. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Did  the  producers  ever  lose  any  oil 
through  these  pipe  lines  to  which  you  refer,  to  your  knowledge?  A.  To  my 
personal  knowledge,  no;  except  the  difference  in  the  valuation  of  their 
product;   there  was  a  difference  in  valuation,  but  I  know  of  no  loss. 

Q.  (By  Vice-Chairman  PHILLIPS.)  No  embezzlement  of  oil  that  was 
left  in  the  line?  A.  No  embezzlement  of  oil;  I  have  no  personal  knowledge 
of  that.  Rumors  were  circulated  in  the  midsummer  of  1871  that  the  various 
pipe  line  interests  in  Pennsylvania  were  about  to  merge  their  holdings  into 
a  single  combination,  the  whole  to  be  under  one  management.  No  merger 
ever  took  place,  or  at  that  time;  no  merger  took  place  at  that  time. 

Operations  this  year  took  a  very  wide  range.  Bradford  appeared  for 
the  first  time  in  the  oil  reports. 

It  is  important  here  in  this  connection,  as  pointing  out  that  the  locality 
of  the  Bradford  region,  which  was  developed,  say  10  years  later,  or  less 
than  10  years  later  (the  greatest  field  ever  discovered)  was  known  of  long 
before  actual  developments  took  place  there.  The  existence  of  oil.  the 
presence  of  it,  was  known  in  that  field  for  at  least  eight  years,  and  wells 
were  actually  sunk  even  before  the  Butler  and  Clarion  county  fields  were 
fully  developed. 

The  year  1872  was  conspicuous  for  the  remarkable  progress  of  develop- 
ments in  Butler  and  Clarion  counties.  In  addition  to  a  very  large  production 
of  crude  oil,  there  was  an  unquestioned  over-capacity  of  pipe  line  and  an 


•P.Iaok   farod  type  indicates  matter  omitted,  In  the  course  of  editing,  from  the 
official   report. 


PATRICK   C.   BOYLE.  513 

over-production  of  refining  plant,  to  an  extent  that  these  two  divisions  of 
the  business,  transportation  by  pipe  and  refining,  became  unprofitable. 
The  witness  continued: 

"This  (1872)  is  the  year  of  the  South  Improvement  Company,  a  move- 
ment which  found  few  supporters  in  the  region,  was  very  generally  exe- 
crated by  the  trade,  and  died,  so  to  speak  'a-bornin'.'  Of  all  the  multifarious 
movements  havin?  for  their  object  the  betterment  of  trade  conditions,  this 
one  is  perhaps  the  least  understood.  The  movement  was  a  combination  of 
the  railroads  and  certain  refining  interests.  It  had  its  inception  with  cer- 
tain Philadelphia  and  Pittsburg  refiners,  with  an  agreement  for  co-operation 
on  the  part  of  certain  Cleveland  refiners.  But  philosophical  minds,  viewing 
the  subject  from  this  distance,  are  agreed  that  it  had  its  origin,  as  a  matter 
of  fact,  with  the  railroad  interests,  rather  than  with  the  oil  interests. 
Refiners,  ever  satisfied  with  a  fair  profit,  had  been  able  and  were  willing  to 
accept  their  chances  with  the  trade,  but  with  the  railroads  the  case  was 
slightly  different. 

"The  march  of  development  southward  from  1870  brought  about  condi- 
tions through  which  some  of  the  important  railroads  of  the  country  might 
be  deprived  of  a  share  of  the  oil-carrying  trade.  The  Pennsylvania  Road, 
however,  was  not  affected  by  the  transfer  of  activities  from  the  Venango 
region  to  that  of  Butler  and  Clarion  counties.  The  Allegheny  Valley  Rail- 
road on  the  one  hand  serving  as  a  feeder  for  rail  shipments,  and  the  Alle- 
gheny river  serving  the  Pittsburg  refiners,  on  the  other,  with  barge  ship- 
ments, the  products  ultimately  coming  to  the  Pennsylvania  Railroad  for 
export  and  interior  shipments,  gave  them  not  only  a  fair,  but  the  lion's 
share  of  the  carrying  trade.  The  northern  railway  lines,  namely,  the  Erie 
and  New  York  Central,  were  naturally  affected  by  the  transfer  of  operations 
to  distant  fields,  which  they  could  not  reach  with  their  existing  con- 
nections. The  first  named  road  was  materially  aided  by  the  gathering  lines 
of  the  Pennsylvania  Transportation  Company,  operated  by  Henry  Harley, 
but  the  New  York  Central  and  its  connecting  lines  were  left  without  petro- 
leum feeders  of  any  description.  This  resulted,  some  years  later,  and  after 
the  failure  of  the  South  Improvement  Company  to  establish  itself,  in  the 
creation  of  pipe  lines  by  the  New  York  Central  interests.  Therefore,  at  the 
close  of  1873,  all  the  principal  railway  lines  touching  the  oil  regions  at  any 
point  were  served  by  feeders  or  pipe  lines,  specially  provided.  From  this 
period,  developments  were  so  rapid  that  no  attempt  will  be  made  to  trace 
the  progress  of  the  business  chronologically,  except  by  movements  in  the 
order  in  which  they  took  place. 

"Now  this  leads  us  to  the  time  of  the  South  Improvement  Company, 
v.hen  there  was  an  over-production  of  pipe  lines  and  the  competition  of  the 
railroads  was  so  very  sharp,  and  it  sought  to  correct  all  the  difficulties  that 
the  region  had  ever  been  troubled  with  in  the  way  of  discriminations  in 
freights." 

Mr.  Boyle,  in  a  further  reference  to  the  South  Improvement  Company, 
and  the  opposition  that  developed  to  it,  said  the  producers  combined,  taking 
in  all  the  oil  interests  of  every  shape,  refineries  as  well  as  others,  together 
with  the  local  railroads.  These  interests  were  combined  in  opposition  to 
the  South  Improvement  Company.  He  said  the  suggestion  for  the  organi- 
zation of  the  South  Improvement  Company  came  from  the  railroads,  that 
the  railroads  suggested  to  the  refiners  that  they  form  an  association  to  be 
called  the  South  Improvement  Company.  The  movement  started  in  Phila- 
delphia, extended  to  Pittsburg  and  then  to  Cleveland.  He  said  the  Standard 
Oil  Company  had  been  very  much  maligned  in  connection  with  the  South 
Improvement  Company.  While  it  was  proposed  that  the  railroads  give  the 
South  Improvement  Company  a  special  preferential  rate,  this  agreement 
was  never  carried  out.  The  protest  in  the  oil  region  was  so  great  that  it 
failed  and  the  South  Improvement  Company  was  never  revived.  He  was 
not  aware  of  any  advantages  now  given  by  the  railroads  to  any  of  the  oil 
producers  or  refiners. 

The  South  Improvement  Company  operated  under  an  incorporation  by 
the  State  of  Pennsylvania,  which  it  purchased,  this  incorporation  being  one 
of   the   numerous    omnibus   charters    maile    by    the    Legislature    of    Pennsyl- 

33 


514  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

vania,  under  its  old  constitution  and  prior  to  or  about  1870.     This  consti- 
tution allowed  the  company  to  do  anything,  as  he  understood  it. 

When  asked  what  interest  the  Pennsylvania  Railroad  Company  had  in 
the  South  Improvement  Company,  the  witness  said  the  conviction  was  well 
settled  in  the  oil  region,  that  that  company  was  really  behind  it.  That  was 
a  mere  suspicion  and  there  was  no  proof  of  it.  The  whole  project  of  the 
South  Improvement  Company  arose  and  fell  in  six  months.  There  was  no 
attempt  to  carry  out  the  contract  between  the  South  Improvement  Com- 
pany and  the  railroads. 

The  commission  took  a  recess,  after  which  it  was  called  to  order  by 
Vice-Chairman  Phillips. 

Q.  (By  Mr.  FARQUHAR.)  Is  it  a  fact  or  not,  that  every  one  of  the  pipe 
lines  up  to  the  time  of  the  establishment  of  the  South  Improvement  Com- 
pany gave  rebates  and  drawbacks?  A.  I  think  it  is;  they  gave  special  rates- 
to  favored  customers. 

Q.  Shippers?    A.  Yes,  sir. 

Q.  Without  exception?  A.  I  cannot  testify  so  broadly  as  that,  but  I 
have  at  various  times  heard  it  stated  that  such  was  the  case,  and  I  know 
of  one  particular  instance. 

Q.  (By  Vice-Chairman  PHILLIPS.)  You  know^  *of  only  one  particular 
instance?  A.  I  know  of  one;  *but  I  have  heard  of  a  great  many;  that  one 
came  to  my  knowledge  in  a  way  that 

Q.  (By  Vice-Chairman  PHILLIPS.)  (Interrupting.)  But  you  have  no 
personal  knowledge  that  there  were  rebates  given?  A.  Oh,  yes.  sir;  I  have 
knowledge  of  that;  the  knowledge  of  the  contracts. 

Q.  (By  Vice-Chairman  PHILLIPS.)  The  different  pipe  lines?  A.  In 
addition  I  say  it  is  variously  stated  that  there  were  others,  but  I  know  of 
one  particular  case. 

Q.  (By  Vice-Chairman  PHILLIPS.)  You  only  know  of  one  particular 
case  in  which  rebates  were  given?     A.  Yes,  sir. 

*Q.  (By  Vice-Chairman  PHILLIPS.)  Now,  Mr.  Boyle  will  take  his  own 
course  in  making  his  presentation  of  his  testimony  to  the  commission.  A. 
Well,  we  will  take  up  the  question  of  pipe  lines  now  to  get  it  clear  in  the 
minds  of  the  commission.  There  has  been  stated,  in  a  general  way,  the  fact 
of  the  existence  of  several  small  pipe  lines,  but  to  get  the  location  of  these 
lines  and  their  length,  and  the  magnitude  of  their  operations  somewhat  in 
the   minds  of  the  commission,  I  will   now  take  up  the   subject  of  pipe  lines. 

The  first  line,  as  I  stated  this  morning,  was  the  line  known  as  the  Van 
Sickle  line,  five  miles  in  length,  extending  from  Pithole  to  Miller  farm. 

Q.  (By  Vice-Chairman  PHILLIPS.)  About  what  distance  is  that?  A. 
Five  miles.  Simultaneously  with  the  starting  of  that  line,  another  line  was 
begun  from  the  same  point;  that  is  to  say,  Pithole,  and  extended  to  the 
Allegheny  river,  seven  miles  in  length,  called  the  Pennsylvania  Tubing  & 
Transportation  Company. 

-Representative  LIVINGSTON.  May  I  ask  what  the  purpose  of  this 
testimony  is?     Is  it  simply  to  give  the  history  of  this  pipe  line  business? 

Vice-Chairman  PHILLIPS.  Well,  the  commission  decided  to  let  Mr. 
Boyle  go  on. 

Representative  LIVINGSTON.  I  do  not  understand  what  you  are  going 
into.     Do  you   simply  intend  to  give  a   history  of  this  pipe   line   industry? 

The  WITNESS.     No.  sir;   this  is  merely  to  lead  on  to  other  facts. 

Representative   LIVINGSTON.     What  is  it  you  want  to  show? 

Mr.  BOYLE.  We  want  to  show  the  concentration  of  the  business  into 
one  concern. 

Representative  LIVINGSTON.  Well,  can  you  not  do  that  without  going 
into  the  history  of  the  pipe  lines,  without  going  on  and  telling  when  this  one 
was  started  and  when  that  one  was  started? 

Mr.   BOYLE.     Certainly. 

Mr.  SMYTH.  I  think  we  had  better  let  the  witness  go  on  in  his  own 
v/ay  and  tell  his  own  story,  if  we  propose  to  hear  him;  and  I  would  not 
attempt  to  curb  the  witness   in   giving   his  testimony. 


*Black   faced   type  indicates   matter  omitted,  in  the  course  of  editing,  from  the 
official  report. 


PATRICK   C.   BOYLE.  515 

*Representative  LIVINGSTON.  I  think  this  commission  had  better  con- 
trol the  testimony,  rather  than  the  witness. 

Mr.  SMYTH.  It  is  not  a  question  of  controlling  the  witness;  if  he 
wants  to  tell  his  story  let  him  tell  it  in  his  own  way;  if  we  do  not  want  the 
history  or  the  story,  let  us  say  so. 

Representative  LIVINGSTON.  I  do  not  want  to  hear  all  this  history;  I 
am   very  candid   about  that. 

Vice-Chairman  PHILLIPS.  I  want  to  ask  Mr.  Boyle  if  this  will  consume 
any  considerable  time. 

Mr.  BOYLE.  It  is  simply  leading  up  to  the  course  of  my  testimony.  If 
I  am  to  be  shut  off  right  at  the  beginning 

Representative   LIVINGSTON.     I    don't  want  to  shut  you  off. 

Mr.   BOYLE.     and   told  to  answer  yes   or   no 

Representative  LIVINGSTON.  I  do  not  want  to  shut  you  off,  but  I  ask 
what  is  the  purpose  of  the  testimony? 

Mr.  BOYLE.  The  purpose  is  to  lead  up  to  the  consolidation  of  the  pipe 
lines. 

Representative  LIVINGSTON.  Why  can't  you  discuss  that,  then,  with- 
out leading   up  to   it. 

Mr.   BOYLE.     I   can;    I   can  say   it  in  a  word. 

Representative   LIVINGSTON.     Why   not  say   it  that  way,  then? 

Mr.  BOYLE.     Well,  I   will   give  you  just  what  you  want. 

Mr.  SMYTH.  I  would  insist  on  my  view  of  the  witness  being  allowed 
to  give  his  testimony   in   his  own  way. 

Representative    LIVINGSTON.     All    right;    go   ahead. 

Vice-Chairman  PHILLIPS.  Well,  Colonel  Livingston  withdraws  his 
objection,  and   Mr.  Boyle  will  proceed  in  his  own  way. 

Representative  LIVINGSTON.  I  want  to  say  this:  If  we  are  to  have 
the  history  of  every  enterprise  that  we  are  going  to  investigate,  it  will  take 
a  dozen  years  to  get  through,  and  I  only  want  to  have  a  limit  somewhere. 

Mr.  BOYLE.  The  next  enterprise  in  order  was  the  Pickett  &  Sherman 
Pipe  Line,  extending  from  Pithole  to  Titusville,  IOI/2  miles.  About  the  same 
time,  Abbott  &  Harley  constructed  a  pipe  line  from  Benninghoff  run  to  the 
Shai^er  farm,  a  distance  of  two  miles.  The  next  enterprise  was  Warren's 
Line  from  Pithole  to  Henry's  Bend,  and  from  this  small  lines  of  a  mile  and 
a  half  to  five  miles  in  length,  but  more  generally  two  miles  than  five,  were 
extended  from  year  to  year.  Very  few  of  them  were  five  miles  in  length, 
but  at  various  times  they  were  all  different  concerns.  Tidioute  had  its 
system  of  pipe  lines,  and  the  Empire  Transportation  Company,  operating 
the  Pickett  &  Sherman  Line,  owned  at  least  two  separate  and  distinct 
gathering  lines  in  different  parts  of  the  field  at  the  same  time.  In  1869  the 
first  pipe  lines  were  laid  in  what  is  called  Parker's  district — possibly  with 
a  small  beginning  in  1868.  In  1869  the  pipe  lines  began  to  be  recognized  as 
carriers.  The  first  line  there  was  the  Parker,  Thompson  &  Co.,  the  next 
was  the  Karns.  About  the  same  time,  however,  Martin  8c  Harms,  of  Petro- 
leum Center,  constructed  a  line  known  as  the  Foxburg  Line,  subsequently 
named  the  Mutual  Pipe  Line.  Then  the  Mutual  Pipe  Line  system  extended 
out  to  St.  Petersburg,  and  ran  into  Clarion  county,  from  time  to  time 
extending  over  the  entire  field  of  10  or  12  miles.  The  Mutual  Pipe  Line 
became  quite  an  extensive  concern.  The  next  in  order  was  the  Grant  Pipe 
Line,  at  Parkers  Landing,  a  small  gathering  line,  getting  its  oil  from  Black 
and  Milford  farms  at  Parkers  Landing,  and  terminating  at  the  river  and 
railroad.  Previous  to  this  time  and  during  the  Pithole  development,  and 
those  immediately  following  it,  around  Fagundas,  Vandergrift  &  Forman 
constructed  a  gathering  system  which  was  later  extended  to  the  Cranberry 
district,  Pinegrove  township  and  the  Milton  farm,  and  with  the  opening  of 
the  large  wells  in  Bear  Creek  valley,  to  the  river  at  Bradys  Bend  and 
throughout  the  producing  district  in  Butler  county,  and  subsequently  to 
Concord  township,  in  Butler  county,  on  the  development  of  what  became 
the  Grease  City  field.  This  line  formed  a  nucleus  of  what  is  now  known 
as  the  LTnited  Pipe  Line  system. 


*Black   faced   type  indicates   matter  omitted,  in  the  course  of  editing,  from   the 
C'fflcial  report. 


516  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

The  next  in  order  was  the  Relief  Pipe  Line  Company,  started  at  Millers- 
town  and  terminating  at  the  Allegheny  river.  This  pipe  line  development 
brings  us  down  to  the  period  of  1874  and  1875,  and  what  I  have  named  thus 
far  have  been  constructed  on  the  one  side  of  the  river,  that  is  on  the  side 
of  the  Butler  and  Armstrong  developments.  On  the  other  side  there  was 
equal  activity.  Marcus  Hulings  constructed  the  Antwerp  Pipe  Line,  taking 
oil  in  opposition  to  the  Mutual  Pipe  Line.  Later  on  the  American  Transfer 
Company  commenced  to  compete  for  business,  and  then  came  the  Atlantic 
Pipe  Line.  All  these  lines  would  average  about  10  miles  in  length — from 
7  to  10  miles  in  length.  The  Atlantic  possibly  might  exceed  that  for  the 
reason  that  they  had  two  termini — one  on  the  river  and  one  on  the  branch 
railroad.  Two  of  these  lines  subsequently  constructed  trunk  lines  from  the 
Clarion  field  to  Oil  City  and  delivered  oil  there,  which  was  at  that  time  a 
common  point.  What  are  known  as  common  points  were  points  of  common 
shipment  or  junction  points,  where  stated  rates  were  given.  *Between  these 
junction  points  another  rate  was  given.  The  aim  of  the  pipe  line,  as  far  as 
possible,  was  to  reach  common  points,  to  get  the  advantage  of  the  freight 
rates.  The  original  pipe  lines  were  merely  transporters  of  oil,  but,  through 
the  exigencies  of  operation,  they  became  buyers  of  oil;  not  in  their  corpo- 
rate capacity,  but  by  some  arrangement  outside  of  their  corporation.  Each 
one  of  them  had  a  purchasing  department,  and  the  price  on  all  the  lines 
varied  to  some  extent.  Very  rarely  the  same  price  was  stated  at  the  same 
time  on  two  lines.  This  condition  existed  up  to  1877,  and  the  result  of  this 
enormous  competition  and  over-capacity  of  pipe  lines  was  that  no  pipe  line 
was  able  to  earn,  by  its  legitimate  functions,  sufficient  to  sustain  itself. 
Therefore  the  purpose  of  the  association  you  spoke  of  by  the  railroads  was 
to  establish  a  through  freight  rate.  These  pipe  lines  were  in  some  manner 
connected  with  one  or  the  other  of  the  four  leading  railway  lines,  and  the 
through  rate  of  freight  was  established  from  the  wells  to  the  seaboard  or  to 
the  refinery,  or  wherever  it  had  termini.  In  1874  Mr.  Rutter,  general  freight 
agent  of  the  New  York  Central  Railroad  Company,  issued  a  new  freight 
tariff  in  which  it  was  expressly  stated  that  all  shippers  receiving  oil  from 
pipe  lines  would  have  repaid  to  them  22  cents  a  barrel. 

This  was  the  beginning  of  the  rebate  system.  Considerable  tumult  was 
occasioned  by  this  circular,  and  meetings  were  held,  resolutions  were  adopt- 
ed and  attempts  were  made  to  influence  the  railroads  to  abandon  the  rate. 
At  all  events  that  is  where  the  rebate  charge  of  20  or  22  cents  a  barrel, 
about  which  testimony  has  been  taken  before  other  commissions,  and  which 
was  given  by  railroads  to  pipe  lines,  started.  Both  the  pipe  lines  and  the 
railroads  wanted  the  oil,  and  their  backers,  the  railroads  or  others,  were 
satisfied  to  divide  the  freight  rate  with  the  pipe  lines,  in  order  to  get  the 
oil  freight  for  the  railroads. 

Q.  (By  Professor  JENKS.)  Do  I  understand  you  to  say  that  this  was  a 
general  circular,  and  that  anyone  who  shipped  oil  over  these  lines  received 
this  22  cents  rebate? 

Mr.  FARQUHAR.  Did  this  include  all  shippers?  A.  Yes.  sir;  all  ship- 
pers who  patronized  the  pipe  lines  within  the  pool.  Not  all  pipe  lines,  either. 
I  want  to  correct  myself  on  that  point,  because  through  the  active  competi- 
tion about  1873  or  1874  a  pooling  arrangement  was  entered  into  by  the  pipe 
lines.  This  was  an  attempt  on  their  own  part  to  get  the  pipage.  Failing  in 
that,  they  failed  to  make  a  success  of  their  organization,  which  was  called 
the  Pipe  Line  Association,  and  it  was  after  that  that  the  Rutter  circular  ap- 
peared, in  which  all  the  railroads  concurred.  If  the  circular  is  of  any  in- 
terest you  will  find  it  already  published  in  the  investigation  before  the 
Manufacturers'  Committee  of  1888.  It  would  be  loading  down  your  records 
to  quote  it  again.     But  we  have  it  here  if  you  desire  it. 

This  condition  existed  from  1874  until  some  time  in  1877.  when  there 
was  a  consolidation  of  certain  pipe  line  interests,  and  this  consolidation 
grew  until  about  all  the  pine  lines  in  the  region  were  members  of  one  con- 
cern known  as  the  United  Pipe  Line  Company.  The  organization  was  effect- 
ed sometime  in  1877  or  1878.    The  United  Pipe  TJne  Company  was  organized 


♦Black   faced    type  indicates  matter   omitted,  in  tlie  course  of  editing,  from   the 
ofHcial  report. 


PATRICK   C.   BOYLE.  517 

with  a  capital  of  $3,000,000,  and  acquired  by  purchase  the  property  of  the 
Columbia  Conduit  Company  and  the  Empire  Line,  these  two  being  the 
strongest,  and  a  lot  of  smaller  lines. 

Q.  (By  Professor  JENKS.)  You  think  the  cause  of  Ihis  combination 
among  the  pipe  lines  was  the  extraordinary  competition  that  existed  among 
them,  that  had  practically  made  their  business  unprofitable?  A.  There  is 
no  question  about  that;  there  is  no  doubt  about  that  whatever.  It  was  the 
over-capacity  of  the  pipe  line  enterprises  and  the  greediness  with  which 
individuals  rushed  into  it.-  Every  person  within  a  mile  of  a  railroad  handled 
his  own  oil  as  far  as  it  was  possible,  and  by  getting  small  lines  in  that  way 
they  formed  a  nucleus  of  other  lines,  by  one  and  another  going  into  it 
and  a  little  capital  taken  here  and  there  they  branched  into  a  pipe  line.  The 
pipe  lines  were  not  equal  in  strength,  in  capacity,  nor  in  integrity.  During 
this  period  the  over-production  of  pipe  lines  resulted  in  a  great  deal  of  em- 
barrassment to  the  trade.  It  is  a  matter  of  public  information  that  some  of 
the  lines  were  not  able  to  make  deliveries  on  demand.  Suits  were  entered 
in  the  courts  for  false  statements  after  the  pipe  line  law  of  1874  went  into 
effect.  That  was  the  cause  of  the  consolidation  of  the  pipe  lines.  It  was  a 
necessity.     The  business  would  not  have  existed  long  had  it  not  been  done. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Was  there  more  than  the  one  suit 
entered  of  the  nature  of  which  you  spoke?    A.  I  recall  but  one  at  this  time. 

Q.  (By  Vice-chairman  PHILLIPS.)  Only  one?  A.  I  do  not  recall  any 
more. 

Q.  (By  Vice-Chairman  PHILLIPS.)  And  yet  there  was  a  multitude  of 
pipe  lines  at  that  time  and  only  one  suit  entered  on  account  of  false  state- 
ments? A.  Well,  I  say  that  from  information,  because  I  have  the  informa- 
tion here;   I  only  speak  of  what  I  know. 

Mr.  Boyle  said  that  at  the  time  when  the  consolidation  of  the  pipe  lines 
took  place,  about  1874  to  1876,  the  daily  production  was  as  follows:  1874, 
29.937  barrels;  1876,  24.505  barrels;  1877,  35,988  barrels,  and  in  1878,  41,540 
barrels.  From  that  until  the  highest  production  of  96,357  barrels  in  1897 
there  was  an  annual  increase  in  the  production. 

The  witness  had  heard  it  stated  that  the  United  Pipe  Line,  which  began 
business  with  a  capital  of  $3,000,000,  which  was  afterwards  increased  to 
$5,000,000,  paid  no  dividend  for  three  years  after  its  organization,  or  until 
the  opening  of  the  Bradford  field.  He  could  not  say  who  owned  the  United 
Pipe  Line  when  it  was  organized,  though  it  is  now  owned  by  the  National 
Transit  Company.  The  National  Transit  Company  is  now  known  as  a  part 
of  the  Standard  pipe  lines  system.  The  refiners,  or  the  Standard,  took  an 
immediate  pecuniary  interest  in  these  pipe  lines  in  1877.  He  had  heard 
it  estimated  that  in  1877  the  Standard  had  a  little  more  than  one-half  inter- 
est in  the  pipe  line  system.  What  is  known  as  the  Standard  Oil  Company 
was  an  aggregation  consisting  of  the  strongest  refining  firms  in  this  country. 
The  same  parties  in  interest  in  the  Standard  Oil  Company  at  that  time,  with 
very  few  exceptions,  are  the  same  parties  in  interest  yet  in  that  company. 
Vandergrift  &  Forman  came  in  the  United  Pipe  Line,  and  Mr.  Vandergrift 
was  the  first  president  of  the  line.  Mr.  Boyle  had  never  heard  that  the 
Rockefellers  were  in  the  pipe  line  company  as  managers.  Mr.  Vandergrift 
left  the  service  of  the  pipe  line  about  1885.  He  had  never  understood  that 
Mr.  Vandergrift  was  a  director  of  the  Standard  Oil  Company. 

'ihe  witness  again  referred  to  the  movement  to  shut  down  oil  production 
that  occurred  in  1862,  immediately  after  the  period  of  the  flowing  wells.  In 
1866  there  was  an  agitation  for  a  shut-down  movement  with  the  object  of 
bettering  the  condition  of  the  producers.  The  first  practical  shut-down  oc- 
curred in  1872,  and  it  was  almost  absolute,  and  included  both  the  production 
and  the  drilling.  It  resulted  in  raising  the  profit  on  oil.  There  was  an  agree- 
ment between  all  the  producers  in  all  the  fields.  This  shut-down  lasted 
30  days,  and  it  was  to  advance  the  price  of  oil.  The  decline  that  took  place 
in  1873  was  due  to  the  large  wells  in  the  neighborhood  of  Millerstown. 

In  1874  there  was  a  very  large  increase  in  the  output  of  oil  near  Karns 
City,  which  was  caused  by  deepening  the  w-ells  65  to  85  feet,  and  through 
the  fourth  sand,  which  oftentimes  quadrupled  the  output  of  the  well. 


518  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

In  1874  a  local  shut-in  plan  originated  in  Clarion  county,  where  some 
flowing  wells  had  lately  been  developed,  and  the  prices  were  naturally  "off" 
that  year. 

In  1876  a  plan  was  started  for  pooling  the  surplus  oil,  as  a  means  of  ad- 
vancing the  market,  but  the  conditions  improved  so  rapidly  about  mid- 
summer of  that  year  that  such  action  became  unnecessary.  The  advance 
in  the  price  of  crude  oil  to  $4  a  barrel,  or  more,  in  the  fall  of  1876  was  re- 
sponsible for  nearly  all  the  ills  that  followed  it  for  the  next  10  years.  It 
called  the  attention  of  persons  not  permanently  engaged  in  the  oil  business 
to  the  great  amount  of  money  to  be  obtained  through  drilling  wells.  Prices 
went  down  and  have  hardly  recovered  yet. 

In  1877  and  1879  the  Producers'  Union  was  formed,  it  being  started 
in  a  small  way  by  a  few  producers  at  Elk  City,  Clarion  county,  who  hoped  to 
unite  their  neighbors  in  a  suspension  of  operations  to  improve  prices,  and 
from  it  grew  the  Petroleum  Producers'  Union,  which  lasted  two  years.  Up 
to  1879  no  movement  of  this  kind  had  continued  for  so  long  a  period.  Since 
then  there  have  been  similar  movements  that  have  lasted  for  a  longer  time. 
This  m_ovement,  which  started  as  a  protective  concern,  rapidly  developed 
into  an  aggressive  organization.  They  undertook  to  fight  the  transportation 
companies  and  the  railroads.  Suits  were  started  in  the  Supreme  Court  of 
Pennsylvania  to  annul  the  charters  of  the  pipe  lines,  and  criminal  actions 
were  brought  against  some  of  the  owners  of  the  pipe  lines  and  members  of 
the  Standard  Oil  Company. 

"If  their  aim  was  to  improve  their  condition,"  said  Mr.  Boyle,  "it  failed 
of  its  purpose." 

Q.  (By  Vice-Chairman  PHILLIPS.)  Where  was  this  suit  brought  against 
some  members  of  the  Standard  Oil  Company?  A.  In  Clarion  county.  The 
suits  against  the  members  of  the  Standard  Oil  Company  were  instituted  in 
Clarion  county;  the  suits  against  the  pipe  lines  were  in  Venango  county. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Well,  was  that  suit  tried  in  Clarion 
county  or  was  it  removed  from  Clarion  county?  A.  It  was  not  tried  any- 
where, and  was  not  removed  from  Clarion  county. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Did  they  not  take  an  appeal  to  the 
Supreme  Court  of  Pennsylvania?  A.  No  doubt  they  did;  but  as  I  under- 
stand it  the  suit  was  settled  outside  of  court. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Yes;  but  after  an  appeal  was  taken? 
A.  Well,  I  am  not  clear  on  that  point,  Mr.  Chairman. 

Q.  (By  Vice-Chairman  PHILLIPS.)  It  was  a  suit  for  conspiracy,  was 
it  not?  A.  It  was  called  a  suit  for  conspiracy,  yes,  sir;  but  that  hardly 
proves  the  conspiracy,  from  the  fact  that  it  was  never  tried. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Oh,  no,  certainly  not;  you  have 
covered  the  ground  very  fully,  Mr.  Boyle;  you  have  stated  that  there  was  a 
suit  brought.     I  have  nothing  further  to  say. 

The  witness  said  the  condition  of  the  producer  was  no  better  after  the 
termination  of  that  combination  than  it  was  before.  The  production  con- 
tinued to  increase  and  the  prices  to  soften  with  the  addition  to  stocks.  In 
1879  the  daily  production  of  oil  was  54,206  barrels,  and  the  price  was  85% 
cents  per  barrel.  When  the  movement  was  started,  in  1877,  the  daily  pro- 
duction was  35,988  barrels  and  the  price  $2.39%,  which  was  the  average  foi 
the  year. 

"These  are  the  actual  figures,"  said  Mr.  Boyle,  referring  to  the  prices 
quoted  above,  "and  that  is  what  makes  me  say  the  condition  of  the  pro- 
ducers was  no  better  at  the  end  of  the  combination  than  it  was  at  the  be- 
ginning." 

The  great  increased  drilling  had  not  ceased  to  any  extent.  Stocks  had 
accumulated  and  production  increased. 

In  1881,  during  the  development  of  the  white  sand  pools  in  Warren 
county,  the  individual  shut-down  of  the  heavier  operators  in  Cooper  tract 
occurred.  *Cooper  tract  was  the  district  indicated,  or  section  in  whicli  the 
oil  was  produced;   the  oil  of  that  particular  quality.     Cooper  tract  was  per- 


*Black   faced    type  indicates   matter  omitted,   in  tlio  course  of  editing,  from  the 
ofllcial  report. 


PATRICK  C.  BOYLE.  519 

*haps  some  one  to  two  thousand  acres  in  extent,  under  different  ownerships; 
that  was  the  name  of  the  territory;  this  was  successful  so  far  as  the  opera- 
tions on  that  tract  were  concerned. 

In  1884  there  was  an  attempted  combination  of  the  producers  to  restrict 
drilling.  The  movement,  while  more  general,  was  only  partially  successful. 
This  was  the  year  of  the  Thorn  Creek  development;  the  period  w^hen  very 
large  wells  were  found  in  a  small  area  of  territory.  The  persons  engaged 
in  engineering  the  shut-down  of  1884,  that  is,  the  combination  of  1884,  or- 
ganized for  the  improvement  of  prices  and  the  betterment  of  the  condition 
of  the  producers,  claimed  and  alleged  that  the  failure  was  duo  to  the  want 
of  co-operation  on  the  part  of  the  Thorn  Creek  operators,  but  it  was  car- 
ried out  very  generally  throughout  other  sections. 

The  Associated  Producers'  Oil  Company  was  formed  shortly  after  1884 
as  a  result  of  the  abortive  attempt  to  limit  production  due  to  activities  on 
Thorn  Creek,  and  it  is  still  in  existence.  The  capital  stock  ($1,000,000)  of 
this  company  w-as  parcelled  out  to  all  the  producing  companies.  As  it  be- 
came necessary  to  purchase  property  in  order  to  curtail  production,  or  stop 
the  drilling,  the  purchasing  was  done  by  this  company  and  all  the  share- 
holders were  to  participate  in  the  profits  that  might  accrue  from  it.  It  was 
considered  a  very  wise  arrangement,  and  the  fact  that  it  is  still  in  exist- 
ence and  doing  business  would  seem  to  indicate  that  it  is  a  .success  in  every 
way. 

The  shut-down  combine  of  1887  consisted  of  an  agreement  or  contract 
between  the  Producers'  Protective  Association  and  the  Standard  Oil  Com- 
pany for  their  mutual  benefit.  On  the  one  hand  the  producers  were  to  shut  in 
at  least  one-third  of  their  production  for  one  year,  and  on  the  other  the 
Standard  was  to  relinquish  certain  holdings  in  oil,  which  he  thought  amount- 
ed to  6,000,000  barrels,  5,000,000  barrels  being  turned  over  to  ^he  association 
(the  producers)  and  1,000,000  being  set  aside  for  the  labor  employed.  The 
price  at  w^hich  the  oil  was  turned  over  by  the  Standard  Oil  Company  was 
62  cents  a  barrel,  and  when  it  was  turned  over  the  current  irice  was  10  cents 
more.  His  opinion  was  that  the  proposition  for  the  contract  that  was  made 
came  from  the  Producers'  Association.  As  a  result  of  this  contract  crude 
oil  advanced  29  cents  a  barrel.  The  price  of  refined  oil  was  rot  advanced  to 
the  consumer  in  proportion  to  what  it  was  to  the  producer.  It  looked  to  him 
as  if  the  Standard  Oil  Company  had  borne  the  loss  resulting  from  this  condi- 
tion in  proportion  to  the  quantity  of  oil  they  refined.  He  thought  the  Stand- 
ard Oil  Company  had  entered  this  arrangement  because  it  desired  a  better- 
ment of  the  trade  as  a  whole  and  was  concerned  in  the  interest  of  the  pro- 
ducer nothwithstanding  all  that  has  been  said  about  that  company. 

The  witness  said  that  2,000,000  barrels  of  oil  of  the  stock  involved  in 
the  shut-down  contract  was  set  aside  for  the  benefit  of  labor  (1,000,000  by 
the  Standard  Oil  Company  and  1,000,000  by  the  Producers'  Protective  Asso- 
ciation), the  profits  on  that  amount  of  oil  to  assist  labor,  which  was  the 
loser  by  the  shut-down.  The  profits  were  distributed  among  the  workmen 
by  their  own  organization.  He  believed  the  laborers  got  more  from  the  sale 
of  their  oil,  it  being  sold  at  a  higher  price,  than  the  producers  themselves  did. 

The  producers  in  the  Washington  field  had  declined  to  come  into  this 
agreement  for  restricting  oil  production  because  they  had  struck  very  pro- 
ductive wells  and  they  made  a  great  deal  of  money  out  of  the  advance  in 
prices. 

Mr.  Boyle  said  that  prices  of  oil  are  often  cut  in  order  to  find  a  market 
for  surplus  stock.  If  the  oil  is  not  sold  it  must  go  into  tanks  and  be  carried 
at  great  expense  until  it  finds  a  remunerative  price  or  inducements  must  be 
given  to  the  foreign  consumer  to  induce  him  to  take  the  surplus  stock.  He 
thought  that  all  companies  refining  oil  at  times  found  themselves  in  this 
condition. 

In  order  to  show  that  the  production  of  crude  oil  has  been  profitable, 
Mr.  Boyle  presented  a  statement  showing  the  amount  of  oil  produced,  the 
average  price  and  the  valuation  by  years  from  1860  to  1898,  the  total  valua- 
tion by  decades,  the  number  and  cost  of  wells  drilled. t 


*Black   faced   type  indicates   matter   omitted.  In  the  course  of  editing,  from  the 
official  report. 

tThis  table  is  published  on  page  4.''.4  of  the  official  report  of  the  commission. 


520  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

The  aggregate  value  of  the  oil  produced  from  1860  to  1898  inclusive  was 
$778,771,847.03,  which  was  obtained  by  drilling  100,881  wells  at  a  total  cost 
of  $232,121,000. 

The  above  included  the  cost  of  15,000  dry  wells,  which  never  produced 
any  oil  at  all  and  which  cost  the  producers  about  $30,000,000. 

"Allowing  that  one-fourth  of  all  the  oil  produced  went  to  the  land  in- 
terests," said  Mr.  Boyle,  "those  interests  would  receive  $194,692,962,  leav- 
ing $584,078,885  for  the  oil  producers.  Deducting  the  cost  of  drilling,  there 
still  remains  $351,957,885.  The  cost  of  lifting  the  oil  at  an  average  of  25 
cents  a  barrel  would  be  $87,989,471.25,  leaving  $263,968,413.75  as  the  profits 
of  the  producing  business  for  the  last  39  years.  This  is  an  average  of 
$6,768,420.86  per  year." 

Q.  (By  Vice-Chairman  PHILLIPS.)  Now,  in  those  figures  I  understand 
you  do  not  include  bonuses  and  rentals  paid  for  holding  ground.  Are  there 
not  many  instances  where  persons  pay  a  very  large  bonus  for  prospective 
territory  that  did  not  prove  valuable,  and  is  not  a  very  large  per  cent  of 
money  expended  in  holding  ground,  paying  very  near  $5  per  acre  per  annum, 
upon  which  to  drill.  Would  not  that  run  into  a  very  great  many  million 
dollars;  the  cost  of  obtaining  the  ground  to  drill  upon?  A.  It  would.  We 
have  considered  that  question  very  fully,  Mr.  Chairman,  and  the  view  that 
we  adopt  on  that  point  is  that  the  bonus  and  lease  rentals  for  speculation  are 
not  entitled  to  enter  into  the  construction  account  or  an  estimate  of  this 
kind.  While  it  is  true  that  they  appear  as  against  the  producer's  profits, 
they  defer  his  profits  for  a  certain  period,  but  the  amount  needed  to  produce 
a  given  amount  of  oil  is  what  we  state.  We  state  the  cost  of  the  wells,  we 
give  the  rental  of  the  wells,  and  we  give  all  the  necessary  expenses  of  lifting 
the  oil.  Now,  any  other  expense  is  purely  speculative,  and  made  for  the 
purpose  of  giving  the  individual  producer  an  advantage. 

Q.  (By  Vice-Chairman  PHILLIPS.)  But  is  it  not  necessary,  in  order 
to  pursue  the  business,  to  pay  these  bonuses  and  pay  these  rentals;  could 
any  firm  or  individual  become  a  large  operator  without  paying  bonuses  or 
without  paying  rentals,  when  the  ground  only  has  a  prospective  value? 
A.  But  it  ought  in  that  case  to  appear  as  a  bonus,  and  not  as  a  fixed  charge 
against  the  cost  of  operating. 

Q.  (By  Vice-Chairman  PHILLIPS.)  But  still  the  burden  is  a  great  many- 
million  dollars;  it  almost  equals  the  cost  of  drilling.  A.  It  is  not  compulsory, 
but  the  cost  of  drilling  is,  and  the  cost  of  lifting  oil  is;  the  lease  being 
speculative,  does  not  enter  into  our  figures. 

*Q.  (By  Vice-Chairman  PHILLIPS.)  But  still  it  curtails  his  profits? 
A.  But  still  it  curtails  his  profits;  where  he  sees  proper  to  invest  in  that 
way,  he  takes  the  chances. 


*Black  faced  type  Indicates  matter  omitted,  in  the  course  of  editing,  from  the 
official  report. 


PATRICK  C.  BOYLE. 


521 


EXHIBIT   II.— TREND   OF   PRICES   OP   CRUDE   AND   REFINED   OIL, 

1870-1898. 


Year. 

Average 
daily  pro- 
duction. 

Average 

price  per 

Barrel. 

Reflned 

per 
Gallon. 

Stocks 
Increased. 

Stocks 
Decreased. 

Total 
Stocks. 

1870 

Barrels. 

15,350 
15,800 
17,925 
27, 106 
29,937 
24,075 
24,  .505 
35,988 
41  544 
.54.206 
71,114 
75,004 
82,338 
63,365 
65.129 
56,921 
70,679 
,58,  ,846 
45,058 
58,869 
82,376 
98, 191 
91,328 
85,296 
84,3;S4 
84,820 
92,815 
96,3.57 
85, 206 

$    3.90 
4.40 
3.75 
1.80 
1.15 
1.24M 
2.5751 
2.39% 

.941^ 

.85H 

1.05-^ 

.88% 
.71% 

■T 

.94% 
.86^ 
.66% 

.gy. 

.83% 

i.;WM 

1.19 

.78% 

f    0.26% 
.24>4 
.23% 
.I8V4 
.13 
.13 
A9% 
Ab% 
.10% 
.O814 
.091^ 
.08 
.07% 
.083^ 

.07^ 
.06% 
.07^ 
.O71J 
.07% 
.06>^ 
.0607 
.0524 
.0519 
.07.36 
.0698 
.0591 
.0631 

Barrels. 

203,872 

Barrels 

Barrels 

544,626 

1871 

12,626 

532, 000 

1872 
1873 

552,223 

.541, 134 

2,080,462 

1,084,423 
1,625,157 

1874 

3, 705, 639 

1875 

155,439 
725. 461 

3,550,200 

1876 

2, 824, 739 

1877 

303,0i)8 
1,487,463 
3,936,956 
8,  .592, 848 
8,615,947 
8,  .574, 093 
1,380,421 
1,1.57,327 

3,127,837 

1878 

4, 615, 300 

1879 

8,552,2.56 

1880 

17, 145, 104 

1881 

25,761,051 

1882 

34, 3a5, 144 

1883 

35, 715, 565 

1884 

36, 872, 892 

1886 

3,333,8.54 
171,140 
5,011,786 
9  752, 6;« 
7, 699, 681 
1,609,279 

33,  .539, 038 

1886 

33, 367, 898 

1887 

28, 3.57, 112 

1888 

18, 604, 474 

1889 

10,904,793 

1890 

9, 295, 514 

1891 

6, 047, 719 
2,052,1.55 

15,343,233 

1892 

17,39.5,-389 

1893 

5,284,206 
5, 774, 406 
1,174,872 

12,111,183 

1894 

6,336,777 

1895 

5,161,905 

1896 

4,488,678 

1,2:^9,069 

752, 101 

9,5.50,583 

1897 

10, 789, 652 
11,. 541, 753 

1898 

Since  1870,  to  and  including  1898,  the  daily  production  of  oil  has  in- 
creased 450  per  cent.  The  price  of  crude  oil  has  declined  75  per  cent.,  and 
the  price  of  refined  oil  about  75%  per  cent.,  ^showing  that  the  two  oils  have 
been  parallel  in  their  decline  from  the  start  until  this  time.  These  figures 
are  from  official   tables,  furnished   by  the  government. 

In  1871  we  exported  petroleum  and  its  products  to  the  amount  of  152,- 
197,617  gallons,  and  of  the  value  of  $36,6.33,825.  In  1897  our  total  exports 
were  994,297,757  gallons,  valued  at  $59,057,547.  In  other  words,  our  exports 
increased  over  500  per  cent,  in  26  years,  but  the  increase  in  valuation  of  the 
total  product  was  but  a  little  over  61  per  cent.  In  1871,  132.178,843  gallons 
of  illuminating  oil  sent  abroad  brought  $33,493,351,  while  in  1898  nearly  six 
times  as  great  an  amount,  or  771,350,626  gallons,  brought  but  $49,343,916. 
The  total  exports  of  petroleum  for  the  year  1898  amounted  to  986,480,610 
gallons  valued  at  $52,551,048.  The  decline  during  the  past  year  (1898) 
reached  7,817,147  gallons  in  amount  and  $6,506,499  in  value. 

For  1896  our  exports  in  petroleum  and  its  products  were  931,795.022 
gallons,  valued  at  $62,764,278,  and  for  1895,  853,126,130  gallons,  valued  at 
$56,224,425. 

In  1888,  680,000,000  gallons  of  petroleum  were  within  $6,000,000  of  the 
value  of  nearly  a  billion  gallons  exported  in  1897;  *showing  a  decline,  and 
showing  what  the  exporters  were  obliged  to  do  in  order  to  find  the  market. 

The  witness  referred  to  a  notice  to  oil  producers  posted  in  the  various 
offices  of  the  Seep  Purchasing  Agency  January  23,  1895,  as  follows: 

The  small  amount  of  dealing  in  certificate  oil  on  tlie  exclianges  renders  the 
transactions  there  no  longer  a  reliable  indication  of  the  value  of  tlie  product.  This 
necessitates  a  change  in  my  custom  of  bu>'ing  credit  balances.  Hereafter  in  all  such 
purchases  the  price  paid  will  be  as  higl-.  as  the  markets  of  the  world  will  justify, 
but  will  not  necessarily  be  the  price  bid  on  the  exchange  for  certificate  oil.  Daily 
quotations   will   be   furnished   from    this   office. 

January    23,    1895.  JOSEPH  SEEP. 


*Black   faced   type   indicates  matter   omitted,  in  the  course  of  editing,  from  the 
official  report. 


522  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

Mr.  Boyle  said  he  had  in  mind  a  case  of  a  gentleman  coming  to  Oil  City 
and  advancing  the  market  two  cents  by  his  own  bidding  and  then  dumping 
half  a  million  barrels  of  his  own  oil  on  it  immediately.  It  was  possible  for 
anyone  with  the  nerve  and  the  oil  to  have  done  the  same  thing  at  any  time. 

The  WITNESS.  (Referring  to  the  Seep  Agency.)  This  marked  a  radical 
departure  in  the  methods  of  buying  and  selling  oil,  and  in  determining  the 
price  of  crude  petroleum.  It  tended  to  make  the  option  between  producer 
and  refiner  a  direct  one,  and  to  eliminate  the  speculative  broker  as  a  factor 
in  determining  values.  The  price  of  speculative  oil  in  the  shape  of  certifi- 
cates hawked  about  on  the  floor  of  the  Oil  Exchange  was  no  longer  to  rule 
the  real  market,  as  established  directly  between  the  man  who  had  oil  in 
the  lines  that  he  wished  to  sell  and  the  agents  of  the  refiners  who  desired 
to  buy  it. 

The  change  was  rendered  imperative  by  the  gradually  diminishing  volume 
of  business  in  the  oil  exchanges  and  the  practice  of  some  of  the  larger  pro- 
ducers, who,  by  the  purchase  of  a  few  thousand  barrels  of  speculative  oil  on 
the  floor  of  the  Oil  Exchanges,  were  able  to  manipulate  the  market  a  few 
cents  in  their  favor  and  at  the  same  time  dispose  of  a  large  amount  of 
credit  balance  oil  at  the  advanced  figures. 

This  order  put  a  sudden  stop  to  the  frequent  practice  of  establishing  a 
fictitious  value  for  oil  by  interested  parties  who  desired  to  effect  sales  or 
purchases  of  the  commodity.  It,  however,  did  not  eliminate  the  petroleum 
^broker  or  put  a  check  on  speculative  dealings  in  oil.  This  business  is  pur- 
sued as  usual,  but  instead  of  the  credit  balance  price  being  determined  by 
the  price  of  certificate  oil,  as  in  times  past,  all  speculation  is  based  upon  the 
price  paid  from  day  to  day  for  credit  balances  in  the  direct  dealing  between 
the  producers  and  refiners.  But  the  broker  had  ceased  to  be  longer  a  factor 
in  the  business.  The  manifest  absurdity  of  basing  the  price  of  the  entire 
amount  of  daily  production  on  the  few  thousand  barrels  of  oil  that  changed 
hands  occasionally  on  the  fioor  of  the  Oil  Exchange  is  a  thing  of  the  past. 

In  the  following  tables  are  shown  the  average  price  of  a  barrel  of  oil 
in  the  exchanges  from  month  to  month,  as  compared  with  the  price  of  a 
gallon  of  refined  oil  in  New  York,  for  the  four  years  immediately  preceding 
the  time  when  the  new  rule  of  the  Seep  Purchasing  Agency  went  into  effect: 


PATRICK  C.  BOYLE. 


523 


HEFINED  PRICES  ARE  QUOTED  IN  CENTS  AND  DECIMAL  PARTS  OF 

A  CENT. 


Date. 


1891. 

January 

February 

March 

April 

May 

June 

July 

August 

September... 

October 

November.... 
Decem.ber 

Average. 

1892. 

January 

February 

March , 

April 

May 

June 

July 

August 

September... 

October 

November... 
December.... 

Average 


Average   i  Average 
nricl        P"ce  r^ 

crSdeoil     fl^^f,' P«^ 
Tipr  harrpl         gallon 
per  barrel.  ^^^  York 


Cents. 

74% 

71 

69% 

68^ 

661^ 

63% 


m% 


Cents. 
7.42 
-AS 
7.31 
7.18 
7.20 
7.13 
7.02 
6.70 
6.42 
6.45 
6.40 
6.44 


Date. 


1893. 

January 

February  

March  

April 

May 

June 

July 

August 

September... 

October 

November... 
December.... 

Average 

1894. 

January 

February 

March 

April 

May 

June 

July 

August 

September... 

October 

November... 
December.... 

Average 


Cents. 

.531^ 

68% 

eo% 

57% 
58% 
W% 
70% 
73% 
78% 


64 


Average 
price  re- 
fined, per 

gallon 
New  York 


Cents. 

5.33 
5.30 
5.34 
5.52 
5.20 
5.21 
5.15 
5.18 
5.15 
5.15 
5.15 
5.15 


5.25 


60 
57 '^ 
57V 
56% 
54 

54% 

54378 

51% 
51% 
53^ 


5oK 


6.45 
6.42 
6. 32 
6.10 
6.06 
6.00 
6.00 
6.08 
6.10 
6.03 
5.80 
5.45 


6.07 


83% 


80 

5. 15 

80% 
81^ 

5. 15 

5.15 

84% 

5.15 

86 

5.15 

88% 

5.15 

83% 
80% 

5.15 

5.15 

S3 

5.15 

82% 

5.15 

82% 

5.15 

91% 

5.61 

5.17 


It  must  be  remembered  that  the  prices  quoted  above  include  the  cost 
of  the  barrel.  Refined  oil  in  bulk  is  2.50  cents  less  than  the  above  figures. 
For  example:  In  1891  the  producer  realized  an  average  of  66"^  cents  per 
barrel  for  his  crude  product,  or  1.59  per  gallon,  while  the  refiner,  after  paying 
cost  of  transportation,  manufacturing,  etc.,  delivered  it  on  board  the  tank 
steamers  for  export  abroad  at  4.43  per  gallon.  In  1894  the  producer  re- 
ceived nearly  two  cents  a  gallon  for  his  crude  product,  while  the  refiner 
realized  but  2.67  cents  per  gallon. 


524 


REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 


The  following  table  shows  the  price  paid  for  crude  petroleum  by  the 
Seep  Purchasing  Agency  since  1895,  with  the  corresponding  price  of  refined 
oil  on  the  dates  when  changes  in  the  price  of  crude  were  made: 

CHANGES  IN   PRICE   OF  CRUDE   OIL  BY  SEEP  PURCHASING  AGENCY  ANI> 

CORRESPONDING  CHANGES   IN  PRICE  OF  REFINED  OIL 

AT     ABOUT    THE    SAME   DATE. 


Date. 


Agency  price 

for  crude 

per  barrel. 


1S95. 


January  23  $0. 

January  24   1 

February    9 1 

March  8   1, 

Marcli  14   1 

March  16   1 


April   8    ..-. 

April    9    

April  10  

April  11  

April  13  

April  15  

April  16   

April  17  2. 

April  18  2. 

April  19  2. 

Apjil  20  2. 

April  22  2. 

April  30  2. 

May  1  1. 

May  2  1. 

May  3  1. 

May  4  1. 

May  6  1. 

May  7  1. 

May  9 1. 

May  10  1. 

May  13  1. 

May   20    1. 

May  24  1, 

May  27  1. 

May  28  1. 

May  29  1. 

May  31  I 

June  4   1, 

June  7   1. 

June  18   1. 

June  19   1. 

June  21  1. 

June  29   1. 

July   1    1. 

July   5    1. 

July   6    1. 

July   12    1, 

July   15    1 

July   19    1, 

July  25    1. 

July   26    1 

July   27    1 

July   28    1 

November   5    1 

November  7    1 

November  11  1 

Novf mljer  12  1 

November  13  1 

November  14  1 

November  15  1 


99 

00 

03 

05 

071/2 

10 

20 

27 

35 

50 

75 

00 

25 

50 

60 

40 

25 

10 

00 

90 

80 

70 

60 

55 

50 

55 

60 

65 

671/2 

,65 

60 

571/2 

,55 

,50 

471/2 

45 

50 

55 

60 

55 

50 

471/2 

45 

471/2 

,50 

521/2 

45 

371/2 

.30 

25 

30 

33 

38 

40 

42 

45 

48 


Refined 

per 
gallon. 
Cents. 
5.90 
5.90 
6.05 
6.60 
6.85 
6.85 
7.50 
8.00 
8.00 
9.00 
9.00 
11.00 
11.50 
11.50 
11.50 
10.75 
10.75 
10.00 
9.15 
8.25 
8.25 
8.25 
8.25 
7.75 
7.75 
7.75 
7.75 
7.75 
8.50 
8.50 
8.50 
8.00 
8.00 
8.00 
7.85 
7.65 
7.65 
7.80 
8.10 
8.10 
7.95 
7.80 
7.80 
7.65 
7.65 
7.65 
7.65 
7.65 
7.65 
♦7.10 
7.25 
7.25 
7.75 
7.75 
7.75 
8.50 
8.50 


Date. 


Agency  price 

for  crude 

per  barrel. 


November  16  $1.50 

November  21  1.55 

November  27  1.50 

November  29  1.47 

November  30  1.45 

December  2  1.40 

December  5  1.38 

December  10  1.43 

December  11   1.48 

December  12   1.50 

Deceinber  19   1.47 

December  20   1.40 

December  21  1.35 

Dectmber  24  1.40 

December  27   1.45 

December  30  1.50 

1S96. 

January  2  1.50 

January  17  1.47 

January  IS   1.45 

January  20   1.43 

January  22  1.40 

January  31  1.43 

February  18  1.40 

February  20  1.35 

February  24  1.33 

February  26  1.30 

March  4   1.28 

March  9  1.30 

March  10  1.33 

March  12 1.35 

March  14  1.38 

March  17   1.40 

March  23   1.37 

March  25   1.35 

March  26  1.32 

March  27  1.29 

April  2  1.25 

April  7  1.22 

April    9    1.20 

April  24  1.25 

May  11  122 

Mav  14  1.20 

May  18  1.17 

May  19  1.15 

May  22  1.13 

May  25  1.10 

May   26    1.09 

June  5   1.10 

June  10   1.14 

June  12   l.lf, 

June  15   I.IS 

June  16   1.20 

June  23   I.IS 

June  24   1.16 

June  25   1.15 

Julv  13  1.13 


Refined 
per 

gallon. 

Cents. 
8.50 
8.25 
8.00 
7.75 
7.75 
7.50 
7.5u 
8.00 

s.oo 

8.00- 
8.00 
7.75 


S.OO 

8.00 

8.00 
S.OO 
8.00 

*7.6& 
7.60 
7.35 
7.10 
7.10 
7.10 
7.10 
7.10^ 
7.25 
7.25 
7.25 
7.50 
7.50 
7.35 
7.35- 
7.20 
7.20 
7.20 

t6.90 
6.95 
6.80 
6.80 
6.7a 
6.60 
6.60 
6.60 
6.55 
6.6S 
6.90 
6.90 
7.00 
7.00 
6.90 
6.90 
6.90 
6.80- 


♦Remained  at  thij 
ber  6. 


fiKtirc  until  Ncivem- 


♦Ranged  from  7.50  to  7.65  cents. 
tApril  17,  6.S0  cents. 


PATRICK  C.  BOYLE. 


525 


CHANGES  IN  PRICE  OF  CRUDE   OIL  BY  SEEP  PURCHASING  AGENCY  AND 
CORRESPONDING  CHANGES  IN  PRICE  OF  REFINED  OIL 
AT  ABOUT  THE  SAME   DATE— CONTINUED. 


Date. 


Agency  price 

for  crude 

per  barrel. 


July  14  $1.10 

July  15  1.07 

July  16  1.03 

July  23  1.06 

July  27  l.OS 

July  31  1.06 

August    12    1.04 

August  27   1.06 

August  31  l.OS 

September  4  1.10 

Stpttmber  10  1.12 

September  23  1.15 

September  25   I.IS 

October  1  1.16 

October  13  1.14 

October  27  1.17 

November  10  1.20 

November  18 1.17 

November  19  1.15 

November  23  1.13 

November  24  1.10 

November  27  1.08 

November  30 1.05 

December  7  1.03 

December  9  1.01 

December  14 99 

December  16 97 

December  17 95 

December  23 93 

December  28 90 

1897. 

January  1 90 

January  IS  88 

January  23 85 

February  1 87 

February  2 90 

February  15 91 

March  22  92 

March  23  93 

March  24  94 

March  26   95 

March  30  96 

April  3  93 

April  5 91 

April  5 88 

April  9 85 

April  15 84 

April  2S 83 

April  30  81 

May  3 83 

May  5 86 

May  18 89 

May  28 87 

June  24   85 

June  28  83 

June  29 82 

July  2 80 

July  13 79 

July  14 77 

July  19 75 


Refined 
per 

gallon. 

Cents. 
6.75 
6.65 
6.50 
6.60 
6.60 
6.65 
6.65 
6.70 
6.75 
6.80 
6.85 
6.30 
6.90 
6.90 
6.90 
7.00 
7.15 
6.90 
6.80 
6.70 
6.60 
6.60 
6.50 
6.50 
6.50 
6.40 
6.30 
6.25 
6.25 
6.20 

6.20 
*6.10 
6.00 
6.05 
6.15 
t6.25 
6.35 
6.40 
6.45 
6.50 
6.55 
$6.55 
6.20 
6.20 
6.05 
6.05 
6.05 
6.05 
6.15 
6.25 
6.35 
6.15 
6.15 
6.10 
6.05 
6.00 
5.95 
5.85 
5.75 


Date 


Agency  price 

for  crude 

per  barrel. 


July  26  $0.73 

Augu.st  2   71 

September  9   69 

September  23 70 

October  14   68 

October  15 67 

October  18 65 

1898. 

January  1  65 

February  16   67 

February   17    68 

February  23    70 

February  25    73 

February  26    76 

February  28   80 

March  1  82 

March  8 80 

March  9 79 

March  14   78 

March  17   77 

April  2 75 

April  21 74 

April  22 72 

April  23 71 

May  5 75 

May  6 80 

May  7 85 

May  11 83 

May   12    82 

May  19 84 

May  20 86 

June  7 87 

June  11 86 

June  15  85 

June  21   86 

June  22  87 

June  24  89 

June  27  90 

June  28  92 

July  11 94 

July  19 95 

July  20 93 

July  21 92 

July  22 90 

July  25 92 

July  26 94 

July  27 96 

August  15   97 

August  18 98 

August  22   1.00 

September  16  1.02 

September  23 1.04 

September  27   1.-06 

September  29  1.05 

October  4    1.07 

October  6  1.08 

October  7  1.10 

October  13 1.12 

October  17  1.15 


Refined 
per 

gallon. 

Cents. 
5.75 
5.75 
5.70 
5.80 
5.50 
5.50 
*5.40 

5.40 
5.40 
5.40 
5.50 
5.60 
5.85 
6.20 
6.05 
5.90 
5.90 
5.80 
5.75 
i'5.75 
5.60 
5.60 
5.60 
5.80 
6.00 
6.00 
6.00 
5.95 
6.05 
6.15 
6.15 
6.15 
6.15 
6.15 
6.15 
6.15 
6.15 
6.25 
6.25 
6.30 
6.20 
6.20 
6.10 
6.20 
6.30 
6.40 
6.40 
6.50 
6.50 
J6..50 
6.75 
6.85 
6.85 
6.95 
7.00 
7.10 
7.20 
7.30 


*On  January  20. 

tRanged  from  6.25  to  6.30  cents. 

JRanged  from  6.40  to  6.55  cents. 


*These    figures     prevailing    until     the 
close  of  the  year. 

'Ranged   from  5.70  to  5.75  cents. 
JSeptember  19.  6.65  cents. 


526 


REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 


CHAxVGES  IN   PRICE   OF   CRUDE   OIL,  BY  SEEP  PURCHASING  AGENCY  AND- 
CORRESPONDING  CHANGES  IN  PRICE  OF  REFINED  OIL 
AT  ABOUT  THE  SAME  DATE— CONTINUED. 


Date 


Agency  price 

for  crude 

per  barrel. 


June  28  $1.13 

June  30  1.17 

July  6  1.19 

July  11  1.21 

July  11  1.23 

July  18  1.25 

July  31  1.27 

August  29   1.30 

August  31   1.35 


Reflned 

per 
gallon. 
Cents. 
7.20 
7.35 
7.40 
7.50 

7.i;o 

7.70 
7.80 
7.90 
8.10 


Agency  price    Refined 
Date  for  crude  per 

per  barrel.        gallon. 
Cents. 

October  20    $1.18  7.40 

November  15  1.16  7.30 

November  16 1.15  7.30 

December  9  1.17  7..30 

December  19  1.19  7.50 

1899 

January  1  1.19  7.50 

January  12  1.17  7.40 

January  13  1.16  7.40 

January  30  1.15  7.40 

February  28  1.13  *7.35 

*In  April  dropped  to  6.95  cents. 

When  there  has  been  a  large  amount  of  surplus  production  seeking  a 
foreign  outlet,  reduced  prices  have  been  the  invariable  result  for  both  crude 
and  refined.  Increased  consumption  is  always  gained  at  the  expense  of 
price.  Foreign  competition  has  been  keen  and  prices  for  refined,  for  the 
four  years  from  1891  to  1895  were  hammered  down  to  the  lowest  notch. 
When  refined  oil  gets  above  a  certain  price  per  gallon,  its  use  becomes 
almost  prohibitive  to  millions  of  our  foreign  consumers.  The  result  of 
higher  prices  is  immediately  shown  in  a  falling-off  in  the  foreign  demand. 

A  careful  inspection  of  the  above  tables  will  show  that  the  relative 
ratio  between  the  prices  of  refined  and  crude  oil  has  been  better  maintained 
during  the  years  that  the  practice  of  basing  prices  upon  the  actual  condi- 
tions of  supply  and  demand  has  prevailed  than  during  the  years  immediately 
preceding  the  adoption  of  the  new  order  of  things.  The  speculator  devoted 
his  efforts  to  bearing  the  market  whenever  there  was  any  immediate  pros- 
pect of  a  temporary  increase  in  new  productions,  without  any  regard  to  the 
foreign  demand  for  refined  or  the  actual  value  of  refined  oil  in  the  markets 
of  the  world.     The  producer  was  absolutely  at  his  mercy. 

Taking  the  year  1899  for  illustration,  it  will  be  observed  that  the  price 
of  refined  oil  has  advanced  from  7.50  cents  a  gallon  at  the  beginning  of  the 
year  to  8.10  cents  at  the  present  time,  a  gain  of  60  points. 

During  the  same  period  the  Seep  Purchasing  Agency  price  for  crude  oil 
advanced  from  $1.19  to  $1.35  per  barrel,  or  16  cents.  During  March  and 
April,  when  crude  oil  was  $1.13  per  barrel,  refined  dropped  as  low  as  6.95 
cents  per  gallon.  On  .June  28,  when  refined  had  advanced  again  to  the  7.20- 
cent  point,  crude  oil  was  marked  up  to  $1.15,  and  a  few  days  later,  when 
refined  had  advanced  to  7.50  cents,  the  crude  oil  price  had  been  raised  to 
$1.21  per  barrel. 

******  * 

Q.  (By  Vice-Chairman  PHILLIPS.)  Let  me  ask  you  a  question  just 
there.  Is  it  fair  to  compare  the  price  of  crude  oil  with  that  of  export  oil  in 
showing  the  profits  without  taking  into  consideration  the  by-products,  such 
as  lubricating  oil,  etc.,  that  are  made  from  them  and  sold  in  this  country 
and  other  places?  A.  That  question  has  occurred  to  my  own  mind  a  num- 
ber of  times,  and  the  conclusion  that  I  have  arrived  at  is  that  where  we 
have  an  article  of  export  in  excess  of  consumption,  the  foreigner  makes  the 
price.     Manchester  gives  us  the  price  for  cotton,  and  Liverpool  for  wheat. 

Q.  (By  Vice-chairman  PHILLIPS.)  Does  the  foreigner  make  the  price 
of  oil  in  Denver  and  in  Minneapolis  and  in  southern  cities  and  towns?  A. 
If  oil  could  be  transported  by  telephone  I  dare  say  it  would  sell  as  cheaply 
in  Denver  as  it  would  in  New  York  City.  *lf  it  could  be  placed  there  by 
instantaneous  force  without  labor — if  it  could  be  placed  there  without  effort. - 
The  oil  used  in  Denver  is  produced  in  Denver,  and  the  eastern  oil  hardly 
enters    into    competition    with    it. 


♦Black   faced   type   indicates   matter  omitted,  in  the  course  of  editing,  from  the' 
ofTicial  report. 


PATRICK  C.  BOYLE.  527 

Q.  (By  Vice-chairman  PHILLIPS.)  Well,  do  you  believe  or  not  that 
the  Standard  Oil  Company  makes  a  very  large  profit  out  of  the  by-products. 
There  are  so  many  of  them  now,  benzine  and  tar  and  lubricating  oil,  *all 
of  which  are  very  profitable,  and  then  to  compare  the  price  simply  of  refined 
oil  abroad,  and  the  price  they  pay  for  crude,  *does  not  seem  to  me  to  take 
in  one-half  of  their  profits.  I  may  be  misinformed  or  mistaken,  but  what 
would  be  your  view  in  regard  to  that?  A.  Well,  the  way  it  has  always 
appeared  to  me  is  this:  The  by-product  is  something  of  a  gift  of  nature. 
In  marketing  this  by-product,  labor  and  capital  have  been  employed.  The 
producer  has  nothing  to  do  with  these  by-products;  he  sells  his  product  as  a 
whole,  and  they  are  only  created  by  labor  in  the  process  of  manufacture,  by 
chemical  process,  by  work.  In  other  words,  they  cost  something;  they 
possibly  cost  nearly  as  much  as  they  produce  in  many  instances,  but  that 
there  is  a  profit  is  very  complimentary  to  the  refinery,  to  the  industry,  to 
the  chemist  that  has  made  it  possible.  There  was  a  time  in  the  refining 
business  when  there  were  no  by-products.  The  only  by-product  that  I  knew 
anything  about  when  I  came  into  the  oil  business,  that  had  a  ready  market, 
was  benzine.  That  was  sold  as  a  dissolvent  for  paraffine  and  went  into  the 
wells  as  benzine;  it  came  out  and  went  into  the  producers'  tanks,  and  was 
sold  back  to  the  refiners  as  crude  oil,  at  400  and  500  per  cent,  over  cost. 

Now,  that  is  the  only  by-product  that  we  had  in  the  beginning.  Chemistry 
has  advanced  the  art  of  refining,  and  at  every  step  labor  and  capital  are 
employed  in  the  preparation  of  the  by-products  and  I  dare  say  there  is  a 
profit;   there  should  be  a  profit  in  them. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Well,  provided  there  is  a  profit  in 
the  by-products  now,  and  you  will  admit  that  there  is  a  large  profit,  *and 
also  a  large  profit  in  selling  water  white  oil  in  this  country  in  a  great  many 
places.  Now,  the  point  that  I  come  back  to  is  this:  Is  it  fair  to  take  the 
price  of  the  refined  export  oil  and  to  compare  with  the  crude.  In  your 
opinion  are  not  the  by-products  the  source  of  one-half  of  the  profits  of  the 
Standard  Oil  Company  or  other  people  employed  in  shipping  oil  abroad?  A. 
Well,  Mr.  Chairman,  it  occurs  to  me  with  the  profits  on  oil  at  export  prices, 
we  would  have  no  oil  business,  because  with  the  production  of  the  present 
volume  no  refinexy  could  undertake  to  carry  on  the  business  and  run  it  for 
the  profits  on  the  burning  oil  alone.  The  oil  would  necessarily  be  so  high 
as  to  render  no  profit  to  the  manufacturer,  as  there  would  be  no  inducement 
for  the  consumer  to  buy  it.  It  has  been  stated  here  in  my  presence  by  some 
person,  I  understand,  that  10  cents  was  considered  a  fair  profit  on  a  barrel, 
but  he  was  taking  into  consideration  the  profits  realized  on  the  by-products, 
but  no  refinery  could  take  10  cents  profit,  and  that  alone. 

Q.  (By  Mr.  FARQUHAR.)  Does  not  the  Standard  Oil  Company  dispose 
of  the  by-products  to  other  manufacturers;  for  instance,  the  petroleum  resi- 
diumi,  which  enters  into  the  whole  composition  of  the  dyes  that  are  sold  in 
this  country.  Now,  isn't  that  sold  at  a  cheap  rate  to  manufacturers  who  are 
dealing  with  their  own  capital  outside  of  the  Standard  Oil  Company?  A. 
Certainly. 

Q.  And  in  the  long  run  it  makes  very  little  difference  with  the  tables 
that  you  have  presented  here,  in  respect  to  the  crude  itself?  A.  That  would 
be  my  view  of  it. 

Q.  In  other  words,  I  want  to  know  whether  the  Standard  Oil  Company 
itself  enters  into  the  manufacture  of  by-products,  such  as  dyes,  magenta 
dyes,  and  others  of  this  character,  or  are  they  not  separate  concerns  and 
different  corporations  and  individuals  that  have  taken  up  the  whole  of  that 
by-product  business.    A.  In  separate  concerns. 

*Q.  (By  Vice-Chairmar.  PHILLIPS.)  The  whole  of  it?  A.  Nearly  the 
whole  of  it. 

Q.  (By  Vice-Chairman  PHILLIPS.)  How  about  the  paraffine  or  wax 
that  enters  into  all  candles  now — sperm  candles,  as  they  used  to  be  called. 
Don't  they  manufacture  the  paraffine  wax  and  sell  it?  A.  Oh,  yes.  sir;  there 
is  a  certain  percentage  of  wax,  but  they  will  sell  wax  to  anyone;  they  will 
either  sell  or  buy. 


*Black   faced   type  indicates  matter  Omitted,  in  the  course  of  editing,  from  the 
official   report. 


528  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

After  the  expiration  of  the  12  months'  contract  between  the  Producers' 
Protective  Association  and  the  Standard  Oil  Company  bringing  about  a 
shut-in  movement,  the  witness  said,  the  former  association  proceeded  to 
induce  men  to  build  refineries  and  to  put  oil  in  trade  in  competition  with 
their  benefactors,  the  Standard  Oil  Company.  The  Producers'  Association 
stated  that  there  was  so  much  profit  in  the  by-products  that  the  refiners 
could  afford  to  give  the  burning  oil  away  for  nothing,  and  on  that  proposi- 
tion a  refinery  was  built  by  impractical  men.  There  was  no  reason  why  the 
refinery,  where  it  was  built,  should  not  have  succeeded.  There  was  one  at 
the  same  place  in  successful  operation  at  the  time,  Mr.  Boyle  testified. 

The  witness  referred  to  the  formation  of  the  Producers'  Oil  Company, 
liimited,  with  a  capital  of  .$600,000.  This  company  had,  built  a  small  pipe 
line  in  the  oil  fields  and  in  all  the  association  had  influenced  the  investment 
of  upwards  of  $3,000,000  in  pipe  lines,  and  the  stockholders  had  never 
received  one  dollar  except  one  5  per  cent,  dividend  paid  by  the  United  States 
Pipe  Line  at  a  time  when  it  was  paying  nothing  on  its  fixed  indebtedness. 
This  pipe  line  company  was  organized  at  the  period  of  the  greatest  produc- 
tion that  has  ever  occurred  in  the  history  of  the  business — the  opening  of 
the  McDonald  field. 

The  WITNESS.  The  first  company  organized  was  the  Producers'  Oil  Com- 
pany, Limited,  with  a  capital  of  $600,000.  No  one  questioned  their  right  to  do 
that.  It  was  organized  at  a  very  opportune  time,  at  the  period  of  the 
greatest  production  that  has  ever  occurred  in  the  history  of  the  business — 
the  opening  of  the  McDonald  field.  They  entered  the  McDonald  field,  and 
the  first  oil  they  took  was  from  that  field;  but  they  kept  away  from  the 
production  that  was  likely  to  be  overwhelmingly  large.  They  kept  on  the 
outskirts,  and  limited  themselves  to  such  wells  as  they  could  handle  nicely 
without  crowding  their  capacity.  That  was  the  first  point  in  which  they 
entered  actively  in  competition  with  the  United  Pipe  Lines,  in  the  trans- 
portation of  oil. 

At  this  time  the  McDonald  field  rose  within  three  months  from  practi- 
cally nothing  to  a  daily  production  of  80,000  barrels,  limited  to  a  territory 
six  miles  long  by  two  miles  wide;  a  very  narrow  strip  for  so  large  a  produc- 
tion, and  that  only  continued  for  a  single  day,  perhaps,  but  the  average 
was  above  60,000  barrels  a  day  for  months.  The  Producers'  Association, 
which  had  been  formed  for  the  betterment  of  the  oil  trade,  did  nothing  to 
improve  the  condition  of  the  McDonald  producers.  It  gave  them  a  competi- 
tion at  once  useless  and  expensive:  expensive  to  the  extent  of  $600,000  of 
the  producers'  money  impractically  put  in  it.  and  which  has  never  paid  a 
cent  of  interest  from  that  day  to  this,  *and  useless  because  it  was  powerless 
to  take  oil  from  the  other  wells.  But  the  one  concern  was  obliged  to 
shoulder  the  entire  responsibility  for  carrying  the  oil  in  that  district  and  it 
would  have  done  so.  regardless  of  the  presence  or  the  efforts  of  the  Asso- 
ciated Producers. 

Q.  (By  Vice-chairman  PHILLIPS.)  Now,  did  or  did  not.  the  Standard 
Oil  Company  purchase  a  large  per  cent,  a  majority  of  the  stock,  at  a  very 
large  price,  in  that  concern — in  the  Producers'  Protective  Oil  Company, 
Limited — with  the  capital  of  $600,000,  of  which  you  spoke?  A.  I  have  heard 
of  some  purchases  of  Colonel  Carter.  *Colonel  Carter  made  some  large 
purchases. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Did  not  that  finally  find  its  way  to 
the  Standard  Oil  Company,  and  in  a  suit  that  was  pending  wasn't  it  proven 
that  the  Standard  Oil  Company  furnished  the  money  to  purchase  a  majority 
of  that  stock?     A.  I  did  not  so  understand  it;  I  did  not  know  that. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Did  they  not  *pay  as  much  as  100 
per  cent.;  pay  two  for  one,  double  the  par  value  of  the  stock,  in  order  to  get 
control  of  it?  A.  I  have  no  information  on  that;  the  only  sales  I  know  of 
were  at  par;  I  know  there  were  some  few  sales  at  par. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Was  that  a  direct  corporation,  or 
what  was  the  nature  of  that  organization  or  company?  What  was  it?'  A.  It 
was  a  limited  concern. 


■*Dlark  faced   type  indicates  matter  omitted,  In  the  course  of  editing,  from  the 
official  report. 


PATRICK  C.  BOYLE.  529 

*Q.  (By  Vice-chairman  PHILLIPS.)  A  limited  partnership?  A.  Yes, 
sir;   a   limited  partnership. 

Q.  (]]y  Vue-Chaiiman  PHILLIPS.)  And  Mr.  Carter  attempted  to  be 
elected  a  *stockholder  in  it,  did  lie  or  did  he  not,  or  a  director?  *A.  Well, 
as  I  understand  it,  he  was  a  stockholder  in  it. 

*Q.  (By  Vice-Chairman  PHILLIPS.)  Well,  I  mean  a  director?  A.  Yes, 
sir. 

Q.  (By  Vice-Chairman  PHILLIPS.)  And  the  suit  was  begun  in  the 
court,  and  taken  up,  and  was  it  or  not  ruled  that  he  could  not  become  a 
director  or  have  the  power  to  vote  that  stock,  and  that  therefore  he  failed 
in  the  control  of  that  $600,000  company?  Is  that  a  fact  or  is  it  not  a  fact? 
A.  Well,  *l  know  there  was  a  suit;  I  know  there  was  a  suit,  and  litigation, 
and  a  decision. 

Q.  (By  Vice-Chairman  PHILLIPS.)  But  you  do  not  know  that  the  suit 
was  adverse  to  Mr.  Carter  or  the  persons  who  stood  back  of  him?  A.  I 
assume  that  it  was  from  the  subsequent  proceeding. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Are  they  or  not  appraising  the 
value  of  the  stock?  A.  I  understand  they  are  now  appraising  the  value  of 
the  stock. 

*Q.  (By  Vice-Chairman  PHILLIPS.)  That  is  sufficient  on  that  one  ques- 
tion. A.  Yes,  sir;  on  that  one  branch.  Well,  the  Producers  &  Refiners'  Oil 
Company,  Limited,  proving  ineffectual  for  the  purposes  intended,  obtained 
additional  capital  through  a  combination  with  the  refiners,  to  the  amount  of 
$250,000,  and  built  a  connecting  line  to  this  one,  to  supply  oil  to  the 
refineries,  making  a  capital  of  $850,000,  and  that  has  never  paid  a  cent  of 
dividends.  It  has  been  in  operation  nine  years  and  it  has  never  paid  a  cent 
to  the  stockholders,  though  the  market  price  of  oil  has  varied  from  one  to 
nine  cents,  if  my  recollection  serves  me,  higher  per  barrel  in  that  line  as 
compared  with  the  Seep  Agency  prices.  The  producers  got  the  benefit  of 
that,  and  yet  the  refineries  to  whom  that  oil  was  sold,  paid  the  existing 
market  price  for  stock  oil,  or  a  price  less  than  the  one  paid  to  the  producers. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Now,  was  there  any  other  line 
built  after  the  second  one  to  which  you  referred,  or  about  that  same  time? 
A.  The  United  States  Pipe  Line  was  built  to  the  seaboard. 

Q.  (By  Vice-Chairman  PHILLIPS.)  By  whom?  A.  By  the  same  asso- 
ciation, ^through  its  influence;  built  to  the  seaboard.  A  million  dollars  was 
embarked  in  that,  and  other  capital  was  added  to  that,  probably  $400,000 
or  $500,000,  making  upward  of  $3,000,000  invested  in  pipe  lines  and  trans- 
portation as  the  result  of  that  movement,  the  stockholders  of  which  have 
never  received  one  dollar  except  a  5  per  cent,  dividend  paid  by  the  United 
States  Pipe  Line  at  a  time  when  it  was  paying  nothing  on  its  fixed  indebt- 
edness. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Do  you  or  not  believe  that  they 
would  have  reaped  a  large  profit  had  it  not  been  for  the  opposition  of  the 
Standard  Oil  Company  *in  all  markets?  A.  Not  at  all.  I  believe  that 
investment  was  useless,  the  capital  wasted,  and  the  producers  wronged. 

Q.  (By  Vice-Chairman  PHILLIPS.)  When  this  company  commenced  to 
sell  refined  oil  in  New  York  City  did  not  the  Standard  Oil  Company  imme- 
diately put  the  price  of  oil  down  in  that  great  city  to  less  than  the  cost  of 
refining  it?  A.  Whatever  was  done  there  was  a  matter  of  merchandising 
on  both  sides.  They  were  merchants,  and  not  oil  producers  or  oil, refiners. 
It  was  a  matter  of  merchandising. 

Q.  (By  Vice-chairman  PHILLIPS.)  Did  they  or  not  do  the  same  thing 
in  Philadelphia  *when  the  producers  entered  that  market?  A.  I  believe 
that  to  be  a  common  practice  *among  the  trade  everywhere.  Wherever 
there  are  refiners  they  do  that.  Wherever  there  are  sales,  each  person 
having  a  commodity  for  the  market  places  it  at  the  best  possible  advantage 
to  himself. 

"The  Pure  Oil  Company  did  not  come  until  after  all  these  were  formed," 


♦Black   faced   tj'pe  Indicates  matter   omitted.  In  the  course  of  editing,  from  tlie 
■official  report. 

34 


530  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

said  Mr.  Boyle,  referring  to  the  United  States  Pipe  Line  Company  and  the 
Producers'  Protective  Oil  Company,  Limited,  "and  it  became  necessary  to 
complete  a  trust. 

"This  thing  was  started  out  in  a  most  untrustlike  way,  but  ended  up 
in  a  trust  as  complete  as  could  be  formed,  and  the  creation  of  the  Pure  Oil 
Company  was  necessary  *to  that  trust  to  control  all  of  these  other  proper- 
ties. The  Pure  Oil  Company,  with  a  nominal  capital  of  $1,000,000  and  an 
actual  capital  of  about  $400,000,  is  trying  to  swing  this  $3,000,000  concern, 
and  will  eventually,  if  the  voting  trustees  have  the  power." 

Q.  (By  Professor  JENKS.)  Will  you  explain  a  little  more  fully  what 
you  mean  by  its  being  a  trust?     A.  It  is  a  trust. 

Q.  Explain  what  you  mean  by  that?  A.  We  have  it  all  here  in  this 
pamphlet  (exhibiting  a  pamphlet). 

Q.  (By  Vice-Chairman  PHILLIPS.)  Do  you  mean  a  trust  or  a  combi- 
nation?    *A.   I   mean  a  trust. 

Q.  (By  Mr.  FARQUHAR.)  With  respect  to  the  form  of  control  you 
regard  it  as  a  trust?  A.  In  the  form  of  control  I  regard  it  as  a  trust.  It  is 
a  combination,  a  series  of  combinations,  and  the  properties  are  managed  by 
voting  trustees. 

*Q.  (By  Professor  JENKS.)  That  is  a  point  I  want  to  bring  out  clearly. 
A.  The  property  is  in  a  trust;  three-quarters  of  the  property  of  the  United 
States  Pipe  Line  or  the  proportion  which  this  organization  controls,  is  in  a 
trust. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Do  you  know,  or  do  you  not  know, 
the  reason  why  a  voting  power  was  put  there?  Did  the  Standard  Oil  Com- 
pany, or  did  it  not,  buy  several  hundred  thousand  dollars'  worth  of  the 
LTnited  States  Pipe  Line  stock,  and  propose  to  control  that,  *as  they  had 
bought  the  control  of  the  limited  partnership;  and  was  it  or  not  essential  to 
the  existence  of  the  United  States  Pipe  Line  that  the  stock  should  be  put  in 
trust?  *Was  it  or  was  it  not?  A.  If  we  start  by  admitting  that  proposition,  we 
must  endorse  all  that  lias  been  done  before  in  the  way  of  combination; 
that  of  itself  is  a  virtual  admission  that  the  Standard  Oil  Company  *in  its 
trust  relations  was  right. 

Q.  (By  Mr.  FARQUHAR.)  That  vindicates  the  Standard  Oil  Company's 
actions?  A.  Entirely.  *The  action  of  this  company  has  vindicated  the 
Standard  Oil  Company. 

Q.  (By  Mr.  SMYTH.)  You  consider  that  this  company  copied  in  a 
measure  the  plan  of  procedure  of  the  Standard  Oil  Company?  A.  Not  ex- 
actly; that  was  open,  and  this  is  secret. 

Q.  (By  Vice-chairman  PHILLIPS.)  Do  you  mean  that  the  Standard  Oil 
Trust  is  not  one  of  the  most  secret  organizations  in  existence  in  regard  to 
making  statements  to  their  stockholders  and  in  the  management  of  their 
business?  *Has  there  ever  been  any  great  corporation  or  trust  managed 
with  the  same  secrecy  in  regard  to  their  business  that  the  Standard  Oil 
Trust  is?  A.  In  regard  to  their  business,  I  suppose  they  have  not  opened 
their  books  to  the  public. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Have  they  made  any  statements 
to  their  stockholders?     A.  Not  being  a  stockholder,  I  cannot  say. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Well,  you  are  a  newspaper  man? 
A.  Well,  they  have  never  made  any  to  me;  I  have  never  asked  them  for  any. 

*Q.    (By   Mr.  SMYTH.)      You  consider  that  there  are  two  oil   trusts,  the 

Standard  Oil    and A.   No,   sir;    there   is  but   one   oil   trust,   the    Pure   Oil 

Trust. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Was  there  or  not  a  suit  brought  by 
a  stockholder  in  that  trust  to  get  knowledge  of  the  business  and,  as  a  stock- 
holder, to  have  a  statement  made  of  how  the  funds  were  being  handled? 
*Did  or  did  not  that  suit  fail?  A.  I  think  the  suit  failed  and  properly,  be- 
cause the  purpose  of  that  suit  was  to  work  an  injury  to  the  company.  *lt 
was  intended  to  injure  the  concern.     It  was  not  brought  in  good  faith. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Then  you  think  that  a  man  holding 
stock  in  a  company  has  no  right  to  know  anything  about  the  amount  that 


♦Black   faced   type   Indicates  matter   omitted,  in  the  course  of  editing,  from   the 
cfRcial   report. 


PATRICK  C.   BOYLE.  531 

company  earns,  or  whether  its  means  are  being  squandered  or  not?  It  is 
not  the  rule  of  other  corporations  to  exist  without  making  statements  to 
their  stockholders,  is  it?  A.  If  the  chairman  can  justify  the  act  of  his  own 
company  in  excluding  Colonel  Carter,  I  do  not  see  how  he  can  censure  the 
other  concern  for  what  it  has  done.* 

tMr.   FARQUHAR.     That   is  fair. 

Q.  (By  Vice-Chairman  PHILLIPS.)  There  are  some  times  when  it  is 
absolutely  essential  to  defend  yourself,  and  there  is  an  old  adage  that  the 
way  to  fight  the  devil  is  with  fire.  These  gentlemen  pursued  the  business 
themselves,  but  the  others  had  better  weapons  and  secured  better  means. 
The  opposition  in  that  case  is  very  liable  to  take  that  same  course  to  defend 
themselves  and  are  impelled  to  do  so,  or  they  would  be  absorbed  as  one 
company  was  and  as  the  other  was  attempted  to  be. 

Q.  (By  Professor  JENKS.)  What  has  been  the  effect  of  this  independ- 
ent oil  movement  upon  the  prices  of  refined  petroleum  to  the  consumers? 
You  said  that  these  various  independent  organizations  fthat  had  come  back 
into  the  trust,  as  you  call  it, J  had  not  made  any  profits,  had  declared  no  div- 
idends, and  that  you  considered  that  in  consequence  the  investment  of  that 
money  was  a  practical  waste,  because  they  had  been  of  no  service  to  the 
oil  producers  in  the  region.     That  is  what  I  understood?     A.  Yes,  sir. 

Q.  What  has  been  the  effect  of  these  independent  oil  movements  upon 
the  price  of  refined  petroleum?    A.  None  whatever. 

Q.  You  do  not  think  they  succeeded  in  reducing  the  price  of  refined 
petroleum  at  all?  A.  No,  sir.  It  only  gave  members  of  this  company  and 
the  independent  refiners  in  the  Creek  region  an  opportunity  to  get  im- 
mensely wealthy.  They  are  making  money  faster  than  they  ever  made  it 
before.  The  producers  are  making  a  little  more  money  than  they  did 
previously,  to  the  extent  of  the  premium  which  the  Producers'  Line  pays 
them,  but  the  stockholders  of  that  line  will  receive  nothing  for  their  invest- 
ment. 

Q.  Do  you  know  how  far  the  stockholders  in  these  combinations  are 
themselves  producers?  A.  To  a  very  large  extent,  fbut  that  would  not 
justify  it. 

Q.  Do  you  know  what  proportion  of  the  producers  whose  oil  they  are 
buying  are  stockholders  in  this  combination?    A.  I  do  not. 

Q.  Then  you  would  say  that  the  general  result  of  this  independent 
movement  is  to  increase  the  price  of  crude  oil?  A.  Only  to  a  very  few — to 
persons  interested  in  that  line  and  connected  with  its  service. 

Q.  And  to  others,  too?  A.  To  others,  no;  its  effect  has  not  been  felt  to 
any  extent  anywhere. 

Q.  Does  it  benefit  all  of  those  whom  it  reaches?  A.  To  that  extent  and 
by  those  means.  It  is  a  method  of  "Robbing  Peter  to  pay  Paul."  It  is 
taking  money  out  of  the  pipe  line  to  pay  the  producer  in  the  way  of  an 
advanced  price  for  his  oil.  That  is  the  way  it  performs  its  service,  by 
piping  oil  for  less  than  the  published  rates,  or  established  rates,  whatever 
they  may  be. 

Q.  iWill  you  tell  what  you  mean  by  that?  What  is  the  rate  for  'jipiug 
oil?  A.  The  pipage  rate  is  understood  to  be  15  cents  a  barrel.  When  the 
premium  has  been  as  high  as  nine  cents  a  barrel  on  that  oil  that  would 
mean  as  much  as  nine  taken  from  1.5,  leaving  the  pipage  charge  six  cents. 

Q.  I  understood  you  to  say  further  that  this  independent  movement  had 
resulted  in  making  the  refiners  in  that  region  rich?    A.  Yes,  sir. 

Q.  Will  you  explain  how  that  has  been  brought  about?  A.  Well,  if  I 
could,  I  W'ould  be  in  the  refining  business  myself. 

Q.  You  think  that  it  his  not  resulted  in  the  lowering  of  the  price  of 
refined   oil?     A.  No;    tthey   claim   they   are    making    money    in   the    region. § 


*This  answer  appears  in  the  nffirial  report  nf  the  cnmmisRion  in  the  fnllowins? 
form:  "A.  If  the  act  of  the  Pure  Oil  (^ompany  in  excluding  Colonel  Carter  is  justi- 
fied, I  do  not  see  how  other  concerns  can  be  censured   for  what  they  have  done.'" 

tBlack  faced  type  indicates  matter  omitted,  in  the  course  of  editing,  from  the 
official   report 

Jin  the  official  report  of  the  commis.-;ion  the  statement  ''that  had  come  back 
Into  the  tru?t,  as  you  call  it,"  does  not  appear,  and  in  its  place  is  the  fnllowing: 
"that  were  compelled   to  go  into  a   trust." 

§In  the  official  report  the  following  appears  in  the  place  of  this  sentence:  "No, 
they  claim  that  their  success  has  not  resulted  in  lowering  the  price  of  refined  oil,  not 
In  the  region,  at  least,  where  we  are." 


532  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

*There  is  nc  perceptible  worry  there,  and  the  oil  they  send  abroad  they 
couldn't  sell  at  home  anyway;  that  oil  that  goes  abroad  is  restricted  in  every 
State  in  the  Union.     *Export  oil  cannot  be  sold  in  this  country. 

Q.  (By  Vice-chairman  PHILLIPS.)  That  is  both  as  to  the  Standard 
and  the  others?  A.  That  is  both  as  to  the  Standard  and  the  others.  *AII 
export  oil  that  is  sent  abroad  could  not  be  sold  in  this  country  by  reason 
of  the  laws  of  this  country. f 

Q.  (By  Vice-Chairman  PHILLIPS.)  Are  not  these  companies  now  mak- 
ing money? 

The  WITNESS.     The  refining  companies? 

*Vice-Chairman   PHILLIPS.     No,  I    mean  these  various   pipe   lines. 

Professor  .JENKS.     The  independent  companies. 

Vice-Chairman  PHILLIPS.  And  would  their  stock  not  be  more  desirable 
at  the  present  time 

The  WITNESS.     Refining  stock? 

Vice-Chairman  PHILLIPS.  No,  I  mean  the  stock  of  these  various  inde- 
pendent companies,  *the  pipe  line  companies.  A.  Why,  they  would  be 
if  run  and  managed  on  business  principles;  *they  certainly  would  be.  I 
believe  there  is  money  in  piping  oil,  and  if  run  for  the  benefit  of  the  line, 
it  is  a  good  investment;  there  must  be  money  in  it;  *but  if  run  for  outside 
interests,  well 

Q.  (By  Vice-Chairman  PHILLIPS.)  Didn't  they  establish  the  first  pipe 
line  to  the  seaboard  to  handle  refined  oil?  A.  Oh,  but  that  cuts  no  figure, 
gentlemen.  Warren,  as  we  have  shown  here,  piped  refined  oil  a  distance  of 
three  miles  in  186.5,  and  in  tank  cars,  they  have  taken  refined  oil  from  one 
point  to  the  o'her,  and  what  is  a  tank  car  but  a  pipe  line  on  a  limited  scale? 
If  you  confine  oil  in  an  iron  vessel,  it  makes  no  difference  whether  it  is  a 
continuous  pipe,  or  in  a  closed  tank,  and  agitated,  the  result  is  the  same. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Would  or  would  not  these  com- 
panies have  paid  a  great  deal  more  if  they  could  have  gotten  throui^h  to 
New  York,  and  not  have  been  opposed  by  combinations  in  Nev.-  Jersey, 
*and  prevented  from  getting  to  the  seaboard;  would  not  their  profits  have 
been  much  larger  if  they  had  free  pipage  to  New  York,  as  the  Standard 
has  to-day?  A.  *The  only  way  I  can  answer  that  is  this  (there  are  so  many 
provisos  in  it):  If  Booties  had  a  baby,  and  the  baby  grew  up  to  be  a  young 
woman,  and  she  fell  in  the  fire,  it  would  be  a  terrible  affliction.  If  there  was 
only  one  proposition,  a  person  might  answer  that. 

Q.  (By  Vice-Chairman  PHILLIPS.)  I  have  naturally  the  same  right, 
and  they  have  the  same  right,  to  go  through  to  New  York  City,  if  possilDle, 
free  from  the  Standard  Oil  Cornpany:  from  any  possible  combination  with 
the  Standard  Oil  Company.     A.  Undoubtedly  you  have  that  right. 

Q.  (By  Vice-chairman  PHILLIPS.)  And  is  it  fair  that  I  should  be  pro- 
hibited from  exercising  that  privilege  of  equality  and  justice?!  A.  Let  me 
answer  that  by  comparison  in  this  way:  If  it  is  fair  and  right  for  one  pro- 
ducer to  take  land  from  any  other  producer;    if  there  are  two  bidding  for 


*BIack  faced  type  indicates  matter  omitted,  in  the  course  of  editing,  from  the 
official   report. 

Tit  is  odd  that  the  three  separate  and  distinct  statements  of  Mr.  Boyle  to  the 
effect  that  export  oil  cannot  be  sold  in  this  country,  do  not  appear  in  the  official 
report,  in  which  he  is  only  quoted  as  saying  on  this  subject  that  oil  that  goes  abroad 
"is  restricted  in  every  State  of  the  Union."  Restricting  the  sale  of  oil  might  or 
miglit  not  mean  forbidding  Its  sale.  This  discrepancy  hotween  the  stenographic  re- 
port and  the  official  report  is  perhaps  not  of  much  consequence,  but  it  is  very 
curious. 

Jit  will  be  seen  that  the  vice-chairman  of  the  commission  was  making  a  per- 
sonal argument  relating  to  his  own  interests.  The  form  of  these  questions  would 
indicate  that  the  vice-chairman  was  .acting  in  the  combined  capacity  of  witness  and 
attorney.  His  "question"  is  really  only  an  argument  in  the  form  of  a  positive  state- 
ment. These  features  of  the  testimony  do  not  appear  in  the  official  report  where  the 
questions  are  given  as  follows: 

"Q.  Have  others  the  same  rignt  to  go  through  to  New  York  that  the  Standard  Oil 
Company  has?     A.  TTndouhtedly   they   have  that  right. 

"Q.  And  is  it  fair  or  just  that  they  should  l)e  iirnhiLited  from  exercising  that  priv- 
ilege of  equality?" 


PATRICK  C.  BOYLE.  533 

that  land  and  one  outbids  the  other  and  takes  the  land  from  him,  I  think 
that  would  be  just  as  fair  as  the  other.  If  it  is  unfair  to  prevent  a  pipe 
line  from  going  into  a  market  already  occupied,  it  is  unfair  for  one  producer 
to  compete  with  his  neighbor  and  take  the  land  from  his  giasp,  if  he  has 
the  superior  ability  and  wealth  to  control  it. 

Q.  (By  Vice-chairman  PHILLIPS.)  One  is  exercising  the  right  of  emi- 
nent domain.*  A.  He  is  performing,  for  that  right,  an  adequate  service  to 
the  people. 

Q.  (By  Vice-chairman  PHILLIPS.)  You  would  say  if  one  railroad  could 
supply  the  whole  market  of  the  City  of  New  York,  that  all  other  railroads 
should  be  prohibited  from  going  there;  jbecause  it  could  supply  that  market 
and  carry  the  passengers,  no  other  person  or  company  should  have  any 
such  right?  A.  I  should  say  this:  If  the  money  to  construct  that  road  was 
to  come  from  the  pockets  of  the  passengers  who  are  expected  to  patronize 
it,  and  they  had  to  pay  their  fare,  too.  I  would  say,  yes;  that  is  the  answer. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Do  you  undertake  to  say  that 
these  companies  are  robbing  people;  that  these  independent  companies 
that  the  Standard  Oil  Company  is  so  desirous  to  control,  and  in  which  it 
has  purchased  stock  which  it  could  sell  to-day  at  a  very  large  profit,  are 
robbing  any  person  or  doing  any  injustice?  A.  jThe  fact  remains,  Mr. 
Chairman.  Robbing  is  a  hard  word  and  I  do  not  care  to  use  it  in  any  way; 
the  fact  remains  that  the  money  embarked  in  the  enterprise  is  unremunera- 
tive. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Allow  me,  Mr.  Boyle.  You  stated 
that  they  were  taking  money  from  some  persons  and  giving  it  to  others. J 
A.  Well,  that  was  only  a  comparison;  just  a  remark.  It  is  a  very  common 
expression — "Robbing  Peter  to  pay  Paul."  tl  do  not  mean  that  there  was 
any    robbery    in    the    case. 

Mr.  KENNEDY.  We  have  had  a  long,  sultry  day,  and  I  think  we  are 
pretty  well  tired  out,  and  it  is  evident  that  we  will  not  be  able  to  finish  Mr. 
Boyle's  examination  at  this  sitting,  and  I  therefore  move  that  we  adjourn 
until   to-morrow   morning  at   10  o'clock. 

Vice-Chairman  PHILLIPS.  *Just  one  question  before  your  motion  is 
put.  Well,  in  regard  to  the  right  of  persons  to  enter  a  market,  that  is  all 
right,  and  whether  he  would  call  that,  as  he  used  the  expression,  "Robbing 
Peter  to  pay  Paul."  I  want  to  ask  whether  they  would  not  have  the  same 
right  either  a  railroad  or  a  pipe  line.  You  have  no  direct  knowledge  of 
these  people  having  done  any  injustice  to  any  of  their  stockholders,  ha.ve 
you?  A.  I  have  no  knowledge  that  they  have  done  full  justice  to  their 
stockholders  in  returning  them  interest  on  their  investment  in  pipe  lines. 
I  have  no  knowledge  of  that  myself.     There  are  $3,000,000  invested  in  that. 

Q.  (By  Vice-Chairman  PHILLIPS.)  You  have  knowledge  that  they 
have  been  employing  every  honorable  means  to  get  through  to  the  City  of 
New  York,  and  that  they  have  lessened  their  freight  rate  a  very  great  deal 
by  getting  into  New  Jersey?  You  have  knowledge  of  that,  haven't  you? 
A.  Yes,  sir. 

Q.  (By  Professor  JENKS.)  You  said  that  you  did  not  think  the  effect  of 
the  independent  movement  had  been  to  reduce  the  price  of  refined  oil. 
What  has  been  the  price  of  water  white  refined  oil  for  the  last  few  years, 
since  the  organization  of  these  companies,  as  compared  with  what  it  was 
before?  A.  I  have  no  means  of  knowing;  Ave  haven't  water  white  in  export. 
tit  is  export  entirely  that  makes  the  price;  water  white  is  a  special  con- 
tract. Any  sale  of  water  white,  or  any  other  class  of  oil,  is  a  special  con- 
tract, according  to  the  location. 

Q.  And  you  have  not  any  record  at  all  of  the  price  of  water  white  since 
1874?     A.  No,  sir. 


*This  "question"  is  one  of  many  arguments  made  by  the  vice-chairman  which 
have  nothing'  about  them  to  indicate  that  they  are  questions  except  an  interroga- 
tion mark  which  is  inserted  in  the  official  report.  But  the  interrogation  mark  cannot 
make  a  qM-=stion  of  a  positive  statement:  its  use  Is  proper  only  after  actual  questions. 

tBlack  faced  type  indicates  matter  omitted,  in  the  course  of  editing,  from  the 
official  report 

JThis  is  another  of  the  vice-chairman's  numerous  arguments  that  are  turned  into 
questions  in  the  ofRcial  report  by  the  addition  of  an  interrogation  mark. 


534  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

Professor  JENKS.     I  think  that  is  all. 

Mr.  Boyle's  testimony  was  continued  on  September  7. 

Mr.  Bojie  thought  that  through  Mr.  Seep,  the  general  purchasing  agent 
of  the  Standard  Oil  Company,  and  his  sub-agents,  80  per  cent,  of  the  crude 
oil  produced  in  Pennsylvania  and  Ohio  is  purchased.  He  thought  there  were 
20  or  30  sub-agents  under  Mr.  Seep  in  the  oil  region. 

Q.  (By  Professor  JENKS.)  In  posting  the  prices  that  he  would  pay  for 
crude  oil  from  day  to  day,  are  the  fluctuations  by  barrels  very  large  or  are 
they  sometimes  only  a  cent  or  two?  A.  Well,  I  don't  know  as  to  that.  I 
pay  but  very  little  attention  to  the  oil  market.  The  fluctuations  are  usually 
over  a  full  cent,  though,  at  a  time;   sometimes  a  fraction  of  a  cent. 

Q.  That  is,  a  barrel,  you  mean?  A.  A  cent  a  barrel,  yes,  sir;  and  it  has 
been  two  cents;  it  may  have  been  higher  than  that  at  times. 

Q.  Do  you  see  any  special  reason  why,  on  a  barrel  of  oil,  the  fluctua- 
tions would  be  so  small  as  this;  any  special  reasons  that  would  affect  the 
market  in  such  a  delicate  way?  A.  Now,  that  question  has  occurred  to  me, 
and  I  think  I  have  spoken  to  one  or  two  persons  about  it,  and  the  reason  I 
rave  heard  assigned  is  this:  They  have  adopted  the  point  system  on 
refined  oil  and  the  point  is  a  very  delicate  fluctuation.  For  example,  10 
points  in  oil  might  represent  a  fraction  of  a  cent  or  a  full  cent,  and  that 
would  account  for  the  margin  or  the  amount  that  you  said.  It  is  controlled 
in  some  way  by  the  movements  of  refined,  and  the  fluctuations  of  refined 
are  by  points.  A  hundred  points  representing  a  cent,  it  is  the  fraction  of  a 
hundred  that  controls  the  prices  of  the  crude. 

Q.  So,  in  your  judgment,  these  minor  fluctuations  that  Mr.  Seep  makes 
are  really  controlled  by  the  fluctuations  of  refined?  A.  Controlled  by  the 
fluctuations  of  refined. 

Q.  The  prices  of  refined  are  presumably  fixed  by  the  Standard  Oil  Com- 
pany in  New  York,  you  think?  A.  As  I  understand  it,  they  are  fixed  by  the 
demand  in  Europe. 

Q.  *Well,  in  one  sense.  There  must  be  somebody  who  has  oil  to  sell 
who  determines  what  price  he  will  sell  it  for.  A.  The  parties  holding  the 
oil  would  have  the  option  of  relinquishing  their  holdings  at  the  existing 
prices  there,  but  to  make  the  price,  as  you  put  the  question,  would  imply 
that  the  Standard  Oil  Com.pany  chalked  the  price  up,  and  said  to  Europe: 
"You  must  take  it  so.  or  not  at  all."  Well,  that  is  not  the  situation,  as  I 
understand  it.  The  pulse  of  the  market  is  carefully  felt  in  Europe  con- 
stantly, and  the  market  is  made  to  suit  the  demand  there. 

Q.  The  point  that  I  had  in  mind  was  this:  Is  it  some  official  of  the 
Standard  Oil  Company  who  determines  what  prices  should  be  accepted  for 
the  oil?  A.  There  is  undoubtedly  some  salesman  connected  with  their 
establishment  who  is  in  direct  connection  with  the  prices  at  some  point. 
The  condition  of  the  market  is  known  to  that  person,  and  if  he  wants  to 
relinquish  his  oil  at  that  figure,  it  goes. 

Q.  Then,  if  the  price  of  the  crude  oil  which  is  offered  by  Mr.  Seep 
varies  with  the  price  of  refined  oil,  would  there  be  a  presumption  that  the 
two  aro  connected,  so  that  the  price  would  presumably  be  fixed  by  Mr.  Seep 
*from  the  same  parties  who  fixed  the  price  of  refined?  A.  The  price  of 
crude  oil  is  invariably  controlled  by  the  price  of  refined.  When  there  is  a 
movement  in  the  refined,  amounting  to  points  enough  to  make  a  full  cent,  it 
appears  in  the  crude. 

Q.  (By  Vice-chairman  PHILLIPS.)  Is  it  not  the  case  frequently,  Mr. 
Boyle,  that  they  advance  crude  before  they  advance  refined;  or  the  same  day 
that  the  one  is  advanced,  the  other  is.  Was  that  not  the  case  with  these 
recent  advances,  that  crude  was  first  advanced,  and  then  the  points  were 
named  on  refined?  A.  I  am  not  clear  as  to  that,  Mr.  Chairman:  and  I  can 
say  furthermore  that  I  am  not  familiar  with  the  movements  of  refined  *in 
the  sense  that  you  speak  of. 

*  *  *■  *  *  ilf  !ti 

Mr.  Boyle  presented  a  series  of  reports  of  the  Chamber  of  Commerce, 
of  Cincinnati,  Ohio,  from  1865  to  1870  inclusive,  and  for  1876  and  1877,  giving 

♦Black  faced  type  indicates  matter  omitted,  In  the  course  of  editing,  from  the 
offlcial  report. 


PATRICK  C.  BOYLE.  535 

the  local  market  price  of  oil  in  that  city.  An  idea  of  the  condition  of  the 
trade  at  the  beginning  of  the  period  covered  by  these  reports  can  be  had 
from  the  following  extracts: 

*For  the  year  ending  August  31,  1865:  The  price  of  this  article 
(petroleum)  owing  to  the  decline  in  the  price  of  gold  was  much  lower  at 
the  close  than  it  vvas  a  year  ago,  though  the  average  price  is  higher  for  the 
year  than  that  of  the  previous  season.  There  has  been  a  marked  falling  off 
in  the  production  of  the  article,  according  to  the  statistics  of  the  commerce 
of  the  country;  from  New  York  alone  the  exports  since  January  were  but 
6,000,000  gallons  against  over  11,000,000  gallons  the  corresponding  time  in 
1S64;  and  this  being  the  chief  exporting  point  furnishes  a  correct  basis  upon 
which  to  estimate  the  decline  in  the  oil  business.  Hundreds  of  the  wells 
have  ceased  to  yield  oil,  and  though  new  ones  are  being  sunk,  but  few  fresh 
discoveries  have  been  made  during  the  year.  Notwithstanding  this  falling 
off  there  has  been  a  slight  increase  in  the  receipts  at  this  place,  and  a  fair 
consumptive  demand  during  the  summer. 

The  following  was  the  price  of  the  refined  petroleum  per  gallon,  duty 
paid  (10  cents  per  gallon),  at  the  close  of  each  month  the  past  year  (1865): 

Cents.  Cents. 

Septembtr  28  So  March  29  83 

October  26   85  April  26     73 

November  30  88  May  31  70 

December  28  93  June  28  *0 

JunuLit  y  25  92  July  26   70 

February'  22   93  August  30  <'J 


*For  the  year  ending  August  31,  1866:  The  production  of  pe- 
troleum has  increased  quite  largely  during  the  past  year  and  prices  have 
been  greatly  depressed,  refined  in  bond  having  sold  as  low  as  35  cents  in 
New  York  in  July,  against  55  cents  a  year  ago.  The  receipts  at  this  place 
have  increased  largely,  but  the  trade  has  not  been  satisfactory.  Either 
through  the  ignorance  or  dishonesty  of  refiners,  doubtless  the  latter,  the  legal 
standard  of  gravity  has  been  disregarded  to  a  great  extent,  and  a  vast  amount 
of  burning  oil  vended,  which  is  as  dangerous  to  use  as  gun-powder,  especially 
in  hot  weather;  and  explosions  occurring  created  a  prejudice  against  its  use; 
and  the  board  of  underwriters  prohibited  its  use  upon  steamers  on  the  west- 
ern waters.  It  will  be  seen  that  prices  have  ruled  much  lower  than  those 
of  the  previous  season,  and  that  the   receipts  have  been   more  abundant. 

For  the  year  ending  August  31,  1867:  Not  so  much  because  of 
the  increase  in  the  production  of  this  article  (petroleum)  as  the  decrease 
in  its  consumption,  probably,  the  prices  of  it  have  been  so  low  the  past 
year  that  it  has,  at  times,  not  paid  for  the  expenses  of  bringing  it  to  market. 

For  illuminating  purposes  a  strong  and  growing  prejudice  exists  against 
it,  because  of  its  being  made  of  too  light  a  gravity,  leading  to  explosions  and 
loss  of  life.  As  fuel,  for  making  steam,  and  for  culinary  purposes,  various 
experiments  have  been  made,  but  it  is  doubtful  that  it  will  come  into  general 
use  at  present.  Only  the  most  productive  wells  are  being  worked.  All  others 
have  been  abandoned  because  it  costs  more  to  lake  the  production  from 
them  and   bring  it  to  market  than  the  prices  would  justify. 

******  * 

Q.  (By  Mr.  FARQUHAR.)  I  would  like  to  ask  the  witness  when  the 
first  oil  exchange  was  established  in  this  country?  A.  Well,  from  the 
earliest  records  that  we  have,  it  would  be  about  1871 — the  oil  exchange  for 
handling  business  as  we  now  understand  it. 

Q.  (By  Professor  JENKS.)  That  was  at  Titusville?  A.  At  Titusville 
in  1871. 

Q.  (By  Mr.  FARQUHAR.)  There  were  exchanges  before  that?t  A. 
Yes,  sir. 

Q.  (By  Professor  JENKS.)  What  was  the  character  of  the  exchanges 
before  1871?     A.  Well,  the  character  of  the  exchange  then  was  something 


*Black   faced   type  indicates  matter  omitted,  in  the  course  of  editing,  from  the 
official  report. 

tin  the  official   report  this  question  is  embodied  as  a  pait  of  Mr.  Boyle's  answer. 


536  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

like  a  chamber  of  commerce,  where  persons  engaged  in  the  same  business 
would  collect  and  exchange  views. 

Q.  (By  Mr.  FARQUHAR.)  How  many  exchanges  were  established  in 
the  country?    A.  Oh,  at  one  time  I  think  there  were  no  fewer  than  20. 

*Q.  Twenty  of  them?     A.  Yes,  sir. 

Q.  When  was  the  New  York  Exchange  established?  A.  My  impression 
is  about  1880,  but  I  think  we  can  get  that  exactly. 

*Vice-Chairman    PHILLIPS.      Have    you    any   other    questions? 

Mr.  FARQUHAR.  I  intend  to  follow  this  up  and  find  out  who  are  the 
speculators  that  fleeced  the  public  at  large  on  oil;  *that  is  what  I  am  de- 
termined to  get  at,  and   I   do  not  care  which  side   looses. t 

Mr.   KENNEDY.     That  is,  assuming  that  the  public   has  been  fleeced. 

iVIr.  FARQUHAR.  Oh,  they  have  been;  we  don't  need  to  get  a  witness 
for  that.     Well,   Mr.  Boyle,  you  can  supply  that  information  at  another  time. 

A.  *We  have  the  matter  here  now,  Mr.  Farquhar.  On  May  2,  1877,  we 
have  a  record  of  the  Petroleum  Exchange  being  opened  in  New  York;  page 
280  of  the  Derrick  Handbook. 

Q.  How  long  did  that  exchange  exist?  A.  That  or  its  successor  is  in 
existence  to-day;  it  is  still  going  on. 

*Q.   Up  to  the  present  time?     A.  Up  to  the  present  time. 

Q.  What  is  the  character  of  the  exchanges  in  New  York  now  in  respect 
to  oil?  A.  Well,  they  deal  in  futures  now;  they  deal  in  futures,  or  they 
speculate  on  the  value  of  oil  a  month  or  a  year  ahead,  *or  whatever  period 
they  fix  upon. 

Q.  The  same  as  in  the  cereals?  A.  *The  same  as  in  the  cereals,  pre- 
cisely; this  is  the  method  of  speculation  now,  but  it  has  only  been  of  recent 
occurrence;  it  is  only  a  few  years  since  they  started  dealing  in  futures. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Is  there  to-day  any  considerable 
amount  of  speculation  of  the  kind  you  have  referred  to  compared  with  what 
there  Avas  15  or  20  years  ago?     A.  It  is  very  small  in  comparison. 

Q.  (By  Mr.  FARQUHAR.)  What  was  the  character  of  the  business  done 
in  the  exchanges  that  were  started  in  the  oil  country — in  Oil  City?  Will  you 
explain  that  a  little  more  fully?  A.  There  were  two  elements  in  the  trade, 
one  interested  in  high  prices  and  one  interested  in  low;  and  the  bears  had  a 
very  decided  advantage  through  the  existence  of  a  very  large  stock  of  oil 
on  hand  and  it  was  possible  to  sell  in  the  later  seventies  and  early  eighties, 
and  never  cover.  Oil  may  have  been  sold  short  there,  to  be  carried  short, 
and  brokers  have  become  rich  by  selling  wind,  and  getting  the  carrying 
prices  of  that  wind,  and  never  covering.  The  effect  of  that  was  to  depress 
the  prices  on  the  producers.  The  larger  producers  took  a  very  pronounced 
stand  against  that  sort  of  trading  in  the  oil  exchanges,  and  it  was  denounced 
very  severely  in  meetings  and  in  letters  to  the  press. 

Q.  Who  were  the  supporters  of  the  oil  exchanges?  A.  Well,  they  are 
generally  called  "lambs;"  that  was  the  public,  you  know;  people  coming  in 
from  the  outside  and  bidding  on  the  price  of  oil,  and  they  generally  lost. 

Q.  Well,  were  producers  as  well  as  refiners  and  all  others  interested 
in  this?    A.  Oh,  undoubteflly. 

Q.  In  this  speculation?    A.  Producers  and  others  were  interested  in  it. 

Q.  They  were  all  interested  in  it?  A.  Producers,  merchants,  laborers, 
clerks,  and  so  on. 

Q.  So  there  was  a  free  field  for  a  while  in  the  oil  exchange  for  people 
who  took  their  chances  in  speculation,  either  on  wind,  as  you  express  it, 
or  on  oil?     A.  On  oil. 

Q.  Have  you  any  idea  what  the  losses  would  be  in  respect  to  that  specu- 
lation, *where  producers  and  all  others  were  participants  in  its  benefit? 
A.  I  have  never  heard  an  estimate  of  that,  but  if  I  were  to  make  one,  I 
should  think  that  $100,000,000  would  not  be  too  high. 


*BIack  faced  type  indicates  matter  omitted,  in  the  course  of  editing,  from  the 
nfllcial   report. 

;in  the  offlcial  report  this  remark  nf  Mr.  Farquhar  appears  in  the  following- 
form:     "I  want  to  find  out  who  the  speculators  were  that  fleeced  the  public  on  oil."' 


PATRICK  C.  BOYLE.  537 

Q.  *Then  you  are  free  to  say  that  the  producer  and  everyone  to  the 
shipper  participated  in  the  profits  of  the  oil  gambling,  from  1867  on  to  what 
time?  A.  Well,  I  would  place  it  at  a  later  period  than  1867;  I  would  place  it 
up  to  about  1870. 

*Q.  1870;  so  we  take  it  from  1870  on  the  regular  exchange.  A.  From 
1870  to  the  early  nineties.  Probably  in  1890  there  was  some  little  specula- 
tion in  oil,  after  the  movement  known  as  the  Producers'  Protective  Associa- 
tion; that  movement  killed  speculation  in  oil. 

Q.  Now,  how  was  that  brought  about?  A.  That  movement  was  brought 
about  by  an  agreement  between  the  Standard  Oil  Company  and  an  associa- 
tion called  the  Producers'  Protective  Association.  We  have  the  agreement 
here. 

Q.  Then  you  give  credit  to  the  joint  action  of  the  Producers'  Protective 
Association?     *A.  Yes,  sir. 

Q.  And  the  Standard  Oil  Company?  *A.  Yes,  sir;  and  the  Standard  Oil 
Company. 

Q.  For  the  suppression  of  speculation?  A.  For  removing  that  feature 
of  injudicious  speculation;  proper  speculation  is  all  right;  it  is  proper  and 
just  for  a  person  to  buy  oil  and  hold  it;  buy  the  certificates  outright.  No 
one  has  ever  raised  his  voice  against  that — against  the  purchase  of  oil  out- 
right. It  is  merely  gambling  on  margins  that  has  been  destructive  of  values, 
and  injurious  to  the  business  standing  of  communities  in  which  these  ex- 
changes were  located. 

Q.  Since  that  agreement,  have  either  the  producers  or  the  Producers' 
Protective  Association,  or  the  Standard  Oil  Company  sustained  in  any  way 
the   Petroleum  Exchange  in   New   York?     A.  Oh,   no. 

Q.  Have  they  been  adverse  to  an  exchange  in  New  York?  A.  Well,  I 
cannot  say  that  they  have  been  adverse  to  it;  I  can  merely  say  that  they  let 
it  alone. 

Q.  Well,  in  other  words,  the  regulation  of  prices  made  by  the  Standard 
Oil  Company  naturally  eliminated  the  speculation  entirely  from  it,  in  cer- 
tificates or  otherwise?    A.  Undoubtedly. 

Q.  At  what  date  do  you  place  Joseph  Seep's  quotations?  A.  On  the 
23rd  of  January,  1895. 

Q.  Now,  does  it  follow  that  Mr.  Seep's  quotations  are  standard  and 
stable  quotations   following  that  agreement?     A.  They  are. 

Q.  So  that  we  have  now  reached  a  market  where  speculation  can  do 
nothing  at  all  with  the  price  of  oil?    A.  Precisely. 

*Q.  That  is  the  very  point  I  want  to  reach.  A.  Precisely;  we  have 
reached  the  point  where  the  consumer  makes  the  price. 

Mr.  Boyle  described  the  methods  adopted  by  speculators  about  1880 
to  influence  the  oil  market  in  various  ways.  These  speculations,  he  said, 
would  start  rumors  of  big  strikes  in  wells.  These  rumors,  referring  to  places 
from  which  information  could  not  be  obtained  readily,  affected  the  market. 
Even  if  such  reports  were  corrected  in  an  hour  or  two  their  effect  would  be 
felt  on  the  market.  This  practice  gave  rise  to  a  protective  system  which  was 
formed  by  placing  experts  in  the  producing  fields  at  points  of  interest  so  that 
results  of  operations  could  be  promptly  reported.  "The  agents  employed  for 
this  work  were  called  scouts,  the  witness  having  left  newspaper  work  for 
two  years  to  serve  as  a  scout  on  the  frontier  for  the  Union  Oil  Company, 
then  the  largest  producing  concern  in  the  business.  The  reports  of  the 
scouts  in  the  oil  field  off-set  the  effect  of  rumors  set  afloat  by  speculators. 

The  witness  described  the  methods  that  were  pursued  in  the  early  days 
of  the  oil  business  in  the  sale  of  crude  oil.  He  said  the  oil  markets  made 
the  first  prices  of  oil  and  that  led  to  the  formation  of  exchanges  and  a 
gathering  of  dealers  in  oil  at  stated  places  and  times,  where  they  did  their 
oil  trading. 

The  WITNESS.  The  first  oil  markets  were,  in  my  opinion,  made  by 
the  dump  men  on  Oil  creek.  Now,  the  dump  men  were  the  first  speculators 
in  oil.  A  dump  is  a  tank  of  any  capacity  from  10  barrels  to  600.  The  dump 
man  developed   into  a  refiner  later  on,   and  his   refinery  was   known   as   a 


*Black  faced   type   indicates  matter  omitted,  in  the  course  of  editing,  from  the 
official  report. 


538  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

B.  S.  refinery;  that  is,  he  took  B.  S.  oil,  the  non-merchantable  oil,  and 
redeemed  the  better  parts  of  it  and  placed  it  on  the  market.  The  dump  man 
visited  the  small  producers  in  all  localities  and  bought  their  oil  at  so  much 
by  contract,  and  if  there  was  one  or  two  feet  in  the  tank  bottom  he  bought 
it  in  a  lump  sum,  or  at  so  much  per  barrel.  He  also  bought  the  good  oil, 
the  merchantable  oil,  from  small  producers  who  could  not  hold  their  oil 
long  enough  to  get  a  full  shipment  of  100  barrels  or  50  barrels,  whose  wells 
had  declined  to  such  a  point  that  they  could  not  hold  for  a  month  at  a  time, 
and  were  obliged  to  sell  from  day  to  day  or  week  to  week,  and  the  dump 
man  was  their  market.  Then  the  refiners  sent  their  people  up  in  the  region 
to  purchase  oil,  and  they  used  to  travel  up  and  down  Oil  creek,  like  platoons 
of  cavalry,  pricing  oil  at  the  various  wells  as  they  came  along.  The  usual 
method  of  approaching  the  producer  was  for  the  purchaser  to  say:  "Well, 
have  you  any  oil  to  sell?"'  The  answer  would  be:  "I  have  so  much."  Then 
the  producer  would  say:  "What  price  are  you  giving  to-day?"  If  it  was 
thought  that  the  producer  was  not  posted  on  the  existing  prices,  the  trader 
would  probably  reply:  "What  is  the  dump  man  paying?"  The  reply  would 
be:  "The  dump  man  is  paying  so  and  so."  Well,  he  might  name  a  figure 
a  few  cents  above  that,  just  sufficient  to  get  their  oil.  The  dump  man  was 
the  first  local  merchant  to  make  a  price  in  the  oil  field.  His  price  was 
stable  and  satisfactory  during  that  time.  You  could  always  find  a  market 
with  the  dump  man.  For  the  first  few  years  of  the  business  the  market 
was  spasmodic;  perhaps  there  would  be  days  and  weeks  at  a  time  when 
there  would  be  no  other  quotations  or  transactions  in  oil.  Perhaps  months 
at  a  time  there  would  be  no  quotations  in  oil  from  the  large  speculators  and 
shippers — that  is,  the  refiners'  agents.  Now,  in  the  course  of  time,  the  dump 
man  was  eliminated  from  the  business.  *When  the  pipe  lines  came  into 
existence,  there  was  no  further  use  for  the  dump  man  and  he  passed  away; 
served  his  useful  hour  and  went  away  into  other  pursuits.  After  that  the 
refiners'  agents  had  their  own  way.  After  that  came  the  independent  ship- 
pers, or  shippers  independent  of  the  refiners'  agents,  persons  who  specu- 
lated, but  the  vast  majority  of  the  oil  went  into  the  hands  of  refiners'  agents. 
Now,  this  crowd  had  a  common  place  of  meeting,  some  point  where  they 
would  assemble  and  discuss  the  trades,  and  discuss  conditions,  and  that 
eventually  led  to  doing  a  little  trading.  These  refiners'  agents,  during  the 
first  10  years  of  the  business,  were  migratory;  that  is  to  say,  they  moved 
about  throughout  the  region,  making  individual  contracts  with  producers 
and  others,  and  their  meetings  would  occur  at  night.  They  would  meet  in 
the  evening  after  supper  and  discuss  the  trade;  that  is  the  history  of  the 
formation  of  the  first  oil  exchange.  Later  on,  as  the  business  became  sys- 
tematized, and  got  into  fewer  hands,  they  began  to  adopt  regular  hours  for 
business.  One  of  their  first  resolutions  was  to  do  no  trading  after  a  certain 
hour  in  the  day,  6  o'clock;  later  on,  they  adopted  a  resolution  to  do  no 
trading  after  4  o'clock,  and  then  they  adopted  banking  hours  for  their  trad- 
ing, but  this  was  when  the  oil  exchange  became  a  permanent  factor  in  the 
trade.  All  the  trading,  say  from  the  period  of  1875  or  '76.  up  to  1895,  was 
done  on  the  exchange.  Trading  done  outside  of  the  exchanges,  known  as 
curb  trading,  was  considered  disreputable  and  classed  with  bucket-shop 
operations.  The  rapid  fluctuations  in  oil  in  1876  did  a  great  deal  to  foster 
the  exchange  element,  and  showed  people  that  it  was  possible  to  make 
money  rapidly  by  these  wide  fluctuations,  and  the  sudden  advance  of  up- 
wards of  $3  a  barrel  in  1876,  brought  the  public  into  speculation  with  the 
producers.  I  can  say  here  and  now  that  producers  who  remained  out  of  the 
oil  exchanges  and  away  from  speculation  invariably  got  wealthy;  those  who 
went  into  the  oil  exchanges  as  invariably  got  poor,  and  the  number  who 
went  into  the  exchanges  outnumbered  those  who  remained  out  so  largely 
that  they  formed  themselves  into  a  league  after  awhile  to  combat  those 
organizations  that  had  nothing  to  do  with  speculation,  and  shake  out  of  them 
some  of  their  earnings. 

Q.   (By   Vice-Chairman   PHILLIPS.)      Were   there  not  some   exceptions. 
Mr.  Boyle,  to  that  in  regard  to  producers?     Captain  Murphy,  for  instance, 


♦Black  faced  type  indicates  matter  omitted,  in  the  course  of  editing,  from  the 
ofTicial  report. 


PATRICK  C.   BOYLE.  539 

was  a  producer  and  a  speculator  both;  has  he  been  a  success  both  ways, 
as  one  example  along  with  many  others?  A.  I  thank  you,  Mr.  Chairman,  for 
calling  my  attention  to  him;  that  is  one  exception;  that  is  one  of  them;  I 
would  thank  you  for  another  one. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Well,  there  were  some,  but  as  a 
rule  you  are  correct.  I  never  speculated,  myself,  as  you  know.  A.  Oh,  I 
know  you  never  speculated;  I  am  satisfied  of  that;  you  were  one  of  the 
strongest  opponents  to  the  wildcat  speculation  in  existence  at  that  time; 
an  outspoken  opponent.  We  have  had  letters  from  you  in  our  newspapers 
denouncing  the  wildcat  speculation. 

Q-  (By  Vice-Chairman  PHILLIPS.)  Especially  the  scout  system,  or 
mystery  business;  *making  mystery  of  wells,  and  not  letting  the  public  know 
what  they  had,  and  using  that  method  upon  the  market.  A.  That  mystery 
bui^iness  was  the  cause  of  the  institution  of  the  scout  system;  *it  established 
that  system;   it  is  responsible  for  that. 

Q.  (By  Mr.  FARQUHAR.)  We  are  to  understand  from  your  testimony 
then,  that  after  this  era  of  speculation  and  after  the  shut-down,  the  strong 
men  in  the  oil  region,  the  Rockefellers  and  all  others  in  it,  in  order  to  sup- 
press all  this  speculation  in  one  shape  or  another,  in  oil  and  oil  certificates, 
agreed  on  a  conservative  basis  throughout  to  make  a  shut-down  to  bring 
the  oil  up  to  a  paying  figure  for  the  producer  as  well  as  the  refiner.  As  a 
matter  of  regulation  that  system  exists  even  to  the  present  day,  with  a 
benefit  to  the  whole  oil  trade,  and  the  cheapness  that  has  come  to  the  con- 
sumer has  come  through  the  great  organizations  of  oil  men.  Are  we  to 
understand  that  by  your  testimony?  That  is,  the  stronger  the  producers 
were,  the  stronger  the  refiners  were,  and  in  their  uniting  and  finding  a  stable 
market  the  consumer  has  gained  the  benefit?     A.  I  believe  that  is  true. 

Q.  That  is  your  observation?    A.  I  believe  so. 

Q.  And  the  credit  of  the  suppression  of  the  inordinate  speculation  in 
1876,  and  later,  is  due  entirely  to  the  producer  and  the  refiner  as  well  as 
the  stable  rates  of  transportation  in  bringing  a  stable  market  and  a  stable 
price  and  a  cheap  price  to  the  consumer  himself.  Are  we  to  understand 
that  that  is  the  gist,  as  I  may  say,  of  your  remark,  or  have  you  anything 
else  to  add?  A.  Well,  only  in  part.  The  producer  is  a  man  of  energy  and 
force,  and  his  effort  has  usually  been  in  the  production,  the  mere  producing. 
He  has  been  entirely  uncontrollable.  Show  him  an  oil  field,  and  he  is  off 
wild  and  excited,  and  no  matter  what  the  conditions  of  trade  are  he  will 
drill  as  long  as  he  *can  find  a  place  to  drill,  and  he  can  get  the  means  to 
drill  regardless  of  anyone  else.  That  is  his  right.  He  is  injuring  himself, 
as  he  is  injuring  others. 

Q.  So  that  you  regard  over-production  as  the  cause  of  small  profits  to 
the  producer?  A.  Over-production  and  speculation.  The  over-production 
has  been  consuming  them,  has  covered  and  blocked  them  for  more  than  30 
years.  We  noticed  yesterday  that  in  1862  it  was  necessary  to  turn  the  stop- 
cocks on  the  wells,  and  every  year  or  two  since  there  have  been  movements 
to  curtail  production,  all  due  to  the  energy  of  producers— over-producing. 

Q.  (By  Mr.  SMYTH.)  Has  the  consumption  of  oil  been  gradually  get- 
ting larger  and  larger  year  after  year?    A.  Yes,  sir;  oh,  yes,  sir. 

Q.  But  it  has  not  kept  pace,  in  your  judgment,  with  the  production? 
A.  Oh,  yes,  sir;  I  would  say  so.  It  has  substantially  kept  pace  with  pro- 
duction, but  the  price  at  which  it  was  offered  had  much  to  do  with  it,  Mr. 
Commissioner;  the  cheapening  of  prices  always  increases  consumption. 

Q.  (By  Mr.  FARQUHAR.)  What  effect  has  the  cheap  crude  oil  on  the 
refiners'  profits?  A.  Well,  sir.  I  couldn't  say.  The  manufacturers'  profits 
are  very  largely  controlled  by  the  prices  of  the  crude.  When  he  buys  crude 
cheap  he  cannot  sell  refined  very  high,  because  the  competition  among  the 
refiners  is  too  active  for  that.  The  competition  among  refiners  is  controlled 
exactly  as  among  producers;  precisely  in  the  same  manner.  I  would  say 
that  in  a  period  of  very  low  prices  the  refiners  suffered  equally  with  the  pro- 
ducers. 


*Black   faced   type  Indicates  matter  omitted,  In  the  course  of  editing,  from  the 
official  report. 


540  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

Q.  That  is,  there  is  a  sensitive  touch  between  the  two,  between  the 
crude  and  refined?  A.  Between  the  crude  and  refined,  yes,  sir.  At  an 
intermediate  price  they  both  succeed  better;  that  is,  if  the  price  be  large 
enough  to  be  remunerative  to  the  producer,  and  still  large  enough  on  the 
side  of  the  consumer  to  make  it  remunerative  for  the  refiners  to  induce 
consumption.  There  is  and  will  be  a  point  beyond  which  it  is  dangerous  to- 
go  on  either  side. 

Q.  Now,  one  question  more  on  that.  Before  this  commission  testimony 
has  been  given  in  which  we  find  a  great  deal  of  dissatisfaction  and  grumb- 
ling on  the  part  of  the  producers,  the  testimony  going  to  show  that  the 
producer  is  the  only  one  that  is  affected  injuriously  in  the  whole  of  this  oil 
business;  that  the  refiners  are  making  money,  nearly  all,  I  understand,  but 
the  producers  are  the  under  dogs  in  the  fight.  They  have  to  take  the  rates 
that  the  Standard  Oil  Company,  and  even  the  association  of  the  independ- 
ents, put  up,  following  the  Standard  as  we  understand  it.  Now,  as  a  busi- 
ness proposition,  Mr.  Boyle,  can  a  producer  ever  ask  to  divide  a  profit  with 
a  manufacturer?     A.  I  would  think  not. 

Q.  Doesn't  it  legitimately  belong  to  the  producers  to  regulate  their  own 
output,  their  own  trade,  and  their  own  business,  so  that  they  will  conserve 
their  own  profit  in  producing  the  oil,  and  selling  it  to  the  refiner?  Can  they 
share  in  any  profit  beyond  that  legitimately?  A.  I  should  think  not.  There 
has  been  a  very  constant  aim  to  do  what  you  say,  to  regulate  their  supplies; 
*there  has  been  a  constant  aim  to  try  to  do  that,  but  the  business  is  one  that 
is  uncontrollable  by  reason  of  the  new  producers  constantly  coming  in 
in  the  opening  of  every  field. 

*Q.  That  is  what  I  want.?  A.  Well,  conditions  change  continually  now. 
If  it  were  possible  to  form  a  combination,  as  did  the  men  who  produced  oil 
on  Oil  creek  in  1870,  when  they  formed  their  Producers'  Agency,  either  a 
corporation  or  a  limited  partnership  company,  regularly  organized  for  a 
declared  purpose  to  retire  a  certain  portion  of  the  oil  (a  combination  at  that 
time  so  close  as  to  embrace  everybody  in  the  business),  the  same  prices 
might  exist  to-day  and  we  might  be  paying  the  price  that  was  current  in 
Cincinnati  in  1865 — if  it  were  possible  to  do  that.  Producers  in  that  case 
could  control  their  output,  and  ask  and  receive  anything  they  required  for 
their  oil.  The  opening  of  new  fields,  as  a  rule,  brings  in  a  class  of  new 
producers.  Let  us  take,  for  example,  the  Parker's  Landing  field,  opened 
entirely  by  what  we  now  call  tenderfeet — farmers,  stock  companies,  persons 
owning  farms  and  interests.  I  happened  to  be  present  during  the  greater 
part  of  the  development  of  that  field,  and  I  believe  I  am  reasonably  familiar 
with  the  operations  there. 

Q.  (By  Representative  LIVINGSTON.)  Do  I  understand  you  to  say  that 
the  producers'  organization  is  distinct  from  the  refiners'  organization?  A. 
Yes.  sir. 

Q.  Why  do  not  the  producers  refine  their  own  oil  and  get  rid  of  the 
refiners?     A.  They  have  attempted  it  on  many  occasions. 

Q.  I  want  to  know  why  they  failed?  A.  Well,  I  will  have  to  refer  you  to 
the  officers  of  their  association.  *l  refer  you  to  your  own  chairman.  If  you 
press  the  question  to  him  he  can  probably  answer  you. 

Q.  Do  I  understand  you  to  say  that  the  producers  are  able,  that  they 
have  capital  and  brains  enough  to  produce  the  oil?     A.  They  certainly  have. 

Q.  Do  I  understand  you  to  say  that  they  cannot  refine  their  own  oil 
independently  of  that  organization?  A.  Well,  I  can  answer  you  this  way: 
They  never  have;  they  have  attempted  it  and  failed. 

Q.  They  have  not  learned  how  to  combine?  A.  The  failure  does  not 
seem  to  be  due  to  the  lack  of  combination.     They  combine  readily  enough. 

Q.  (By  Mr.  FARQUHAR.)  But  their  combinations  never  stay?  A. 
The  combinations  do  stay  also,  but  it  seems  to  have  been  a  matter  of  expe- 
rience. 

Q.  (By  Representative  LIVINGSTON.)  What  astonishes  me  is  that 
they  are  laboring  under  a  disadvantage  on  account  of  the  oil  refiner.     Why 

♦Black  faced  type  Indicates  matter  omitted.  In  the  course  of  editing,  from  the 
official  report. 


PATRICK  C.  BOYLE.  541 

do  they  not  put  up  their  own  refineries  and  refine  the  product  that  they 
n^ake  and  get  all  there  is  in  it?    A.  They  do  not  do  it;  we  know  that. 

Q.  (By  Mr.  SMYTH.)  Is  it  not  considered  a  separate  business,  the 
producing  and  refining  of  oil?  A.  It  is;  *one  is  producing  and  the  other  is 
manufacturing. 

Q.  (By  Representative  LIVINGSTON.)  What  is  the  reason  of  that? 
That  is  what  I  am  after.  Why  don't  the  producers  refine  and  sell  their  oils 
to  the  consumer?  That  is  what  I  want  to  know,  because  if  they  can  help 
themselves  they  will  not  get  much  sympathy  from  me,  and  if  they  cannot 
help  themselves  then  I   have  to  look  out  for  them. 

Vice-Chairman  PHILLIPS.  Can  you  state  how  they  are  on  that  point 
now,  Mr.  Boyle.  The  producers  were  never  able  to  unite  sufficiently,  being 
scattered  and  unable  to  get  together;  so  the  refiner  comes  in  and  proceeds 
to  establish  a  large  refining  industry  so  as  to  get  the  drawbacks  and  rebates 
that  built  up,  for  instance,  the  Standard  Oil  Company  and  the  large  con- 
cerns. They  were  r\e\/er  able  to  unite  sufficiently  to  offer  the  railroads  a 
sufficient  carrying  trade  to  get  the  rebates  that  built  up  the  monopolies  in 
the   refining   interests.     Is  that  true  or   not? 

Mr.  SMYTH.  Is  that  due  to  a  lack  of  organizing  ability  on  the  part  of 
these  producers?  Why  did  the  Standard  Oil  promoters  have  more  ability  to 
organize  than  these   independents? 

Vice-Chairman  PHILLIPS.  The  refiners  connected  with  the  business, 
as  you  have  already  stated,  Captain  Smyth,  are  different.  There  are  two 
businesses  which  require  different  character  of  skill  and  ability.  The  farm- 
ers do  not  organize  the  mills  and  grind  out  their  flour,  and  the  farmers  in 
the  South,  after  raising  cotton,  do  not  establish  the  cotton  mills,  and  the  oil 
prodLicers  cannot  very  well    do  that. 

Representative  LIVINGSTON.  That  is  not  a  reason  why  they  should 
not   do   it;   they   can    do    it. 

Vice-Chairman  PHILLIPS.  But  there  were  two  distinct  industries  and 
I  think  Mr.  Boyle  will  bear  me  out,  that  when  the  refiners  got  together,  they 
offered  a  large  amount  of  oil  to  transport  to  the  seaboard;  and  in  the  early 
days  there  was  a  very  heavy  rebate  given  to  the  refiners;  so  much  so  that 
others  could   not  organize  against  them. 

Representative    LIVINGSTON.      Right  there   a   question. 

Vice-Chairman  PHILLIPS.  I  think  Mr.  Boyle  will  bear  me  out  that  there 
were  in  the  early  days  very  large  rebates  given  to  the  refiners. 

Representative  LIVINGSTON.  If  one-third  of  the  producers  could  organ- 
ize, could  they  not  control  it?  I  know  that  if  one-third  of  the  cotton  raisers 
would  organize  they  could  control  the  price  of  every  bale  of  cotton.  I  know 
that  is  true  of  wheat;  *if  one-third  of  the  wheat  raisers  organized  they  could 
control  the  price  of  wheat.  Now,  could  not  one-third  of  the  producers  of  oil 
organize  and  thereby  get  rid  of  this  encumbrance  and  handicap? 

Vice-Chairman  PHILLIPS.  They  could  organize  and  establish  their  man- 
ufactories, but  the  manufacturing  talent  and  experience,  and  the  merchan- 
dising talent  and  experience,  may  be  wanting  among  the  producers. 

Q.  (By  Representative  LIVINGSTON.)  Would  the  railroads  stand  in 
the  way  of  their  organization?  Is  that  one  of  the  impediments?  A.  I  agree 
with  the  chairman  in  what  he  says  about  the  early  conditions  of  the  refin- 
ing oil  business.  The  refiners  were  able  to  offer  inducements  to  the  rail- 
roads in  the  way  of  very  large  freight  shipments,  and  obtained  some  con- 
cessions which  enabled  them  to  tide  over  a  time  when  they  needed  assist- 
ance very  much. 

Q.  What  I  wanted  to  draw  out  was  whether  the  railroads  or  any  other 
combinations  stand  in  the  way  of  these  producers.  *That  is  what  I  am  try- 
ing to  prove  now.  I  don't  know  why  they  did  not  organize.  I  cannot  tell. 
If  the  railroad  corporations,  or  any  other  body  of  men  who  have  franchises, 
stand  in  the  way  of  their  getting  a  legitimate  profit  from  their  oil.  this  com- 
mission ought  to  know  it.  A.  I  am  leading  up  to  that  point  in  discussing 
the  beginning  of  the  existing  organization  of  the  producers.  *!  am  trying  to 
trace  it  up  and  I  started  yesterday  and  will  now  continue  on. 

♦Black  faced  type  iiidicixtos  matter  omitted,  in  the  course  of  edithig,  from  the 
■offlcial  report. 


542  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

*Q.  Well,  then,  you  will  show  that  later?  A.  Yes,  sir;  I  will  show  where 
they  have  continued  to  attempt  it  and  the  reasons  why  they  failed.  They 
are  still  trying  to  do  it.  You  have  not  admitted  failure,  have  you?  (Ad- 
dressing the  chairman.) 

Q.  (By  Vice-Chairman  PHILLIPS.)  Now,  one  other  question.  Is  it  not 
a  matter  of  sworn  evidence,  Mr.  Boyle,  by  perhaps  the  president  of  the  Penn- 
sylvania Railroad  Company,  that  the  Standard  Oil  Company  received  over 
$11,000,000  in  rebates  in  about  14  months  in  the  early  period?  A.  I  do  not 
so  understand  it,  Mr.  Chairman.  I  say  there  was  certain  testimony  given 
by  the  present  president  of  the  Pennsylvania  Railroad  and  certain  figures 
were  given,  and  certain  deductions  were  made  from  those  figures  by  another 
person  who  did  not  testify,  and  the  deductions  of  this  person  are  given  as  the 
testimony  of  the  president. 

Q.  (By  Vice-Chairman  PHILLIPS.)  I  think  there  is  a  document  lying 
there.  A.  Well.  I  am  referring  to  that  document,  and  my  remarks  apply  to 
it.  The  president  only  testified  to  figures  and  rates.  He  gave  no  sums; 
there  is  nothing  stated  in  that  testimony  about  any  sums  of  money  that  were 
received.  , 

Q.  (By  Vice-Chairman  PHILLIPS.)  Well,  they  paid  rebates  to  the 
amount  of  over  $10,000,000  in  14  or  16  months?  A.  He  did  not  say  that;  the 
president  did  not  so  testify. 

Q.  (By  Vice-chairman  PHILLIPS  )  My  recollection  may  not  be  correct 
about  the  figures,  but  it  is  in  that  volume.  A.  It  is  in  that  volume,  and  Mr. 
Lewis  Emery,  .Jr.,  testified  to  that  and  drew  his  deductions  from  testimony. 

Q.  (By  Vice-chairman  PHILLIPS.)  Is  it  not  Mr.  Cassatt's  own  testi- 
mony? A.  No.  he  goes  further  than  Mr.  Cassatt;  *he  includes  all  the  rail- 
roads. Mr.  Cassatt  testifies  to  one  road,  the  operations  of  his  own  road,  and 
Mr.  Emery  takes  it  for  granted  that  the  three  other  roads  within  the  pool  at 
that  time  conceded  the  same  rate,  and  upon  this,  taking  the  entire  produc- 
tion for  the  period  of  17 1?  months,  he  takes  the  total  production  for  that 
period,  and  during  this  period  he  was  shipping  by  his  own  pipe  lines  and  by 
w^ater  to  the  seaboard  as  much  as  2,000  barrels  a  day,  and  he  includes  that. 
He  takes  in  the  entire  production,  and  his  own,  too,  which  we  know  did  not 
go  over  any  railroad.  Those  roads  were  from  the  producing  regions  to  the 
seaboard.  There  were  shipments  by  water  and  several  shipments  from 
Huntington  over  the  Chesapeake  &  Ohio  to  Norfolk. 

Mr.  Phillips  asked  Professor  Jenks  to  refer  to  Mr.  Cassatt's  testimony, 
but  other  commissioners  objected  that  Mr.  Boyle  could  know  of  the  matter 
being  discussed  only  as  a  reader  of  the  records  and  that  other  witnesses 
should  be  interrogated  on  that  question. 

The  witness  read  what  was  termed  a  "practical  exhibit."  issued  by  the 
Petroleum  Producers'  Agency  of  the  Petroleum  Producers'  Association, 
which  v.-as  created  in  1S69  and  1870  and  which  proposed  less  production  to 
get  higher  prices  for  oil  and  showed  that  a  small  production  would  yield 
more  profit  than  a  large  production,  because  high  prices  would  rule  in  the 
first  instance  and  low  prices  in  the  latter  case, 

Mr.  Boyle  read  the  circular  of  the  Petroleum  Producers'  Association  of 
Pennsylvania,  dated  Reno,  Pa.,  April  25,  1870,  and  signed  by  C.  V.  Culver, 
secretary,  giving  the  purposes  and  terms  on  which  this  association  was  to 
be  formed.  The  circular  stated  that  the  objects  of  the  association  were  to 
be  the  collection  and  dissemination  of  valuable  statistics  and  information 
respecting  the  production  of  petroleum,  the  securing  of  the  most  advantage- 
ous facilities  for  transportation,  the  protection  of  the  producing  interests 
against  imfriendly  legislation  and  against  all  unjust  exactions  by  whatever 
means,  threatened  or  attempted,  and  the  general  improvement  of  the  meth- 
ods of  producing  and  handling  oil.  Any  person  actually  engaged  in  the 
production  of  crude  petroleum  could  become  a  member  of  the  association, 
with  the  consent  of  two-thirds  of  the  managers  present  at  a  regular  meeting 
of  the  board  and  subscril)ing  to  the  constitution  and  paying  a  membership 
fee  of  $5.  It  stated  that  a  special  canvasser  of  ability  and  integrity  was  to 
be  employed  to  get  the  statistics  in  regard  to  production  at  the  wells,  the 


•Black   faced   type   indicate.'^  matter   omitted,   in  the  course  of  editing,  from   the 
official  report. 


PATRICK  C.  BOYLE.  543 

number  of  barrels  of  oil  stored  in  iron  tankage,  local  shipments  by  river 
and  railroad,  the  stocks  of  oil  in  hands  of  refiners,  etc. 

The  WITNESS.  Now.  the  purpose  of  the  agency  formed  by  the  Petro- 
leum Producers'  Association,  which  was  created  in  1869  and  1870.  is  stated 
here  in  a  few  words,  in  what  is  called  a  "practical  exhibit."     (Reading.) 

"The  establishment  of  the  Petroleum  Producers'  Agency  is  expected  to 
accomplish,  among  others,  these  important  things: 

"1.  It  will  prevent  unwise  competition  between  producer  and  sellers  by 
taking  advantage  of  which,  buyers  contrive  to  depress  prices. 

"2.  It  will,  as  a  result,  secure  a  fair  price  for  whatever  amount  of  oil  the 
world  requires — unaffected  by  the  fact  that  there  is  more  produced  than  the 
consumption  demands. 

"3.  The  surplus  oil  being  kept  in  the  control  of  the  agency,  it  cannot  be 
used  by  any  one  to  manipulate  or  depress  the  market  prices. 

"4.  The  surplus  oil  placed  in  tank  exactly  represents  the  over-produc- 
tion and  unerringly  indicates  its  extent  and  increase." 

Right  there,  they  could  make  more  money  by  holding  the  oil.  than  they 
could  by  putting  it  on  the  market. 

Mr.  FARQUHAR.  That  is  right;  that  was  the  means  of  raising  the 
prices  to  the  consumer. 

The  WITNESS.     (Reading.) 

"5.  No  concealment  or  misrepresentation  can  be  made  of  the  stock  or 
over-production  to  unduly  affect  prices. 

"6.  Every  producer,  being  the  holder  of  a  tank  receipt  representing  his 
share  of  the  surplus  oil,  is  doubly  interested  in  restraining  over-production — 
because  he  suffers  both  from  the  inability  to  realize  upon  his  receipt  for  oil 
in  tank  and  from  having  to  deduct  from  the  value  of  his  production  the 
value  of  that  required  to  be  placed  in  tank  and  the  cost  of  tanking  it. 

"7.  The  effect  of  competition  and  of  the  lack  of  it  in  buying  and  selling 
crude  oil  is  shown  by  the  fact  that  with  an  established  demand  for  16.000 
barrels  of  oil  a  day,  and  a  production  of  the  same  amount,  the  advantages 
of  the  buyers  and  sellers  are  so  nearly  balanced  that  $5  a  barrel  will  be 
freely  paid  by  the  buyer  and  accepted  by  the  seller — yielding  $80,000  a  day 
for  the  gross  production.  But  if  the  production  should  fall  off,  say  1,000 
barrels  a  day,  competition  between  buyers  would  exist  to  such  an  extent 
that  $6  would  be  just  as  readily  paid  and  be  readily  accepted,  making 
$90,000  for  the  whole.  If  the  production  should  still  further  decrease,  so  as 
not  to  exceed  14,000  barrels  a  day,  the  price  would  promptly  advance  to  over 
$7,  and  realize  at  least  $100,000  for  the  total  production." 

Q.  (By  Representative  LIVINGSTON.)  Just  a  little  explanation  right 
there.  W^ould  that  be  independent  of  the  surplus  carried  at  the  time? 
Would  these  prices  vary,  notwithstanding  the  surplus  on  hand?  A.  The 
surplus  would  be  retired  and  kept  out  of  the  way.  or  the  markets  advanced. 

Q.  I  understand  your  answer  is  yes?    A.  Yes,  sir.     (Reading.) 

"If,  however,  the  advantage  were  to  turn  the  other  way,  as  would  soon 
be  the  case,  with  such  stimulating  prices,  and  the  production  should  reach, 
say  17,000  barrels,  exceeding  the  demand  by  1,000  barrels,  the  competition 
would  be  between  the  sellers  instead  of  the  buyers,  and  the  price  would 
decline  to  $4  a  barrel,  making  $68,000  for  the  daily  production;  with  less 
readiness,  18.000  barrels  would  bring  at  most  $.3. .50  per  barrel,  or  $63,000  in 
the  aggregate,  while  19,000  barrels  would  hardly  find  purchasers  at  $3  per 
barrel,  or  $57,000  for  the  daily  product,  and  a  production  of  20.000  barrels 
■would  not  command  $2.50  per  barrel,  or  less  than  half  the  amount  that  a 
production  of  14.000  barrels  would  readily  command,  and  apparent  perma- 
nent production  in  excess  of  20,000  barrels  would  so  thoroughly  demoralize 
the  market  as  to  make  petroleum  without  a  reliable  quotation." 

Twenty  thousand  barrels  then  was  considered  a  very  extravagant  esti- 
mate of  the  production.  If  it  ever  reached  that  the  business  would  not  only 
be  a  losing  one,  but  there  would  be  no  market  whatever.     (Reading.) 

"The  logic  of  this  undeniably  correct  statement  has  a  thousand  times 
suggested  that  it  would  be  a  profitable  speculation  to  buy  the  entire  produc- 
tion at  the  price  which  is  current  when  production  is  largely  in  excess  of 
demand,  and,  reserving  only  so  much  as  the  market  would  actually  require. 


544  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

to  set  fire  to  the  remainder,  put  it  out  of  existence,  and  thereby  realize 
twice  as  much  from  the  remainder  as  the  whole  cost." 

Q.  (By  Representative  LIVINGSTON.)  That  would  be  justifiable,  would 
it?     A.  That  is  what  they  say  here.     (Reading.) 

"Wanton  as  the  destruction  of  such  valuable  material  would  be,  but  one 
consideration  has  prevented  its  accomplishment  long  ago  as  a  speculation; 
that  is,  the  great  advance  in  price  which  would  naturally  result  from  its 
consummation  would  so  stimulate  production  as  to  entail  upon  the  enter- 
prising speculator  the  possibility  of  loss  by  a  second  stock  larger  than  the 
first. 

"There  is,  however,  a  common  sense  method  of  accomplishing  a  better 
result  by  better  means.  The  oil  is  too  valuable  to  destroy  or  waste;  and 
to  withdraw  the  supply  from  competition  with  the  amount  which  the  world 
requires,  would  enable  the  producer  to  realize  a  fair  price  for  what  is  sold, 
and  retain  the  surplus  without  other  cost  than  that  of  putting  it  in  tank. 
But  who  shall  do  this?  If  any  individual,  or  firm,  or  company,  were  to 
undertake  it,  they  would  find  their  resources,  however  large,  eventually  ex- 
hausted, only  to  make  a  market  for  an  enlarged  production,  stimulated  by 
their  enterprise. 

"There  is  but  one  way  to  secure  a  community  of  interest  among  pro- 
ducers, by  affording  them  the  advantages  of  the  good  prices  resulting  from 
selling  through  our  agency  without  competition  and  compelling  them  to 
bear  uniformly  the  burdens  and  losses  resulting  from  excessive  over-produc- 
tion. These  ends  are  sought  to  be  accomplished  through  the  agency,  which 
undertakes  to  receive  all  the  oil  produced,  to  pay  a  fair  price  for  what  the 
world  will  consume  and  to  tank  the  surplus  at  the  cost  of  the  producer  for 
his  benefit. 

"The  following  table  shows  the  practical  result  of  selling  16,000  barrels 
of  crude  oil  a  day  at  $5  a  barrel  and  storing  the  excess  at  the  expense  of 
the  producer — estimating  the  cost  of  tankage  at  $1  per  barrel. 

"Observe  that  if  the  supply  is  not  in  excess  of  the  demand,  the  full 
market  price  will  be  paid  for  the  entire  production  as  fast  as  delivered,  so 
that  there  would  be  no  delay  in  making  payment  and  no  tanking  of  sur- 
plus oil. 

"The  table  is  only  to  show  what  would  be  the  result  to  the  producer,  the 
demand  being  for  16,000  barrels  a  day  and  the  production  steadily  rising 
from  17.000  to  24,000  barrels  a  day. 

"The  operation  of  the  plan  is  to  secure  the  producer  a  minimum  price 
of  $5  a  barrel  for  all  the  oil  which  can  be  sold — deducting  therefrom  only 
the  commission  for  selling  the  oil  and  the  cost  of  tanking  the  surplus.  For 
his  interest  in  the  surplus  oil  in  store  and  in  the  tankage,  he  has  a  receipt 
estimated  in  the  table  at  a  valuation  of  $3  a  barrel,  at  which  valuation  it  is 
assumed  the  receipt  can  be  readily  sold,  if  the  producer  purposes  to  realize 
upon  his  entire  production  rather  than  wait  for  the  surplus  oil  to  be  market- 
ed at  a  higher  rate. 

"The  table  shows  at  a  glance  what  the  producer  will  realize  from  the 
advance  made  by  the  agency,  what  the  proceeds  of  the  sale  of  oil  in  addition 
to  the  advance  and  what  his  interests  in  the  stored  oil  is  worth  at  the  esti- 
mated value.  The  right  hand  column  shows  what  he  may  realize  per  barrel 
at  once  on  his  entire  production  by  selling  his  interest  in  the  tanked  oil  with 
the  amount  marketed. 

"The  advantage  to  producers — resulting  from  the  establishment  of  the 
agency  by  which  the  rates  indicated  can  be  realized  from  sales  through  it — 
contrasted  with  sales  made  in  competition  between  sellers,  is  so  marked 
and  decided  that  it  needs  only  the  simple  exhibit  to  prove  that  by  the  opera- 
tion of  the  agency  at  least  from  $1  to  $2  a  barrel  upon  the  entire  production 
may  be  saved  to  the  producers  at  large — amounting  in  the  aggregate  to  from 
$6,000,000  to  $12,000,000  a  year." 


PATRICK  C.  BOYLE. 


545 


Dally  Pay- 
ments $5  per 
barrel. 


17,000   $.51,000 

18,000    rA  (m 


^^       ■= 


•se: 


02 


ftt.       "2 


as 


19, 000 
20,000 
21,000 
22,000 
23,000 
24,000 


.-,7,  IXX) 

m,  a)0 
m,  (XX) 

(j(i,  000 

(iy.ooo 

72,000 


$34,000  $80  000 
36,000  I  SO,  000 


3S, 000 
40,000 
42,000 
44,000 
40,000 
48,000 


80.000 
80.000 
80, 000 
80, 000 
80,000 
80,000 


>^n 

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d  1. 

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-.§ 

a 

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irTi  h-  .r: 


CD 


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o  s  o  5? 


1,000 
2,000 
3,000 
4,000 
5,000 
6,000 
7,000 
8,000 


$1,000  $28,000 
2,000  I  24,000 


3,0(X) 
4,000 
5,000 
t),000 
7,000 
8,000 


20,000 
1(5,000 
12,000 
8,  OCX) 
4,000 
0 


$1.()0 

.$4.0.') 

50. 35 

1.33 

4.33 

.67 

1.05 

4.05 

.95 

.80 

3.80 

1.20 

.58 

3.58 

1.42 

.37 

3.37 

1.63 

.18 

3.18 

1.82 

.00 

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2.00 

.60 
.71 

ifl^ 
1.00 


$4,823^ 

4.52>| 

4.40 

4.29 

4.18>^ 

4.09 

4.00 


Q.  (By  Vice-chairman  PHILLIPS.)  Was  not  that  a  wild,  visionary 
scheme?  Did  it  cause  a  ripple  in  the  oil  region  at  the  time  it  was  presented? 
I  think  there  are  oil  producers  that  never  saw  that  or  had  any  knowledge 
of  it.  *lt  (did  not  have  any  effect,  did  it,  in  any  manner,  upon  the  oil  fields 
at  the  time  that  it  was  presented?  A.  I  am  not  prepared  to  agree  with  you 
in  that  statement,  :Mr.  Chairman.  It  seems  to  me  there  was  a  very  consid- 
erable discussion  of  it  in  the  newspapers,  and  it  was  talked  over  in  the 
various  towns  of  the  region.  A  fund  was  subscribed  for  it  at  the  time,  and, 
while  inoperative,  it  was  owing  to  the  great  production  in  Butler  county. 
Had  conditions  remained  as  they  were  when  this  was  contemplated,  it  would 
undoubtedly  have  gone  into  effect.  *lt  was  the  great  production  in  Butler 
county  that   discouraged   this   movement. 

Q.  (By  Vice-chairman  PHILLIPS.)  But  it  was  entirely  ineffective  and 
inoperative  and  was  not  received  generally  by  the  producers?  A.  It  was 
inoperative.  Here  is  substantially  the  same  plan,  *differing  only  in  degree, 
adopted  a  few  years  later  by  the  Petroleum  Producers'  Association.  This 
went  into  effect.  This  one  was  effective  and  agencies  were  established  in 
the  various  points  in  the  oil  regions  for  the  purchase  of  oil.  Oil  was  bought 
from  the  producers  and  sold  substantially  on  the  same  plan  for  the  purpose 
of  retiring  oil,  *with  the  additional  purpose  of  taking  oil  away  from  the 
existing  or  competing  companies.  This  is  the  report  of  the  committee  on 
organization  of  the  Petroleum  Producers'  Association,  Limited,  adopted  by 
the  general  council  of  the  Petroleum  Producers'  Union,  of  which  Mr.  B.  B. 
Campbell  was  president.     This  was  a  partnership  affair. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Did  that  have  any  material  effect 
on  the  prices,  either  to  the  producers  or  consumers?  A.  I  cannot  say  that 
it  did;  no.  It  was  an  effort,  Mr.  Chairman,  in  the  direction  of  the  curtail- 
ment of  the  production,  made  necessary  because  of  over-production  at  that 
time — *from  the  surplus  energy  of  the  producers  who  were  getting  more  oil 
than  the  world  consumed.  An  address  by  the  general  council  of  the  Petro- 
leum Producers'  Union,  of  the  same  date,  states  the  reasons  for  the  existing 
depreciation,  and  urges  the  producers  to  join  the  union  and  to  subscribe  to 
it,  and  to  this  union  $1,000,000  was  subscribed. t 

Q.  (By  Vice-chairman  PHILLIPS.)  Was  it  ever  paid  in?  A.  Well,  we 
have  only  reports  of  the  subscriptions  and  the  acknowledgment  of  the  same, 
and  the  fact  that  it  was  put  into  practical  operation.  Agencies  were  estab- 
lished at  various  points  in  the  oil  country  and  they  set  up  opposition  buyers. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Did  it  have  any  special  effect  on 
the  trade?     A.  No  noticeable  effect  on  the  trade  and   it  was  very  shortly 


*Black  faced  type  indicates  matter  omitted,  in  the  course  of  editing,  from  the 
official   report. 

tin  the  official  report  this  answer  is  ?lven  in  the  following  form: 
"I  cannot  say  that  it  did.     But  it  was  an    effort   for   the    improvpinent    of    trade 
conditions  at  that  time.     An  address  by  the  general  council   of  the  Petroleum   Pro- 
ducers' Union  of  the  same  date  states   the  reasons  for  the  existing  di^pression  and 
Lrges  producers  to  .ioin   the  union.     To  this   nio\-ement  $1,000.0(X)  was   subscribed." 

35 


546  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

abandoned,  but  it  was  an  outgrowth  of  the  movement  inaugurated  by  David. 
Armstrong  in  1877  and  1878  and  1879.  Ben  Campbell  succeeded  to  the  chair- 
manship. 

The  witness  read  a  drilling  contract  which  was  adopted  by  the  Petro- 
leum Producers'  Association  and  was  used  in  connection  with  a  movement 
in  the  oil  regions  in  1887  and  1888  for  the  restriction  of  operations  in 
interior  drilling.  After  providing  that  wells  should  not  be  drilled  closer 
together  than  a  prescribed  distance,  the  contract  in  part  is  as  follows: 

'•Whereas,  abundant  territory  as  well  as  our  own  experience  teaches  us 
that  the  price  of  any  commodity  is  mainly  dependent  upon  the  relatioa 
between  supply  and  demand,  and  that  petroleum  is  no  exception  to  this  rule; 

"And  whereas,  the  excess  of  visible  supply  of  stocks  of  petroleum,  fur- 
nishing an  apparent  supply  largely  in  advance  of  the  immediate  demand,  has 
been  and  still  is  the  most  depressing  circumstance  which  affects  the  petro- 
leum industry; 

"And  whereas,  the  effect  of  our  'shut-in'  of  production  for  eight  months^ 
while  not  as  advantageous  as  we  had  hoped,  has  nevertheless  put  the  price 
on  a  higher  plane  than  that  upon  which  it  had  previously  rested,  and.  as 
we  believe,  has  prevented  the  commodity  from  sinking  to  even  lower  prices 
than  we  had  experience  of  in  recent  years,  and  we  had  therefore  to  limit 
the  production  by  a  moderate  restraint  of  drilling,  as  demanded  by  the 
interests  of  the  producers  of  petroleum  until  the  stocks  are  reduced  to  an 
amount  consistent  with  the  healthy  relation  between  supply  and  demand, 
and  as  a  result  the  receipt  of  remunerative  prices  to  the  producers; 

'"Now,  therefore,  we,  the  undersigned,  producers  of  petroleum,  do  here- 
by agree  to  and  with  each  other  that  we  will  not  drill  any  wells  for  the 
production  of  petroleum  on  any  farm  or  tract  of  land  owned  by  us,  except 
along  or  adjacent  to  exterior  boundary  lines  of  our  respective  properties, 
to  a  greater  extent,  exclusive  of  boundary-line  wells,  than  one  producing 
well  for  each  20  acres  and  each  fractional  part  of  20  acres;  provided  that 
additional  wells  may  be  drilled  with  the  consent  of  the  local  assembly  of 
the  Producers'  Protective  Association  for  the  district  in  which  the  particular 
property  may  be  situated  and  of  the  general  executive  board  of  said  Pro- 
ducers' Association,  or  in  case  such  consent  cannot  be  obtained,  upon  the 
allowance  of  the  arbitrators,  or  a  majority  of  them,  one  to  be  chosen  by 
the  person  or  persons  desiring  to  drill,  one  to  be  chosen  by  the  local  assem- 
bly of  the  Producers'  Protective  Association  for  the  district  in  which  such 
property  is  situated,  and  the  third  by  the  two  so  chosen. 

"And  we  further  respectively  agree  that  all  conveyances  made  by  any 
of  us  of  oil  territory  during  the  continuance  of  this  contract  shall  be  made 
expressly  subject  to  all  the  conditions  of  this  agreement. 

"This  agreement  shall  continue  in  force  until  the  first  day  of  May,  1889, 
but  may  be  abrogated  before  that  date  by  the  votes  of  a  majority  of  the 
general  assembly  of  the  Producers'  Protective  Association,  and  such  general 
assembly  shall  be  convened  to  consider  the  question  of  abrogation  upon  the 
demand  of  one-third  of  the  local  assemblies  of  said  association." 

The  witness  said  the  shut-down  movement  of  1887  and  1888.  in  which 
the  Standard  Oil  Company  co-operated  with  the  producers  and  did  much  to 
make  the  movement  a  success,  was  no  doubt  the  most  wholly  successful 
action  ever  inaugurated  by  the  producers.  This  movement  had  its  incep- 
tion among  some  of  the  heavy  operators  in  the  Washington  county  field 
and  it  extended  over  the  whole  region  and  embraced  all  but  a  very  few  of 
the  operators.  Its  scope  was  wide  and  its  effects  were  greater  than  any  like 
movement.  The  mutuality  of  the  interest  among  all  branches  of  the  trade 
rendered  its  success  certain.  The  producing,  refining,  land  and  working 
interests  all  co-operated  to  make  the  movement  a  success  and  enhance  the 
value  of  the  product  of  the  producers.  At  the  inception  of  the  movement 
the  reduction  of  stocks  was  going  on  quite  rapidly  and  the  consumption  was 
8,000  barrels  a  day  over  the  production,  so  that  the  conditions  were  favor- 
able for  the  movement. 

The  WITNESS.  On  August  2,  1887,  at  Bradford,  there  was  a  meeting 
of  representative  producers,  at  the  invitation  of  H.  L.  Taylor,  of  Buffalo,  at 
which  time  it  was  developed  that  the  organization  pending  was  so  near 
completion  as  to  insure  a  successful  undertaking  of  the  work  mapped  out. 


PATRICK  C.  BOYLE.  547 

and  the  meeting  decided  to  postpone  action  for  a  short  time.  About  the 
same  time  the  Producers'  Protective  Association  held  a  few  secret  meetings 
in  Bradford,  in  the  interest  of  the  shut-down. 

The  movement  became  a  subject  of  much  discussion  in  the  newspapers, 
and  its  probable  outcome  was  very  thoroughly  discussed.  The  sensational 
press  got  in  its  work  on  this  movement  early  in  the  game,  and  among  other 
things  given  publicity  in  connection  with  the  shut-down  movement  was  a 
series  of  propositions  which  implied  that  the  sole  object  of  the  movement 
was  a  battle  against  the  Standard  Oil  Company,  which  allegations  were 
promptly  denied  by  Mr.  Kirk. 

The  Derrick  criticised  the  action  of  *Thomas  Phillips,  in  Butler  county, 
who  was  alleged  to  be  hustling  to  get  down  all  the  holes  he  could  while  the 
preliminaries  of  the  shut-down  were  being  arranged.  In  Butler  county,  in 
the  Reibold  pool,  Phillips  had  two  wells  doing  2,900  barrels  a  day.  The 
Derrick  made  a  couple  of  attempts  to  interview  Mr.  Phillips  on  the  subject 
of  the  shut-down,  but  he  maintained  a  strict  silence  upon  the  subject.  Early 
in  September  there  were  meetings  of  the  Producers'  Protective  Association 
at  Bradford  and  a  conference  of  large  producers  at  Pittsburg,  which  included 
D.  O'Day,  of  the  National  Transit  Company.  The  Phillips  operations  in 
Butler  attracted  special  attention,  and  a  special  to  the  Derrick  from  Butler 
asserted  that  Mr.  Phillips  was  a  shut-down  man  in  name  only.f  The  leading 
producers  about  the  middle  of  September,  had  another  conference  at  Pitts- 
burg with  officials  of  the  Standard,  presumably  on  matters  connected  with 
the  shut-down  movement.  It  was  learned  fi'om  Washington  county  that 
McKeown  and  Willets,  two  of  the  largest  operators  in  the  field,  had  refused 
to  have  anything  to  do  with  the  movement,  contending  against  the  shut- 
down movement  as  a  means  of  bettering  the  conditions  of  the  trade,  which 
had  been  depressed  from  over-production  for  10  years.  Some  persons 
asserted  that  the  shut-down  movement  would  have  the  effect  of  bringing  in 
new  producers,  with  the  result  of  defeating  the  very  object  of  the  project. 
The  discussion  in  the  Derrick  of  the  shut-down  movement  covered  a  wide 
scope,  and  many  diversified  opinions  as  to  how  to  better  conditions  were 
expressed,  but  the  general  trend  of  opinion  was  largely  in  favor  of  the  shut- 
down. Phillips'  production  from  three  wells  in  the  Reibold  pool  amounted 
then  to  5,000  barrels  daily. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Was  not  that  more  properly  called 
the  Glade  Run?  A.  Yes,  sir;  Reibold  was  the  railway  station.  I  will  change 
that  to  Glade  Run. 

The  WITNESS.  On  September  29,  a  meeting  of  the  Producers'  Protec- 
tive Association  was  held  at  Emlenton,  at  which  matters  pertaining  to  the 
shut-down  were  considered  but  not  made  public.  At  this  meeting  and  among 
Emlenton  producers  it  is  said  there  was  a  decided  change  of  sentiment 
toward  the  Standard  Oil  Company,  it  being  asserted  that  but  for  the  Stand- 
ard, Pennsylvania  oil  would  be  selling  at  50  cents  per  barrel.  On  October 
2,  Phillips't  four  wells  at  Reibold  were  making  5,400  barrels  a  day,  which 
might  be  called  a  pretty  strong  showing  for  a  man  working  for  the  success 
of  a  shut-down  movement.  *There  was  in  Butler  county  a  decided  sentiment 
in  favor  of  the  shut-down  movement,  and  a  session  of  the  executive  com- 
mittee of  the  Producers'  Protective  Association  was  held  there  to  take  some 
action  and  consider  the  situation  in  Butler. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Now,  Mr.  Boyle,  allow  a  correction 
there,  please,  as  there  is  a  name  mentioned  there.  A.  I  want  to  take  that 
name  out;   it  was  not  intended  to  put  it  in. 


♦Black  faced  type  indicates  matter  omitted,  in  the  course  of  editing-,  from  the 
official  report. 

rAs  an  act  of  courtesy  to  the  commission  Mr.  Phillips'  name  was  eliminated 
from  the  official  report,  Mr.  Boyle  sugsesUns  that  the  name  had  crept  in  his  notes  in 
connection  with  oil  production  by  an  inadvertence. 

tMr.  Phillips'  name  was  omitted  from  the  official  report. 


548  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

*Q.  (By  Vice-chairman  PHILLIPS.)  That  is  all  right.  A.  It  was  unin- 
tentional, LUt  the  facts  were  that  these  wells  were  drilling  at  the  time.  It 
was  thoroughly  understood  by  these  persons  at  that  time.  They  were 
finished  and  were  shut  in,  but  there  was  a  violation  of  the  agreement  at  that 
time,  against  which  I  protested.! 

*Q.  (By  Representative  LIVINGSTON.)  What  is  it  that  you  are  strik- 
ing out — Mr.  Phillips'  wells? 

Vice-Chairman  PHILLIPS.  In  connection  with  the  statement  that  they 
were  not  shut  down  at  the  time  of  the  movement,  which  is  not  a  fact. 

The  WITNESS.  I  wish  to  state  in  this  connection — and  aside  from  my 
notes — that  there  was  no  intention  to  make  any  such  insinuation,  but  that  it 
was  thoroughly  understood  at  the  time. 

Vice-Chairman  PHILLIPS.  I  was  in  the  movement  from  the  beginning 
and   my  actions  were  thoroughly   understood   by  all   the   people   at  that  time. 

The  WITNESS.  There  was  no  intention  to  cast  any  reflection  upon  Mr. 
Phillips,  and  at  the  time  to  which  this  statement  refers  the  movement  had 
not  taken  effect. 

Vice-chairman   PHILLIPS.      No. 

The  WITNESS.     It  was  just  in  the  period  of  its  inception   at  that  time. 

Representative  LIVINGSTON.  That  takes  out  the  pith  of  the  business, 
as  far  as  that  is  concerned. 

The   WITNESS.      It  is   not  out,   Mr.   Livingston. 

The  moral  effect  of  the  drilling  of  the  Phillips  gushers  at  Reibold  was 
very  bad  and  rendered  more  difficult  the  work  of  the  committee  having  in 
charge  the  work  in  that  part  of  the  field.  On  October  14,  another  gusher 
was  added  to  the  Phillips  group,  bringing  his  total  production  from  five  wells 
up  to  6,300  barrels  a  day,  or  about  one-ninth  of  the  total  daily  production. 
In  the  middle  of  October,  N.  F.  Clark,  one  of  the  leaders  in  the  shut-down 
movement,  stated  that  80  per  cent,  of  the  producers  had  joined  the  Pro- 
ducers' Protective  Association  and  were  ready  to  get  into  the  shut-down. 
He  also  found  that  more  than  two-thirds  of  the  oil  was  produced  by  the 
small  producers.  During  the  month  of  October  the  executive  committee  of 
the  Producers'  Protective  Association  made  efforts  to  get  all  the  producers 
of  oil  into  line,  but  still  Mr.  Phillips't  gushers  continued  to  arrive  on  sched- 
ule time  at  Reibold.  On  October  20  he  added  another  to  his  list,  having 
then  a  daily  production  of  5,520  barrels,  from  six  wells.  The  first  authentic 
news  that  the  shut-down  would  be  a  success  came  out  on  October  23,  when 
it  was  learned  that  the  movement  would  go  into  effect  on  November  1,  and 
that  its  essential  features  were  as  follows:  The  shut-down  to  include  the 
shutting  in  of  not  less  than  one-third  of  the  production  of  the  operators  in 
the  agreement,  the  cessation  of  drilling  operations  and  the  general  co-op- 
eration of  the  producing  element.  The  Standard  Oil  Company  entered  into 
the  agreement  to  help  make  it  successful.  The  company  set  aside  6.000,000 
barrels  of  oil,  upon  which  it  was  proposed  to  donate  to  the  producers  the 
profits  on  5,000,000  barrels  of  this  oil — that  is  the  advance  above  62  cents- 
while  the  profits  on  the  other  1,000,000  barrels  were  to  accrue  to  the  oil 
well  workers  who  would  be  thrown  out  of  work  by  the  shut-in  and  shut- 
dovv'n.  This  result  was  arrived  at  only  after  prolonged  and  energetic  nego- 
tiations on  the  part  of  the  producers,  but  once  all  the  elements  of  the  busi- 
ness were  combined  it  was  practically  assured  that  the  movement  would  be 
successful.  This  looked  like  a  one-sided  proposition  wherein  the  Standard 
was  not  likely  to  be  much  of  a  winner,  but  that  being  the  agreement 
brought  home  by  the  producers'  committee,  they  returned  to  the  region  with 
the  sole  idea  of  organizing  the  producers  and  making  a  success  of  the  move- 
ment. How  well  they  succeeded  in  handling  the  question  is  best  evidenced 
by  the  fact  that  there  were  then  14,000  producers,  and  that  they  succeeded 
in  enlisting  85  per  cent,  of  the  number  in  the  movement. 


'Black  faced  type  indicates  matter  omitted,  in  the  course  of  editing,  from  the 
official   report. 

jThis  part  of  Mr.  Boyle's  answer  appears  in  the  official  report  in  the  following 
form:  "There  is  no  intention  of  stating  that  his  actions  wtre  contrary  to  contract; 
everything  was  open  and  understood." 

tMi-.   Phillips'   name  does  not  appear  in  the  official  report. 


PATRICK  C.  BOYLE.  549 

The  shut-down  commenced  on  November  1,  1887,  and  continued  until 
November  1  of  the  year  following,  both  sides  to  the  agreement  faithfully 
carrying  out  every  condition.  The  Producers'  Protective  Association  con- 
tinued their  organization,  which  at  the  start  was  secret.  I  think  the  restric- 
tion extended  so  far  that  no  one  holding  an  office  in  the  association  was 
allowed  to  be  known  by  name  outside  of  the  organization  itself.  Altogether 
it  was  one  of  the  closest  corporations  ever  organized  for  business  purposes. 
They  continued  to  hold  their  meetings  and  to  discuss  the  conditions  of  the 
trade,  which  were  not  permanently  bettered  by  this  shut-in  movement, 
owing  to  the  very  large  developments  in  the  McDonald  field  within  two 
years  of  the  termination  of  the  shut-down  agreement,  where  an  enormous' 
production  took  place  in  a  very  short  time. 

The  Producers'  Protective  Association  organized  business  associations, 
which  were  fostered  by  them.  The  first  of  these  was  the  Producers'  Oil 
Company,  Limited,  capitalized  at  $600,000,  which  was  absorbed  by  the  Pro- 
ducers &  Refiners'  Oil  Company,  capitalized  at  $2.50,000,  the  money  sub- 
scribed for  the  latter  having  been  invested  in  pipe  lines  furnishing  an  outlet 
from  the  McDonald  field.  The  Producers  &  Refiners'  Oil  Company  had 
also  been  organized  by  the  Producers'  Protective  Association  and  still  later, 
about  1894,  an  attempt  was  made  to  combine  it  with  the  United  States  Pipe 
Line  Company,  which  had  been  organized  with  a  capital  of  $1,000,000.  The 
attempt  to  consolidate,  combine  or  absorb  one  or  the  other  of  these  lines  at 
that  time  failed  through  the  activity  of  one  of  their  own  stockholdors,  who 
%vent  into  court  and  prevented  this  consolidation.  The  United  States  Pipe 
Line  proposed  to  buy,  with  the  consent  of  the  Producers'  Oil  Company, 
Limited,  the  property  of  the  Producers  &  Refiners'  Oil  Company,  the  pay- 
ment to  be  made  in  the  stock  of  the  United  States  Pipe  liine  Company,  it 
having  been  proposed  to  increape  the  stock  of  that  company  for  that  pur- 
pose from  $1,000,000  to  $2,000,000. 

The  WITNESS.  That  being  the  case,  another  company  was  formed, 
known  as  the  Pure  Oil  Company.  The  Pure  Oil  Company  was  formed  on  or 
about  the  24th  of  January,  189.5,  at  a  meeting  of  producers  at  Butler.  Pa. 
Subscriptions  were  received  to  the  amount  of  about  $50,000  toward  the 
organization  of  what  was  called  the  Pure  Oil  Company.  The  stated  purpose 
of  this  company  was  to  market  the  products  of  the  refineries  and  pipe  lines. 
It  was  to  be  the  commercial  organization  of  the  trust,  then  in  process  of 
formation,  and  it  has  since  been  sought  by  a  reorganization  of  that  concern, 
which  took  place  about  1897  under  the  laws  of  New  Jersey.  The  Pure  Oil 
Trust  was  reorganized  under  the  laws  of  New  Jersey  in  1897. 

Q.  (By  Vice-chairman  PHILLIPS.)  Why  do  you  call  the  Pure  Oil  Com- 
pany a  trust?  Was  not  that  a  straight  corporation,  as  the  Standard  and 
others  have  since  been  organized?  A.  I  will  give  you  my  authority,  Mr. 
David  Kirk,  the  first  president:  he  calls  it  a  trust  and  it  is  so  called  here.  It 
is  cited  as  a  trust  agreement  *in  the  exhibit  which  is  here. 

Q.  (By  Vice-Chairman  PHILLIPS.)  It  was  organized  under  the  laws  of 
the  State  of  New  Jersey  as  a  corporation?    A.  Mr.  Kirk  calls  it  a  trust. 

Q.  (By  Vice-chairman  PHILLIPS.)  But  does  the  fact  that  :Mr.  Kirk 
calls  it  a  trust  make  it  a  trust?  A.  I  think  the  organization  itself  makes  it 
a  trust  by  the  appointment  of  trustees  for  the  conduct  of  the  business. 

Q.  (By  Vice-Chairman  PHILLIPS.)  It  is  only  a  voting  trust,  and  have 
not  voting  trusts  existed  in  all  ages,  in  Europe  as  well  as  in  America — *vot- 
ing  trusts  to  vote  the  stock.  A.  I  am  not  contending  against  the  legality  of 
the  trust,  Mr.  Chairman.     It  is  merely  a  statement  of  fact. 

*Q.  (By  Vice-chairman  PHILLIPS.)  Yes;  we  want  the  facts.  A.  I  am 
merely  making  a  statement  of  facts,  based  upon  information  obtained  from 
Mr.  David  Kirk. 

*Representative  LIVINGSTON.  Well,  call  It  by  some  other  name  and 
go  on. 

Mr.  SMYTH.  Do  you  not  think  we  are  losing  a  great  deal  of  valuable 
time   by  these   Interruptions? 

VIce-Chairman  PHILLIPS.  Yes,  but  we  want  correct  his.tory,  if  it  is 
possible  to  have  it. 


*P.lack   faced    type   indicates  matter   omitted,  In  the  course  of  editing,  from  the 
official  report. 


550  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

*The  WITNESS.     You  will  get  the  history  correct,  ail  right. 

Mr.  SMYTH.  Still  we  can  make  the  corrections  afterwards,  it  seems  to 
me,  by  records  or  in  some  other  way. 

Mr.  BOYLE.  (Referring  to  the  Pure  Oil  Trust.)  The  reorganization 
tooli  place  at  Taylor's  Hotel,  in  Jersey  City,  in  1897,  and  the  powers  of  the 
*octopus  grewf  from  that  moment.  They  have  attempted  to  take  in  all  the 
corporations  combined  with  them  into  one  concern.  The  attempt  was  made 
several  times,  as  I  understand  it,  to  absorb  all  the  allied  interests  in  which 
the  Producers'  Protective  Association  was  concerned  and  they  are  still 
attempting  it,  with  a  very  considerable  show  of  success,  as  1  am  informed. 

Mr.  Boyle  read  from  the  trust  agreement  under  which  the  Pure  Oil 
Company  was  formed  (which  appears  in  full  in  Chapter  V,  page  55,  as 
follows: 

"Fourth — This  agreement  may  be  cancelled  and  the  trust  hereby  created 
dissolved,  only  by  the  winding  up  of  the  Pure  Oil  Company,  or  by  the  con- 
sent, in  writing,  duly  executed,  of  the  equitable  owners  of  four-fifths  of  the 
shares  held  in  trust  hereunder,  and  of  four-fifths  of  all  the  other  shares  of 
the  company,  after  providing  in  full  for  the  redemption  or  purchase  at  $110 
per  share,  in  cash,  of  all  the  preferred  and  common  shares  of  the  company 
at  the  time  outstanding." 

He  said  the  purpose  of  the  above  provision  was  to  make  the  trust  per- 
petual, but  if  it  should  be  dissolved,  the  shares  originally  costing  $5  were 
to  be  purchased  at  $110  each. 

Q.  (By  Vice-Chairman  PHILLIPS.)  I  think  perhaps  that  is  a  mistake, 
is  it  not?    A.  Well,  it  is  here,  Mr.  Chairman. 

*Q.    (By    Vice-chairman    PHILLIPS.)       The    actual    shares    themselves? 

A.  It  is  a  part  of  Mr.  Kirk's  exhibit. 

Q.  (By  Vice-chairman  PHILLIPS.)  Isn't  it  10  per  cent,  more  than  they 
cost? 

Q.   (By  Representative  LIVINGSTON.)     Do  you  mean  to  say  that  A  and 

B,  two  members  of  the  company,  or  trustees  perhaps,  in  the  trust,  turn  in 
$110  for  their  own  stock  or  outstanding  stock?  A.  It  says,  outstanding  on 
the  dissolution.  It  means  the  redemption  of  all  stock  at  $110,  the  original 
cost  of  the  stock  being  $5. 

Q.  (By  Vice-chairman  PHILLIPS.)  Does  not  that  mean  10  per  cent? 
A.  I  am  only  reading  what  it  states.     *lt  is  a  part  of  the  exhibit. 

Q.  (By  Vice-chairman  PHILLIPS.)  Is  that  a  certified  copy?  A.  Oh, 
no,  no.  It  is  a  part  of  the  records  in  the  courts  of  Allegheny  county.  The 
copy  is  taken  from  the  court  record  of  Allegheny  county. 

*Q.  (By  Vice-Chairman  PHILLIPS.)  I  presume  it  is  correct.  A.  It  is  a 
suit  entered  by  Mr.  Kirk,  the  retiring  president.t 

Q.  (By  Representative  LIVINGSTON.)  What  is  the  condition  of  that 
company  now?  A.  It  is  in  existence  and  it  is  largely  under  the  control  of 
this  $3,000,000  corporation.  There  is  an  authorized  capital  here  of  $10,000,- 
000,  with  possibly  $400,000  of  it  paid  in.  and  it  is  substantially  controlling 
other  organizations  and  combinations,  in  which  upwards  of  $3,000,000  are 
invested. 

*Q.   It  is  a   live  corporation?     A.  Oh,  yes,  sir. 

The  fact  that  the  voting  powers  of  the  five  trustees  of  the  Pure  Oil 
Trust  was  "for  the  election  of  directors  or  for  any  other  purpose;"  was 
brought  out  in  the  testimony.  The  witness'  statement  that  there  were  five 
trustees  for  this  trust  represented  the  condition  of  affairs  in  1897,  the  num- 
ber of  trustees  having  since  been  increased. 

Q.  (By  Mr.  KENNEDY.)  What  are  the  voting  powers  of  the  five  trus- 
tees of  this  organization?     A.  As  stated  there,  to  vote  all  the  stock. 

Q.  To  vote  all  the  stock?  A.  To  vote  all  the  stock  represented  in  the 
trust,  yes,  sir;   *for  the  election  of  directors. 


♦Black  faced  type  indicates  matter  omitted,  in  the  course  of  editing,  from  the 
cfficial   report. 

IThe  words  "octopus  grew"  do  not  appear  in  the  official  report,  the  words  "or- 
ganization increased"  being  in  their  place. 

iThe  bill  in  equity  filed  by  Mr.  David  Kirk  is  given  'n  full  in  Chapter  V, 
page  145. 


PATRICK  C.  BOYLE.  551 

Q.  Not  for  the  transaction  of  other  business?  A.  For  the  election  of 
directors.     It  is  stated  here  in  the  second  paragraph:      (Reading.) 

"At  all  meetings  of  the  company  for  the  election  of  directors,  or  for 
any  other  purpose,  to  cast  the  entire  number  of  votes  which,  as  holders  of 
said  shares,  they  would  be  entitled  to  cast." 

Q.  (By  Representative  LIVINGSTON.)  *Does  that  occur  in  the  original 
— for  any  other  purpose?  This  is  a  true  copy?  A.  This  is  a  true  copy,  and 
the  original  may  be  obtained  from  the  records  of  the  court  in  Pittsburg. 

*Q.  There  is  no  necessity  of  making  a  specification  there  at  all;  for 
that  and  "any  other  purpose"  means  for  all  purposes.  You  submit  simply 
this  agreement  and  not  the  whole  pamphlet?  A.  I  submit  the  whole  pamph- 
let as  a  part  of  the  history  of  the  organization  of  the  "Pure  Oil  Trust." 

Q.  (By  Mr.  SMYTH.)  Your  opinion  is,  then,  that  these  five  trustees 
controlled  all  these  companies  that  are  represented  in  the  Pure  Oil  Com- 
pany? A.  In  the  Pure  Oil  movement,  it  has  come  to  be  known  now  as  the 
Pure  Oil  movement.t 

Q.  (By  Vice-Chairman  PHILLIPS.)  There  are  a  much  larger  number 
than  five  trustees?     *A.   I  should  say  so. 

Q.  (By  Vice-chairman  PHILLIPS.)  That  is  a  mistake  then?  A.  It  is 
necessary  to  say  that  there  have  been  some  changes  in  the  organization 
since  then,  and  I  am  informed  that  at  a  meeting  not  long  ago  in  Jersey  City 
an  attempt  was  made  to  re-construct  the  by-laws,  change  the  by-laws,  and 
in  this  change  of  by-laws  they  may  have  restricted  the  voting  directly. 

Q.  (By  Vice-Chairman  PHILLIPS.)  This  represents  the  condition  of 
affairs  existing  in  1897  ?:■:     A.  Yes,  sir. 

Mr.  Boyle  submitted  copies  of  the  by-laws  and  rules  and  regulations 
of   the    Pure    Oil    Trust,    as    follows: 

EXHIBIT  A. 

By-laws  and  rules  and  regulations  of  the  Pure  Oil  Trust. 

Incorporated    November   S,    1S95.     Capital,  $1,000,000. 

The  objects  of  the  company  are  to  prcduce,  purchase,  transport,  store  and  sell 
crude  petroleum  and  its  products  and  to  protect  and  to  aid  other  companies  and  par- 
ties in  the  production,  transportation,  manufacture,  storage  and  sale  of  the  same. 
The  corporation  may  acquire,  hold,  maintain  and  dispose  of  any  stocks,  shares,  bonds 
and  other  interests  in  or  issued  by  the  corporation,  joint  stock  or  limited  partnership 
association  ei. gaged  in  or  aiding  or  promoting  the  producing,  storing,  transport- 
ing, refining  and  selling  of  crude  petroleum  or  its  products,  or  in  any  business 
Incident  thereto. 

BY-LAWS. 

ARTICLE  I. 

Meetings   of  Shareholders. 

Section  1.  The  annual  meeting  of  the  shareholders  shall  be  held  at  the  principal 
cfTice  of  the  company  on  the  fourth  Wednesday  of  January  in  each  year,  commenc- 
ing at  10  o'clock  a    m.,  standard  time. 

Notice  of  the  annual  meeting  of  shareholders  shall  be  by  written  or  printed  let- 
ter addressed  by  the  secretary  to  each  shareholder  at  his  or  her  last  known  place 
of  residence,  and  mailed  10  days  prior  to  the  time  fixed  for  holding  such  annual 
meeting. 

Sec.  2.  Special  meetings  of  the  shareholders  may  be  called  whenever  it  shall 
be  deemed  advisable  by  the  board  of  directors,  or  by  the  president  upon  request,  in 
writing,  signed  by  the  shareholders  owning  collectively  not  less  than  one-third  of 
the  shares  of  the  company. 

Notice  of  special  meetings  shall  be  given  in  the  same  way  as  the  notices  of 
annual   meetings. 

Proxies. 

Sec.  3.  Shareholders  may  be  represented  at  any  meetings  of  the  shareholders 
by  proxy,  duly  authorized  In  writing,  executed  within  30  days  next  preceding  the 
meeting.  . 


*Black  faced  type  indicates  matter  omitted,  in  the  course  of  editing,  from  the 
official   report. 

tThis  question   and   answer  appear   in  the  official  report  in  the  following  form: 

"Q.  Your  opinion  is  that  the  company  controls  all  these  companies?  A.  Sub- 
stantially; it  has  come  to  be  known  as  the  Pure  Oil   movement." 

$In  the  official  report  this  question  is  made  a  part  of  Mr.  Boyle's  answer. 


552  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

Quorum. 
Sec.  4.  The  legal  representatives  of  n.  jTiajority  of  all  the  shares  of  the  com- 
pany shall  constitute  a  quorum  at  any  meeting  of  the  shareholders;  and  without 
a  quorum  being  present  or  represented  by  proxy  no  business  shall  be  transacted 
or  election  held,  but  a  less  number  may  adjourn  from  time  to  time  until  a  quorum 
be   present. 

Voting. 

Sec.  5.  At  meetings  of  shareholders,  general  or  special,  all  votes  upon  disputfd 
questions  shall  be  by  ballot,  if  demanded  by  any  shareholder  present,  and  all  votes 
by  ballot  shall  be  de'termined  by  the  number  of  shares  represented  by  the  respec- 
tive votes  cast. 

At  all  meetings  of  shareholders  for  the  election  of  directors  each  shareholder 
shall  be  entitled  to  cast  as  many  votes  as  he  has  shares  of  the  company  standing  to 
his  name  on  the  books  of  the  company. 

The  election  shall  be  by  ballot,  and  each  ballot  shall  have  endorsed  thereon 
the  name  of  the  person  casting  the  same  and  the  number  of  shares  represented 
thereby. 

Vacancies. 

Sec.  6.  In  case  of  death,  resignation  or  removal  of  any  director,  the  vacancy 
shall  be  filled  by  the  remaining  directors. 

Tellers. 

Sec.  7.  The  directors  shall  appoint  two  shareholders  as  tellers  to  conduct  the 
election  and  to  certify  the  result,  in  writing,  to  the  partjes  elected  and  to  the  presi- 
dent and  secretary  of  the  company.  In  case  of  the  directors  failing  to  so  appoint, 
the  shareholders  present   shall   choose    two  tellers  to  conduct  the  election. 

The  secretary  of  the'  company  shall  furnish  the  tellers,  for  their  guidance  in 
conducting  the  election,  a  list  of  shareholders,  showing  the  number  of  shares 
standing  in  the  name  of  each  on  the  books  of  the  company,  authenticated  by  the 
seal  of  the  company. 

Time   of  Election   and  Term  of  Office. 

Sec.  8.  The  polls  shall  be  open  from  2  to  3  o'clock  p.  m.  The  terms  of  office 
of  directors  shall  commence  at  noon  on  the  first  AV'ednesday  after  their  election  at 
the  annual  meeting  of  stockholders  and  continue  until  their  successors  are  duly 
elected  and  seated. 

ARTICLE   II. 

Directors — Meetings. 
Sec.  1.    The    board    of   directors    shall  fix    the    time    and    place    for    holding    its 
meetings. 

Special  meetings  of  the  board  may  be  held  at  any  time  on  the  call  of  the  presi- 
dent  or   any   two   directors,   after   due   notice  given  to  each  of  the  directors. 

Election  of  Officers. 
'       Sec.  2.    At    the   first   meeting   after    their    election    the    directors    shall    organize 
by  electing  from  their  number  a  president  and   a  vice-president  to  serve  until  their 
successors    are    qualified,    and    appo'nting  a  secretary  and  a  treasurer  to  serve  during 
the  pleasure  of  the  board. 

Quorum. 

Sec.  3.  A  majority  of  the  directors  shall  constitute  a  quorum  at  any  meeting  of 
the  board,  and  no  business  shall  be  transacted  by  the  board  without  a  quorum 
being  present. 

Salaries. 

Sec.  4.  The  salary  of  the  president  and  vice-president  shall  be  fixed  by  vote 
cf  the  stockholders. 

Executive    Committee. 

Sec.  5.  For  the  more  prompt  and  efficient  management  of  the  affairs  of  thg 
company  there  shall  be  an  executive  committee  of  the  board,  consisting  of  the 
president,  vice-president  and  three  other  oirectors,  who  shall  be  appointed  by  and 
hold  office  during  the  pleasure  of  the  board.  In  the  intervals  between  the  meet- 
ings of  the  board  of  directors  its  powers  and  duties  shall  devolve  upon  and  be 
exercised  by  the  executive  committee,  subject  to  the  approval  of  the  board  at  its 
next   regular   meeting. 

The  proceedings  of  the  executive  committee  shall  be  duly  recorded  in  the  same 
manner  as  the  regular  proceedings  of  the  board  of  directors. 

A   majority    of   the   executive   committee   shall   constitute  a   quorum. 

In  case  of  disagreement  of  the  executive  committee  on  any  subject  the  matter 
shall  be  referred  to  the  board  of  directors. 

Minutes. 

Sec.  G.  The  board  of  directors  shall  cause  to  be  kept  a  complete  record  of  their 
official  proceedings  and  acts  of  the  proceedings  of  all  shareholders'  meetings; 
present  to  the  shareholders  at  the  annual  meeting  a  statement  of  the  assets  and 
liabilitiis  of  the  company  and  of  the  condition   of  its   affairs   generally. 


PATRICK  C.  BOYLE.  553 

ARTICLE   III. 
Powers  and  Duties  of  Officers— President. 

Sec.  1.  It  shall  be  the  duty  of  the  president  to  preside  at  all  meetings  of  the 
board  of  directors,  to  sign  all  certificates  of  stock  and  warrants  for  the  payment 
of  money  ordered  by  the  board  of  directors,  and  such  other  papers  as  he  may 
be  ordered  by  the  board  of  directors  to  execute  on  behalf  of  the  company. 

In  case  of  the  absence  or  inability  of  the  president  to  act,  the  vice-president 
shall  be  invested  with  all  the  powers  and  shall  perform  all  the  duties  of  president.  In 
case  of  absence  or  inability  to  act  of  both  president  and  vice-president,  the  board 
of  managers  may  appoint  one  of  their  number  president  pro  tem.,  wlio  shall  during 
such  absence  or  inability  perform  all  the  duties   of   president. 

Secretary. 

Sec.  2.  The  secretary  sliall  keep  tiie  minutes  of  the  meetings  of  the  board  of 
directors  in  a  proper  book  provided  for  that  purpose;  attend  to  the  giving  and  pub- 
lication of  all  notices  of  the  company,  unless  otherwise  provided  for  by  the  board 
of  directors;  have  the  custody  of  the  seal  of  the  company  and  affix  same  to  all  cer- 
tificates of  stock  and  such  other  papers  as  the  directors  may  order;  countersign 
all  warrants  on  the  treasury  for  the  payment  of  money  which  shall  have  been 
previously  signed  by  the  president  as  authorized  by  the  board  of  directors;  attend 
to  such  correspondence  as  shall  be  assigned  to  him;  act  as  secretary  of  all  stand- 
ing committees  of  the  board,  and  shall  in  general,  under  the  direction  of  the  board 
of  directors,  perform  all  the  duties  incident  to  the  office  of  secretary  of  tlie  com- 
pany. 

Treasurer. 

Sec.  3.  It  shall  be  the  duty  of  the  treasurer  of  the  company  to  receive  and  de- 
posit or  hold  and  pay,  as  the  board  of  directors  may  order,  all  funds  resulting  from 
the  sale  of  shares  or  any  property  of  the  company;  and  shall  sign  all  stock  certi- 
ficates and  obligations  of  the  company  created  by  special  order  of  the  board  of 
directors. 

The  treasurer  shall  give  bond  for  the  faithful  discharge  of  his  duties  in  such 
amount  and  with  such  security  as  the  ,1irectcrs  may  determine. 

RULES    AND    REGULATIONS. 

1.  The  business  of  the  company  shall  be  the  producing,  purchasing,  trans- 
porting, storing  and  selling  of  crude  petroleum  and  its  products,  and  aiding  other 
companies  and  parties  in  the  production,  transportation,  storing,  manufacturing 
and  sale  of  the  same.  The  corporation  may  acquire,  hold,  manage  and  dispose  of 
any  stock,  shares,  bonds  and  other  interests,  in  or  issued  by  any  corporation, 
joint  stock  company  or  limited  partnership  association  engaged  in  or  aiding  or 
promoting  the  producing,  transporting,  storing,  refining  and  selling  of  crude  petro- 
leum and  its  products,  or  in  any  business  incident  thereto.  And  in  addition  to  the 
powers  hereinbefore  provided  for, .  it  may  also  purchase,  hold,  manage  and  sell 
on  commission  or  otherwise,  such  Investment  securities  and  other  property,  real, 
personal  and  mixed,  as  the  corporation  may  be  geneially  or  specifically  authorized 
In  writing  from  time  to  time,  by  the  owners  and  holders  of  a  majority  in  number 
of  the  shares  of  the  capital  stock  of  the  company,  to  purchase,  hold  and  sell. 

And  the  company  may  exercise  such  trusts  and  do  such  other  things,  not  in- 
consistent with  its  charter,  as  it  may  from  time  to  time  be  authorized  in  like  man- 
ner to  do. 

2.  The  principal  office  of  the  company  shall  be  located  at  Jersey  City,  in  the 
county  of  Hudson  and  State  of  New  Jersey,  and  branch  offices  may  be  established 
from  time  to  time  as  may  be  determined  by  the  consent  of  the  owners  and  hold- 
ers of  three-fifths  of  the  shares  of  the  company. 

3.  The  shareholders  shall  make  rules  and  regulations  and  by-laws  for  the  gov- 
ernment of  the  company  and  management  of  its  business  and  affairs  as  in  their 
discretion  they  may  deem  advisable,  which  may  he  amended  at  any  time  by  the 
consent  of  the  owners  and  holders  of  three-fifths  in  number  of  the  shares  of  the 
company,  given  in  writing,  filed  with  the  secretary,  and  recorded  in  the  minutes 
of   the    proceedings,    both    of   the    shareholders   and   directors  of  the  company. 

4.  The  affairs  of  the  company  shall  be  managed  by  a  board  of  directors,  con- 
sisting of  nine  members,  to  be  elected  annually  by  the  shareholders  at  their 
annual  meeting,  at  which  each  shareholder  shall  be  entitled  to  cast,  personally 
or  by  proxy,  one  vote  for  each  share  of  stock  in  the  company  held  by  such  share- 
holder. The  directors  shall  choose  annually  from  their  own  number  a  president 
and  vice-president  to  serve  until  their  successors  are  chosen;  shall  appoint  all  other 
t  fficers,  managers,  agents  or  employes  of  the  company;  prescribe  the  duties  and 
fix  the  compensation  of  each;  and  may  suspend  or  remove  any  of  them  at  dis- 
cretion, and  they  may  make  such  additional  by-laws  as  may  be  deemed  by  them 
advisable— all  subject  to  the  by-laws  and  rules  and  regulations  adopted  by  tr^e 
shareholders  for  the  government  of  the  company. 


554  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

5.  Interests  of  the  company  will  be  lepresented  by  chares  which  may  be  divid- 
ed into  classes,  including  preferred,  common  and  deferred  shares,  to  be  issued, 
held   and   transferred,    subject    to    the   by-hiws   and   regulations   of   the   company. 

The  preferred  and  deferred  shares  may  be  each  sub-divided  into  various  classes, 
each  class  having  such  special  rights  and  limitations  as  will  more  particularly 
adapt  them  to  the  uses  for  which  they  are  intended,  subject  to  such  relation  to  tne 
shares   of  otlier   classes  as   may    be   establisiied   in    their    issue. 

The  rules  and  regulations  relating  to  them  will  embrace  the  following  features: 

6.  A  majority  of  all  the  shares  of  the  company  shall  be  held  in  a  permanent 
trust  approved  by  all  the  shareholders  to  secure  the  control  of  the  company  and 
the  faithful  maintenance  of  the  policy  af.reed  on  for  conducting  the  business  of 
the  company  in  the  interest  and  for  the  protection  of  all  concerned  in  its  affairs. 
The    shares    so    he^d    shall    be    designated  as  trust  shares. 

7.  The  capital  of  the  company  shall  be  the  net  amount  of  cash  paid  into  the 
treasury  of  the  company  for  its  permanent  use  as  the  })roceeds  of  its  stock  is- 
sued and  sold  for  cash  for  account  of  capital;  and  no  credit  m  excess  of  the  amount 
shall    be    made    to    "capital"    in   accounts  or   statements   of   the   company. 

8.  No  preferred  stock  shall  be  issued  except  as  cash  to  the  extent  of  $100  for 
each  share  of  such  stock  issued  shall  be  paid  into  the  treasury  of  the  company  to 
the  credit  of  capital,  or  of  surplus,  or  of  the  guaranty  and  redemption  fund,  to  be 
created  as  prescribed  in  Section  12  hereof,  as  may  bo  deemed  advisable. 

Any  of  the  preferred  shares  may  be  converted,  at  the  option  of  the  holder, 
into  common  or  deferred  shares  by  so  stipulating  in  their  issue,  and  distinctly  stat- 
ing the  right  of  conversion  in  the  certificates  representing  them;  otherwise  they 
shall   not   be   convertible. 

9.  The  deferred  shares  of  the  company  may  be  issued  for  cash,  investment  se- 
curities, property,  services,  payment  of  expenses,  making  disbursements  of  any 
kind,  and  in  exchange  for  shares  of  otlier  classes  issued  by  the  company  at  the 
discretion  of  the  directors  with  the  written  consent  of  the  owners  of  a  majority 
of  the  shares  of  the  company  at  the  time  outstanding. 

10.  The  holders  of  preferred  stock  shall  be  entitled  to  receive  cumulative  divi- 
dends therecn  of  $1.50  per  share,  quarterly,  in  full,  before  any  dividend  shall  be  pay- 
able on  the  common  stock. 

11.  A  guaranty  and  redemption  fund  shall  be  created  and  maintained  by  cred- 
iting thereto  all  of  the  cash  received  by  the  company  from  the  following 
sources: 

(a)  The  proceeds  of  all  shares  of  the  company  sold  for  cash  by  the  company 
when  issued,  in  excess  of  the  amount  credited   to   capital. 

(b)  The  cash  proceeds  of  all  shares,  securities  or  other  property  of  whatever 
kind,  acquired  by  the  company  in  exchange  for  its  shares  of  any  class,  as  such 
proceeds  may  be  realized,  at  any  time,  by  the  sale  for  cash  of  any  portion  of 
such   shares,   securities  or  property. 

(c)  The  proceeds  of  all  shares,  of  whatever  class,  purchased  by  the  application 
of  the  guaranty  and  redemption  fund  as  authorized,  and  resold  for  cash  by  the  com- 
pany. 

12.  The  guaranty  and  redemption  fund  shall  be  applicable  to  the  general  uses 
of  the  con;pany,  but  may  be  applied  to  buying  shares  of  all  classes,  in  the  order 
of  their  priority,  or  right  to  dividend,  as  stipulated,  at  the  lowest  rates  at  which 
any  shares  of  the  same  class  can  be  bought,  not  over  $110  per  share,  on  demand 
of  the  several  owners  and  holders  of  shares  respectively,  made  within  a  pre- 
scribed time  after  the  payment  of  dividends;  provided,  notice  of  the  intention 
to  make  such  demand  shall  have  been  given  to  the  secretary  of  the  company  30 
days  before  the  time  fixed  for  the  declaration  of  dividends;  and  provided  further 
that  no  part  of  tlie  guaranty  and  redemption  fund  shall  be  applied  to  buying  at 
any  price,  the  shares  of  any  class,  so  long  as  there  may  remain  unsatisfied  any 
demand  made  by  the  owners  and  holders  of  the  shares  of  any  prior  class  to  have  the 
same  redeemed  at  not  over  $110  per  share. 

All  shares  so  purchased  shall  be  placed  in  the  treasury  to  be  used  for  the  benefit 
of  the  company  in  such  form  and  manner  as  may  be  determined  by  tlie  direc- 
tors with  the  consent,  in  writing,  of  the  owners  and  holders  of  a  majority  of  the 
shares    of    the    company. 

13.  When  no  shares  of  any  class  can  be  purchased  at  $110  per  share,  the  guar- 
anty and  redemption  fund  sliall  bf>  applicable,  at  the  discretion  of  the  directors, 
to  the  purchase  of  tlie  shares  of  the  several  clas-ses  other  than  the  trust  shares,  at 
such  rates  above  $110  per  share  as  may  be  approved  by  the  owners  of  a  majority  of 
the  shares  of  the  capital  stock. 

The  shares  of  any  class  so  purchased  may,  when  authorized  by  the  owners  nf 
a  majority  of  all  the  shares  of  the  company,  be  resold  at  any  time,  at  the  discretion 
cf  the  directors,  at  any  price  not  less  than  that  at  which  they  were  severally  pur- 
chased; or  they  may  be  retired  from  the  class  to  which  they  belong,  and  be  placed  in 


PATRICK  C.  BOYLE.  555 

the  treasury  of  the  company,  to  be  held,  reissued,  and  sold  for  its  use  and  benefit,  sub- 
ject to  such  conditions  as  the  directors  may  prescribe,  in  accordance  with  the  regu- 
lations of  the  company. 

14.  When  the  dissolution  of  the  company  shall  be  determined  on,  voluntarily 
or  otherwise,  the  trustees  acting  under  the  permanent  trust,  created  and  prescribed 
In  Section  6  hereof,  shall  be  trustees  to  convert  its  assets  and  wind  up  its  affairs. 
The  proceeds  of  all  assets  received  by  them  shall  be  applied  by  them  absolutely,  as 
the  guaranty  and  redemption  fund  is  required  by  the  rules  and  regulations  to  be 
applied,   preceding,  and  as  may  be   further   prescribed    hereinafter. 

Any  portion  of  the  guaranty  and  redemption  fund  remaining  after  providing  for 
the  purchase  and  retirement  of  all  shares,  as  herein  prescribed,  shall  be  distributed 
to  the  owners  of  the  trust  shares,  and  of  any  other  shares  then  outstanding,  equal- 
ly per  share. 

15.  The  owners  of  a  majority  of  the  trust  shares,  acting  together,  shall  have 
the  right  to  convey  to  the  company  absolutely  or  in  trust,  permanently  or  tem- 
porarily, and  subject  to  such  conditions  as  may  be  stipulated  in  such  transfer,  any 
securities  regularly  yielding  net  income;  provided,  that  the  receiving  and  holding  of 
such  securities  shall  not  subject  the  company  to  any  prejudice,  or  embarrassment, 
or  legal  liability  to  pay  any  money  on  account  thereof;  and  no  such  temporary 
transfer  in  trust  shall  be  terminable  until  the  well-established  net  income  of  the 
company  from  its  regular  business  and  other  sources  of  permanent  revenue  shall  he 
equal  to  the  maximum  amount  to  which  it  may  be  raised  by  such  temporary  transfer 
in  trust. 

16.  Each  holder  of  shares  standing  in  his  name  on  the  books  of  the  company 
shall  be  entitled  to  a  certificate  or  certificates  therefor,  duly  signed  by  the  presi- 
dent and  treasurer,  with  the  seal  of  the  company  affixed  and  attested  by  the  secre- 
tary of  the  company,  and  each  owner  of  an  interest  in  any  of  the  trust  shares  shall 
he  entitled  to  a  certificate  of  the  fact,  signed  by  the  chairman  and  attested  by 
the  secretary  of  the  permanent  trust,  showing  the  extent  of  the  interest,  which  in- 
terest shall  be  assignable  and  transferable  on  the  surrender  of  the  certificate  repre- 
senting it,  properly  indorsed,  as  may  be  piescribed  by  the  trustees,  with  the  appro- 
val of  the  directors,  and  the  owners  of  a  majority  of  the  trust  shares. 

Mr.  Boyle  read  from  the  Commercial  Gazette,  of  Pittsburg,  an  article, 
reproduced  in  the  Oil  City  Derrick  of  May  5,  1892,  describing  the  enormous 
undertaking  for  providing  the  McDonald  and  Cherry  Grove  oil  fields  with 
tankage  and  pipe  lines,  which  was  done  by  the  National  Transit  Company. 
The  work  was  so  immense  It  was  likened  to  the  operations  of  an  army. 
In  round  numbers  10,000  tons  of  iron,  rivets,  lumber  and  other  building 
material  were  shipped  into  the  McDonald  field  by  the  tankage  department 
of  the  National  Transit  Company.  It  was  shown  that  by  an  enormous  exer- 
tion and  extremely  large  expense,  this  field  was  supplied  with  tankage  and 
pipage  so  that  the  anxious  owners  of  the  oil  wells  had  their  product  taken 
care  of  promptly. 

The    WITNESS.      (Reading): 

"A  few  days  ago  the  superintendent  of  the  National  Transit  Company's  tank  de- 
partment made  an  official  report  in  which  he  said:  'A  retrospect  of  the  work  dono 
proves  conclusively  that  vast  resources  are  required  to  cope  with  floods  of  oil  such 
as  were  poured  forth  by  the  Cherry  Grove  and  McDonald  fields,  and  that  nothing 
short  of  the  experienced  and  well  equipped  organization  that  did  the  work  could 
have  accomplished  It. 

"  'In  round  numbers,  10,000  tons  of  iron,  rivets,  lumber  and  other  building  ma- 
terial were  shipped  into  the  McDonald  field  by  one  department  alone— the  tankage 
department— and  the  tankage  provided  for  at  the  rate  of  one  for  every  10  working 
hours,  requiring  the  handling  of  an  average  of  150  tons  of  material  per  day  to  keep 
the  large  force  of  workmen  employed;  special  trains  were  run  for  the  accommoda- 
tion of  the  men  and  no  expense  spared  to  meet  the  demands  of  the  field.  Rolling  mills 
and  tank  shops  were  pressed  to  their  utmost  capacity,  in  many  cases  running 
night  hours  to  meet  the  extraordinary  demand  made  upon  them,  and  second-hand 
tankage,  wherever  it  could  be  spared,  was  cut  down  and  made  to  do  service  again 
In  the  new  field.  Men  skilled  in  the  special  work  of  tank  building  were  sought  for 
and  transported  to  building  points  from  Chicago,  Brooklyn  and  all  the  cities  and 
towns  of  oildom,  east  and  west,  until  their  name  was  legion.  More  than  a  score  of 
saw  mills  were  drawn  upon  to  furnish  the  lumber  at  the  rate  of  thousands  of  feet 
per  day,  to  roof  the  huge  oil  receptacles. 

"  'In  addition  to  this  force  were  the  graders,  turning  out  two  and  more  tank 
grades  per  day.  The  Chartiers  Valley  represented  a  scene  of  activity  rarely  wit- 
nessed since  the  days  when  armies  were  similarly  engaged  throwing  up  temporary 
fortifications.  For  miles  teams  laden  w'th  iron,  rivets,  sheet  iron,  etc.,  were  seen 
hurrying  in  seemingly  endless  confusion;  and  yet  all  were  under  proper  direction, 
each   going   to   a   designated   point   arriving  in  such  order  as  to  prevent  loss  of  time 


556  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

from  want  of  material,  for  there  was  no  surplus,  no  reserves;  everything  was 
used  on  arrival,  and  special  agents,  laboring  with  overtaxed  railroad  officials  to 
hurry  forward  supplies,  others  seeking  belated  cars  on  side  tracks;  the  wires  brought 
into  requisition,  the  express  companies  shipping  rivets,  plate  iron,  and  many  other 
articles  which  ordinarily  were  shipped  by  freight.  It  was  no  longer  a  question  of  ex- 
pense, but  simply  a  question  of  securing  supplies  as  fast  as  required,  by  whatever 
means.  Scarcely  time  for  sleep — none  for  recreation;  it  would  come  later,  as  it  did; 
besieged  everywhere  by  the  owner  or  expected  ov/ner  of  a  flowing  well,  with  the 
ever  present  and  ever  occuring  question:  "When  will  you  complete  the  next  tank?" 
"To-morrow,"  the  answer  came  uniformly,  and  so  did  the  tank,  but  only  to  be 
filled  at  once  and  the  necessity  for  another  equally  great  pressing  upon  us." 

"This  vigorous,  graphic  and  conservative  statement  is  fully  borne  out  by  th'* 
facts  and  gives  an  excellent  pen  picture  of  the  excitement  and  fierce  activity  at- 
tending the  development  of  that  prolific  territory.  This  was  the  work  of  but  one  d^ 
partment  and  involved  merely  the  building  of  the  iron  tankage,  which  still  stands  In 
the  McDonald  field  to  show  for  itself  what  was  done.  But  it  does  not  involve  that 
still  mightier  work  of  moving  into  the  McDonald  field  the  pipes  for  the  miles  of  lines 
required  to  run  this  oil  from  the  wells  of  the  producers  to  the  market  of  the  world  or 
v.fhere  it  might  be  fitted  for  such  markets;  it  says  nothing  of  the  great  pump  stations 
wliich  were  erected  at  both  McDonald  and  Greggs  stations,  on  the  Panhandle  rail- 
road, to  care  for  this  enormous  output  of  nature's  wealth,  or  of  the  pumps  in  every 
valley  of  that  field;  the  boilers  and  engines  necessary  as  motive  power  to  all  this 
machinery  needed  to  move  the  fiood  of  oil  which  poured  from  this,  the  most  pro- 
lific white  sand  field  ever  developed  on  this  continent. 

"The  McDonald  field  is  about  nine  miles  long  by  two  miles  wide,  or  contains  in 
the  vicinity  of  IS  square  miles,  yet  the  pipe  line  company  has  shipped  hito  that  field 
55  miles  of  two-inch  pipe,  41  miles  of  three -inch  pipe,  25  miles  of  four-inch  pii-?,  and 
32  miles  of  six-inch  pipe,  a  total  of  153  miles  of  pipe,  or  over  eight  miles  of  pipe  for 
every  square  mile  of  territory,  and  all  this  merely  to  carry  the  product  from  the 
wells  to  the  mains  of  the  company,  which  had  been  previously  laid  from  the  Wash- 
ington field  to  the  grand  depots  at  Clean,  in  New  York,  on  the  trunk  line  to  New 
York  and  to  Colegrove,  connecting  with  the  trunk  line  to  Philadelphia.  Neither  do 
these  figures  include  70  miles  of  six-inch  pipe  from  Greggs  station  to  Bear  Creek,  as 
an  additional  outlet  deemed  necessary,  owing  to  the  possibility  that  the  increasing 
production  might  become  greater  than   the  capacity  of  these  two  main  lines  to  carry. 

"The  field  itself  is  but  about  a  year  old  and  all  this  work,  or  by  far  the  greater 
part  of  it,  was  done  between  the  middle  of  July  and  the  beginning  of  November, 
1S91.  The  plant  is  completed  with  the  exception  of  laying  such  lines  as  may  be 
necessary  to  connect  new  wells  as  they  come  in.  The  pipe  line  business  has  assumed 
its  usual  routine  under  the  facilities  provided  by  the  gigantic  system  established; 
and  while  the  output  of  the  field  is  still  large,  it  is  handled  without  the  slightest  rip- 
ple of  excitement.  Not  only  the  iron  tankage  with  a  capacity  of  3.000,000  barrels  of 
oil  stands  there,  but  the  mighty  pumps  at  the  stations  of  McDonald  and  at  Greggs 
are  living  and  pulsating  evidences  of  the  achievement. 

"There  was  m.vch  accomplished,  however,  which  cannot  appear  to  the  mere  ob- 
server in  the  field.  Superficial  examinations  in  the  erection  of  a  plant  of  this  size 
within  such  a  brief  period  of  time,  a  plant  that  is  as  permai^ent  as  the  field  itself; 
working  with  the  smoothness  and  perfection  of  one  which  might  have  occupied 
years  in  its  construction.  Neither  can  a  superficial  observer  see  the  expensiveness  of 
certain   features  unless  he  be  an  expert  in  the  handling  of  oil. 

"The  field  itself  is  one  succession  of  hills  several  hundred  feet  in  height,  with 
correspondingly  deep  hollows.  There  are  wells  on  the  hills  as  well  as  in  the  hollows. 
Very  large  producers  were  so  situated  that  there  was  no  advantage  to  the  pipe  lines 
from  gravity  whatever;  everything  had  to  be  forced  by  pumps,  a  result  of  some 
wells  being  so  much  lower  than  others  and  the  high  pressure  at  which  the  lines 
were   used,    requiring   the   use   of  a    pump  st.ation  in  every  productive  valley. 

"The  haste  with  which  construction  had  to  be  prosecuted  is  faintly  indicated  by 
the  growth  of  production  in  the  oil  field.  The  first  oil  well  completed  was  the  Royal 
Gas  company's  well  in  February,  1891.  It  was  drilled  for  gas  and  the  field  has  ac- 
cordingly been  not  only  a  surprise,  but  it  is  also  an  -iccident.  This  was  followed  by 
Sauter's  No.  1,  which  wells  were  connected  with  the  main  discharge  line  of  the 
National  Transit  company  by  two-inch  pipes.  The  next  well  of  any  importance  was 
the  Matthews,  situated  about  midway  between  the  McDonald  and  the  McCurdy 
field,  already  developed.  It  got  some  oil  in  the  Gordon  sand  in  the  spring  of  1891, 
and  was  a  small  well,  say  10  or  12  barrels  daily.  This  wtis  connected  in  the  usual 
way. 

"To  the  beginning  of  July  there  had  been  no  such  volume  of  production  as  to 
cause  any  unusual  efforts  to  care  for,  or  to  transport.  But  in  the  early  part  of  the 
month  of  July  the  Clark  &  Bannister  well,  on  a  town  lot  in  McDonald,  struck  the 
fifth  sand  and  started  off  at  .30  barrels  per  hour;  the  Matthews,  already  referred  to, 
more  than  two  miles  distant,  struck  the  same  sand  about  the  middle  of  the  month, 
nnd  was  credited  with  40  or  50  barrels  prr  hour.  Siuitor's  No.  3,  as  if  envioiip  that 
McDonald  should  be  outdone  by  that  oul-in-the-country  well,  went  to  the  fifth  sand 
also  and  came  in  with  ;i  jump  at  120  barrels  per  hour. 


PATRICK  C.  BOYLE.  557 

"This  was  not  a  theory  but  a  condition  that  had  to  be  faced.  The  production 
must  be  cared  for.  A  f)ump  station  was  begun  at  McDonald  without  delay.  Trans- 
portation had  to  be  forced.  Tiie  capacity  of  the  lines  at  the  beginning  of  July  was 
but  about  3,000  barrels  daily.  This  evidently  would  ha\e  been  inadtquale  to  run  such 
an  outpouring  of  oil  as  was  going  on.  The  production  of  oil  by  the  middle  of  August 
was  up  to  about  15,000  barrels  per  day.  By  the  first  of  September  the  lines  could  handle 
26,000  barrels  per  day.  The  production  increased  and  exceeded  that  amount.  By  the 
first  of  October  the  lines  could  handle  iO.OOC  barrels  per  day.  The  petroleum  still  in- 
creased; the  race  between  production  and  the  capacity  of  the  company  to  handle  it 
became  fast  and  furious.  By  November  the  production  of  some  days  was  up  to  Cne 
vicinity  of  SO, 000  barrels  per  day,  but  by  the  1st  of  December  the  capacity  of  the  pipe 
line  had  been  increased  so  that  it  was  able  to  handle  90,000  barrels  per  day,  if  neces- 
sity should  arise. 

"That  day  has  not  come.  The  production  began  growing  less  after  November, 
but  the  plant  of  the  pipe  line  company  is  none  the  less.  It  not  only  erected  a  plant 
capable  of  handling,  but  actually  received  and  ran  such  a  volume  of  oil  as  can 
scarcely  be  comprehended.  The  amount  of  oil  carried  away  from  the  McDonald  field 
In  November,  if  carried  in  cars,  would  liave  required  a  train  of  25  full  loaded  cars 
to  have  been  run  more  than  once  every  hour,  day  and  niglit,  to  have  carried  it.  More 
than  750  trains  would  have  been  required.  The  plant  able  to  move  such  a  weight  is 
necessarily   large  as  well   as  powerful,   and  much  machinery  is  necessary. 

"But  keeping  the  machinery  in  motion  was  one  of  the  difficulties  encountered 
jn  that  field  and  successfully  overcome  which  might  have  been  a  fatal  obstacle  to  a 
less  thoroughly  equipped  organization.  The  water  available  in  the  vicinity  of  the 
operations  was  so  bad  owing  to  coal  mine  drainage,  that  it  could  not  be  used  for 
the  boilers.  It  became  necessary  to  pipe  all  the  water  from  the  Ohio  river  and  Mon- 
tour run.  The  injury  to  the  boilers  before  the  water  pipe  system  was  completed 
caused  the  expense  of  a  large  number  of  boilermakers  for  ten  weeks.  The  water  sys- 
tem from  the  Ohio  river  and  Montour  run  covered  about  seven  miles,  but  it  was 
subsequently  found  that  a  saving  in  distance  could  be  effected  by  building  a  water 
station  in  Bridgeville  from  which  a  three-inch  main  was  run  and  is  now  supplying 
that  field. 

"The  conditions  under  which  this  plant  was  erected,  also  involved  the  difficulties, 
delays,  vexations  and  additional  expense,  of  the  means  of  transportation  of  ma- 
terial being  in  pressmg  demand  by  all  manner  of  interests  in  the  newly  developed 
field.  Operators  were  anxious  to  get  their  machinery  and  tools  to  their  leases  at  the 
earliest  possible  moment;  well  supply  companies  were  making  demands  for  trans- 
portation with  all  the  vehemence  possible  to  exercise;  merchants  and  craftsmen 
attracted  thither  added  tlieir  mite  to  the  pressure;  not  only  upon  the  railroad  com- 
pany to  various  stations  adjacent  to  the  field,  but  also  for  teams  to  transport  their 
boilers,  engines,  rig  timbers  and  building  material,  stocks  of  goods,  supplies  for 
man  and  beast;  teams  were  brought  into  requisition  to  the  number  of  many  hun- 
dreds; the  movement  of  teams  were  necessarily  slow  and  accident  to  one  was  the 
concern  of  all,  as  the  delay  stopped  the  procession  of  loaded  wagons  for  miles;  a 
single  car  on  a  switch  might  delay  the  whole  train,  but  one  side  track  was  available 
at  any  of  the  stations  on  the  railroad  near  the  field;  a  veritable  army  of  men  was 
employed;  the  work  went  on  night  and  day  under  competent  direction;  as  one  gang 
quit  for  rest  and  sleep  another  went  on,  gas  furnishing  the  light  by  night,  so  there 
was  no  pause  from  the  beginning  of  the  line  or  of  a  pump  station  until  it  was  com- 
pleted. 

"The  whole  plant  including  64  boilers,  some  of  them  80  horse  power;  145  pumps 
of  various  sizes,  from  the  small  ones  in  the  valleys  to  the  powerful  works  at  the 
j.umping  stations,  with  appropriate  engines,  all  brought  in,  set  up  and  put  in  run- 
ning order,  supplied  with  water  brought  through  miles  of  an  artificial  water  sys- 
tem; about  150  miles  of  pipe  lines  in  the  field  and  70  miles  of  large  main  out  of  it; 
iron  tankage  with  a  capacity  of  3,000,000  barrels,  all  erected  and  completed  within  the 
brief  period  of  four  months.  It  is  a  triumph,  whether  viewed  as  an  achievement  of 
American  enterprise  or  the  result  of  business  organization  which  enables  such  vast 
resources  to  be  placed  at  the  disposal  of  productive  industry  so  promptly,  skillfully 
and  advantageously  to  the  development  of  natural  resources."— Industrial  edition  of 
the  Pittsburg  Commercial   Gazette. 

At  this  time  the  Producers'  Oil  Company,  Limited,  owned  only  a  private 
line  on  the  margin  of  the  field,  probably  sufficient  to  handle  2,000  barrels  a 
day,  and  during  the  four  months  it  did  not  increase  beyond  5,000  to  6.000 
barrels  a  day.  If  that  production  had  been  dependent  upon  that  one  line, 
it  would  have  gone  to  waste,  or  would  not  have  been  produced. 

Q.  (By  Vice-chairman  PHILLIPS.)  If  we  had  had  a  free  pipe  line  law 
in  Pennsylvania,  which  was  opposed  by  the  Standard  Oil  Company  for  years 
and  finally  granted,  do  you  not  think  that  there  would  have  been  pipe  lines 
of  sufficient  capacity  to  have  taken  care  of  that  volume  of  oil — if  we*  had  had 
the  right  to  build  pipe   lines  in  our  S.at — if  we  had  had — if  the  producers 

*ln  the  official  report  "we"  is  changed  to    "the   producers." 


558  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

had  had  the  right;  and  is  it  fair  therefore  to  instance  the  capacity  of  a. 
single  pipe  line  just  starting  up,  *to  supply  local  matters,  to  care  for  the 
whole  field?  A.  To  begin  with,  we  will  have  to  assume  that  the  producers, 
or  the  persons  engaged  in  constructing  the  pipe  lines  under  a  free  pipe  line 
law,  at  some  period  previous  to  1877,  would  have  been  willing  and  satisfied 
to  form  a  compact  organization,  to  put  in  sufficient  capital,  and  to  continue 
to  act  as  a  unit,  as  the  persons  owning  the  existing  pipe  line  system  there 
have  done.  If  all  these  things  could  have  been  brought  about  then  I  be- 
lieve it  would  have  been  possible  to  have  had  enough  lines  there,  but  the 
constant  co-operation  of  all  the  parties  interested  would  have  been  neces- 
sary. They  would  necessarily  have  been  obliged  to  have  been  united  on 
every  proposition,  and  that  is  something  that  was  never  accomplished  be- 
fore nor  has   it   been  since. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Do  you  not  believe  that  if  the  pipe 
line  industry  had  held  out  such  inducements  as  the  railroad  industry  has  to 
the  country  that  there  would  have  been  two  or  three  large  competing  lines 
in  the  field,  and  that  the  burden  of  taking  care  of  that  oil  would  not  have 
been  self-imposed  by  the  Standard  Oil  Company?  A.  All  we  can  judge  is  by 
what  did  occur  at  the  time  when  there  were  a  great  many  competing  or- 
ganizations. There  were  one  or  two  strong  pipe  lines,  and  they  were  owned 
by  one  or  two  railroad  companies,  and  managed  in  part  or  in  whole,  either 
openly  or  by  agreement. 

Q.  (By  Vice-Chairman  PHILLIPS.)  It  was  then  a  growing  industry— 
away  back  before  it  was  monopolized.  A.  No,  it  was  not  a  gi'owing  industry. 
It  was  over-produced.  There  were  no  pipe  lines  in  the  business  previous  to 
the  organization  of  the  pipe  lines  in  1877  that  had  made  a  dollar. 

Q.  (By  Vice-Chairman  PHILLIPS.)  That  was  in  the  infancy  of  the 
industry,  and  you  could  not  expect  to  have  the  kind  of  capacity  you  have 
described.  Do  you  maintain  that  it  is  necessary  that  one  company,  be  it  the 
Standard  or  some  other  company,  would  be  better  for  the  oil  country,  *to 
crush  out  all  opposition — better  for  producers  and  consumers,  and  all,  than 
several  large  responsible  competing  companies,  which  undoubtedly  would 
have  been  formed  if  the  oil  people  had  had  the  right  of  eminent  domain 
and  if  they  had  not  been  opposed  in  getting  it  by  the  Standard  Oil  Company 
itself?  A.  I  never  understood  that  the  Standard  Oil  Company  was  directly 
opposing  it.  The  Standard  Oil  Company  was  not  in  the  pipe  line  business 
at  all  at  that  time  of  the  great  opposition  to  and  the  great  agitation  for 
free  pipe  line  laws.  They  did  not  come  into  it  until  1877,  *if  then;  if  they 
came  into  it  they  came  into  it  at  that  time. 

Q.  (By  Vice-chairman  PHILLIPS.)  Was  there  not  a  great  effort  made 
in  Pennsylvania  to  get  the  right  of  eminent  domain?     A.  Yes,  sir. 

Q.  (By  Vice-chairman  PHILLIPS.)  The  Standard  Oil  people,  or  the 
National  Transit  Company,  which  you  say  is  controlled  by  the  Standard 
Oil  Company,  or  is  a  part  of  their  system,  opposed  the  giving  of  the  right 
of  eminent  domain.  They  had  secured  the  right  of  way  by  purchase  through 
the  State;  they  had  secured  the  right  of  way  across  railroads,  and  when 
other  companies  undertook  to  do  that,  did  they  not  lease  and  purchase 
ground  in  front  of  their  right  of  way,  and  did  not  the  railroads  oppose 
other  companies  passing  under  or  over  their  ground?  It  was  impossible, 
was  it  not,  for  a  number  of  years  for  other  people  to  get  to  the  seaboard, 
after  the  Standard  Oil  Company  or  the  National  Transit  Company  had 
secured  their  right  of  way?  A.  I  did  not  so  understand  it,  Mr.  Chairman. 
I  never  knew  of  but  one  instance  of  a  right  of  way  being  secured  for  ob- 
structive  purposes. 

*Mr.  SMYTH.  I  would  submit  very  respectfully  that  the  witness  ought 
not  to  be  interrupted  so  frequently.  I  think  if  you  want  to  rebut  his  testi- 
mony that  the  proper  time  will  come  after  his  evidence  is  closed.  If  you 
have  witnesses  to  contradict  what  he  is  saying  they  can  be  produced  then, 
but  it  seems  to  me  that  you  are  giving  testimony,  Mr.  Chairman,  without 
being  a  witness. 


*Black   faced   type  Indicates  matter  omittPd,  in  the  course  of  editing,  from  the 
ofRcial  report. 


PATRICK  C.  BOYLE.  55» 

*Vice-Chairman  PHILLIPS.  No,  I  was  simply  asking  whether  these  were 
or  were  not  facts  in  the  case. 

iVIr.  SMYTH.  I  understand  that  question  as  stating  facts  and  appealing 
to   him  to  confirm  them. 

Vice-chairman  PHILLIPS.  I  asked  him  whether  they  were  or  were  not 
true;   that  is  all. 

Mr.  FARQUHAR.  I  think  the  chairman  will  see  that  he  has  made  state- 
ments in  the  character  of  an  argument. 

Vice-Chairman  PHILLIPS.  I  asked  him  whether  it  was  or  was  not  the 
case,  and  I  think  that  Major  Farquhar  put  the  question  about  by-products 
on  a  stronger  ground  to  Mr.  Boyle  yesterday. 

Mr.  FARQUHAR.  The  question  as  to  by-products  was  in  what  way 
they  were   manufactured. 

Mr.  KENNEDY.  I  submit  that  our  rules  will  not  permit  the  asking  of 
leading  questions,  and  a  great  deal  of  time  has  been  consumed  since  this 
witness  has  been  on  the  stand  in  asking  leading  questions.  I  think  our  ques- 
tions should  be  simple  and  direct,  and  have  no  leading  features  about  them. 

Vice-Chairman  PHILLIPS.  The  chair  will  just  make  this  further  re- 
mark. There  have  been  objections  made  to  having  long  papers  read,  and 
it  is  impossible  for  the  commission  to  remember  them,  and  they  passed  a 
rule — I  think  Major  Smyth  was  not  here  at  that  time — requiring  that  testi- 
mony be  furnished  the  commission  two  or  three  days  in  advance,  when 
written.  Now,  this  is  not  for  publication,  of  course.  I  am  just  making  this 
explanation  so  that  at  any  given  point  any  commissioner  may  ask  a  ques- 
tion, as  that  rule  has  not  been  followed  very  strictly,  and  in  this  case  I  do 
not  think  the  testimony  has  been  furnished,  and  I  have  been  following  that 
idea  with   Mr.  Boyle. 

Q.  (By  Representative  LIVINGSTON.)  May  I  ask  what  this  testimony 
about  the  pipe  lines  is  leading  up  to?  Is  this  simply  a  history  of  how  the 
oil  business  or  the  pipe  line  business  is  conducted?  A.  It  is  to  show  the 
manner  in  which  it  is  done — the  manner  in  which  the  business  is  conducted, 
and  the  uselessness  of  the  opposition  attempted  by  the  Pure  Oil  Trust — their 
uselessness  and  inability  to  do  any  business  where  it  was  required. 

Q.  You  want  to  show  that  the  oil  company  could  not  do  any  business? 
*A.  They  could   not  do  any  business. 

Q.  On  account  of  their  being  hampered  by  the  pipe  company?  A.  No, 
they  were  not  hampered  by  the  pipe  company;  *they  were  hampered  by  their 
own  inability.  They  were  not  able  to  do  anything  that  they  wanted.  It  was 
a  limited  concern,  not  organized  under  the  pipe  line  laws  of  the  State,  but 
it  was  a  private  company.  Its  purpose  was,  in  other  words,  to  establish  the 
later  movement  of  the  Petroleum  Producers'  Association,  but  it  was  a  dog- 
in-the-manger  policy;  going  into  business  for  the  purpose  of  annoyance, 
without  rendering  any  useful  service  to  the  State.  *l  regret  exceedingly  that 
that  question  was  withdrawn,  because  I  would  have  liked  to  have  answered 
it,   Mr.   Phillips. 

Mr.  FARQUHAR.     I  do  not  regard  that  it  was  withdrawn. 

Q.  (By  Vice-chairman  PHILLIPS.)  *No,  I  will  explain  furthermore  that 
I  was  trying  to  get  at  the  reason  why  there  were  not  other  large  companies 
on  account  of  this  opposition;  *whether  he  did  or  did  not  know  that  to  be 
the  fact.  A.  I  never  knew  of  the  Standard  Oil  Company  opposing  the  con- 
struction of  any  pipe  line  by  placing  obstructions  in  their  way.  I  have 
known  of  individuals  obstructing  the  Standard  Oil  Company's  operations. 
I  have  known  of  that. 

Q.  (By  Vice-Chairman  PHILLIPS.)  *Now,  while  on  the  pipe  line  ques- 
tion— I  think  it  is  entirely  pertinent  because  I  have  my  notes — I  will  ask 
this  question,   if  there   is  no  objection. 

Now.  after  the  Standard  Oil  Company  had  assumed  control — or  rather 
the  National  Transit  Company — were  there  not  some  20-odd  pipe  line  com- 
panies formed  that  went  into  different  fields  in  the  oil  country  to  handle 
oil,  to  ship  by  railroad  and  to  supply  refineries  from  various  local  fields; 
were  there  not  a  large  number?     *A.  Previous  to  this. 


*Black  faced   type  indicates  matter  omitted,  in  the  course  of  editing,  from  the 
cfTicial  report. 


560  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

Q.  (By  Vice-Chairman  PHILLIPS.)  *Were  there  not  a  large  number 
afterwards,  and  isn't  there  one  in  the  field  to-day — out  in  the  Ohio  field?  It 
has  been  stated  here  by  other  witnesses  that  there  would  have  been  some 
20-odd.  *l  do  not  say  that  I  am  stating  this.  Now,  on  that  question  I  want 
to  asli  you  this:  You  admit  that  there  have  been  a  number  that  went  into 
the  local  fields  *about  Oil  City  and  other  places  to  manufacture  oil,  since  the 
National  Transit  Company  had  authority  or  had  control?     A.  Yes,  sir. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Now,  was  it  not  the  rule  of  the 
National  Transit  Company  to  place  a  premium  on  oil  in  all  those  fields  so 
as  to  add  to  the  price  of  the  oil,  so  that  the  local  men  could  not  handle  it. 
Has  that  been  their  course,  or  has  it  not?  A.  Some  instances  have  come 
under  my  own  observation  of  pipe  lines  being  constructed  into  new  fields, 
*which  were  already  occupied,  for  the  special  purpose  *of  competing.  I  have 
one  now  in  mind  in  Oil  City,  that  started  first  as  the  Peerless  or  Keystone 
Pipe  Line,  and  it  changes  its  name  so  often  that  I  could  not  keep  track  of  it. 
That  line  did  not  come  in  as  a  competing  line  in  the  field.  *lt  went  In  under 
special  contract  with  the  producers,  and  the  conditions  upon  which  it  entered 
the  field  was  the  guarantee  of  a  certain  amount  of  oil  at  a  fixed  rate  of 
pipage.  The  pipage  rate  was  fixed  at  five  cents  below  the  existing  rate  of  the 
National  Transit  Company,  which  was  virtually  a  bid  of  five  cents  for  that 
oil  and  was  in  itself  a  premium  of  five  cents.  The  competing  company  went 
out  and  bid  the  same  figure,  *and  sometimes  more  possibly,  but  the  premium 
was  always  a  bid  to  get  the  oil.  *The  premium,  in  other  words,  was  a  bid 
for  the  oil.     Sometimes  it  was  by  special   contract. 

Q.  (By  Vice-Chairman  PHILLIPS.)  You  know  a  few  years  ago  there 
was  quite  a  large  line  started  in  the  Washington  field  to  which  you  have 
referred?  It  is  known,  I  believe,  as  the  Craig-Elkins  line.  *They  were  the 
parties  largely  interested  in  it. 

Mr.  J.  W.  LEE.     The  Western  and  Atlantic.t 

Q.  {By  Vice  Chairman  PHILLIPS.)  Did  the  Standard  Oil  Company  put 
a  premium  on  Washington  county  or  Butler  county  oil  while  that  line  was 
in  existence?  A.  For  the  reason  I  have  stated,  the  oil  was  bid  away  from 
them  by  these  so-called  independent  companies  coming  in. 

Q.  (By  Vice-Chairman  PHILLIPS.)  I  do  not  so  understand  it.  A.  That 
is  as  I  understand  it.     *l  am  answering  the  question  as  I  understand  it. 

Q.  (By  Vice-Chairman  PHILLIPS.)  There  came  a  time  when  the  Stand- 
ard Oil  Company,  or  the  National  Transit  Company,  purchased  that  line, 
did  there  not?    A.  That  is  the  assumption. 

Q.  (By  Vice-Chairman  PHILLIPS.)  And  did  they  not  take  off  the 
premium  *when  they  purchased  the  oil?  A.  I  don't  believe  there  is  any  pre- 
mium on  that  oil  now. 

Q.  (By  Vice-Chairman  PHILLIPS.)  *Now,  there  is  none  on  it.  But  did 
they  not  reduce  the  price  of  oil  seven  cents  per  barrel  to  the  producer  the 
day  or  the  next  day  after  the  purchase  was  made;  *did  they  or  not?  A.  If 
you  will  give  me  the  date  I  will  refer  to  this  book  here.J  *l  have  absolute 
confidence  in  our  figures;  I  cannot  state  it  from  memory.  *but  if  you  will 
give  me  the  time  I  will  look  it  up. 

Q.  (By  Vice-Chairman  PHILLIPS.)  I  cannot  at  this  time  *give  you  the 
time.     You  have  no  knowledge?     A.  I  have  no  knowledge  on  that  subject. 

Q.  (By  Vice-Chairman  PHILLIPS.)  *One  other  question,  now,  in  re- 
gard to  that  while  we  are  on  this  pipe  line  business.  This  is  very  pertinent 
to  this  investigation,  this  pipe  line  system,  because  this  is  the  controlling 
power  in  the  oil  field.  Now,  there  was  a  new  field  called  the  Scio  field  opened 
up  within  the  last  two  years.  There  is  an  independent  pipe  line  in  that  field 
to-day,  is  there  not?  A.  I  have  heard  there  were  some  people  competing 
there  for  oil. 


•Black  faced  type  Indicates  matter  omitted,  in  the  course  of  editing,  from  the 
ofTicial   report. 

1In  the  offlcial  report  Mr.  Lee's  suggestion  was  embodied  in  Mr.  Boyle's  an- 
swer 

JThe  witness  referred  to  tlie  Derrick's  Handbook    of    Peti  oleum. 


PATRICK  C.  BOYLE.  561 

Q.  (By  Vice-Chairman  PHILLIPS.)  Well,  was  there  or  not  a  premium 
placed  on  that  oil?     A.  I  believe  there  is  a  premium. 

Q.  (By  Vice-chairman  PHILLIPS.)  Is  that  oil  better  than  any  other  oil? 
A.  It  is  said  to  be;  it  is  said  to  be  equal  to  Clarion  oil. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Well,  have  there  not  been  very  fre- 
quently premiums  put  on  oil,  it  being  claimed  that  it  was  better,  and  after- 
wards taken  off  when  opposition  ceased?  A.  I  have  knowledge  of  premiums 
being  placed  on  oil,  and  I  have  knowledge  of  premiums  being  taken  off,  but 
I  have  no  knowledge  of  the  purpose  of  those  premiums. 

♦Vice-Chairman  PHILLIPS.  Well,  that  is  sufficient  on  that  question; 
there  will   be  other  people  that  will  be  more  competent  to  tell   of  that. 

Q.  (By  Mr.  FARQUHAR.)  Which  are  the  pipe  lines  that  paid  rebates 
to  producers,  when  did  they  pay  them,  and  how  did  they  pay  them?  *That 
question  will  cover  the  whole  ground  that  we  have  discussed  for  the  last  20 
minutes.  A.  The  Mutual  Pipe  Line  paid  a  rebate  of  five  cents  a  barrel,  *and 
all  the  successors  to  the  Mutual  paid  the  same  rebate  up  to  a  certain  period. 

Q.  (By  Mr.  SMYTH.)  Is  that  an  independent  pipe  line?  A.  They  were 
all  independent  pipe  lines. 

♦Vice-Chairman  PHILLIPS.  He  is  speaking  of  the  infancy  of  the  trade; 
the  beginning  of  it. 

Mr.  FARQUHAR.  And  speaking  of  the  whole  rebate  and  premium  sys- 
tem so  as  to  cover  the  whole  ground  without  an  interruption  by  questioning. 

The  WITNESS.  (Resuming.)  They  entered  into  a  contract.  I  have 
some  figures  here  on  the  subject.  These  rebates  to  which  I  refer  now  were 
a  matter  of  common  knowledge,  as  far  back  as  1878,  *through  the  discus- 
sions of  the  producers'  movements  at  that  time,  pro  and  con,  in  the  columns 
of  the  press.  Some  time  after  the  close  of  that  movement  one  of  the  persons 
connected  with  the  movement,  *whom  we  will  forbear  to  name  here,  made 
a  demand  upon  the  United  Pipe  Line  Company  for  a  rebate,  and  gave  his 
reasons.     The  reasons  will  appear  from  this  correspondence. 

Mr.  Boyle  read  a  number  of  letters  that  had  passed  betvreen  R.  P. 
Crawford,  treasurer  of  the  Bear  Creek  Oil  Refining  Company,  and  Mr.  O.  P. 
Swisher,  and  later  Mr.  Henry  McSweeney,  solicitor  of  the  United  Pipe  Lines, 
and  others.  They  related  to  questions  concerning  rebates  on  oil.  The  letters 
were  presented  by  the  witness  and  fully  explain  the  attempt  to  secure  re- 
bates on  piping  oil  on  the  part  of  those  who  had  become  prominent  in  fight- 
ing the  rebate  system: 

Letter   No.    1.     B.   B.    Campbell,    chairman;    R.  P.    Crawford,   treasurer. 
Bear  Creek  Refining  Company,  Limited,  refiners  of  petroleum.     City  ofiice, 
corner  Etna  and  Eleventh  streets,  Pittsburg,  Pa.,  October  22,  1884. 
Mr.  O.  P.  Swisher: 

Dear  Sir— -I  am  informed  that  your  former  attorney,  Mr.  Hancock,  has  been 
superseded  by  Mr.  McSweeney.  I  wish  the  latter  to  get  the  inclosed.  If  not  ad- 
dressed properly,  please  see  that  it  gets  in   the  proper  hands. 

'  Yours   sincerely, 

R.    P.    CRAWFORD. 

Letter  No.  2,  written  under  the  letter  head  of  the  Bear  Creek  Refining 
Company,  on  even  date  with  the  above.    Mr.  Crawford  writes: 
H.    McSweeney,    Esq.: 

Sir— 1  met  Mr.  J.  R.  Campbell  three  weeks  ago  on  a  train  to  Oil  City.  I  told 
him  I  was  anxious  to  get  an  old  unsettled  matter  fixed  upon  a  matter  of  over- 
charge of  pipage  on  oil  from  some  small  producing  wells  near  the  mouth  of  Clarion 
river.  Mr.  Campbell  told  me  to  write  to  you  on  the  subject.  In  the  days  of  the 
old  Mutual  Line  (G.  R.  Harms,  manager)  we  found  oil  on  a  lease  obtained  from 
Hon.  Thomas  Mellon  and  R.  Galey,  Sr.,  about  one  mile  from  the  mouth  of  Clarion 
river.  We  had  completed  our  arrangements  to  lay  our  own  pipe  lines  to  the  rail- 
road. Mr.  Harms  came  to  see  me,  and  he  agreed  to  15  cents  pipage  for  all  the 
oil  from  the  lease  above  referred  to,  but  not  to  extend  to  any  other  leases.  The 
pipage  at  that  time  was  settled  monthly.  I  have  the  papers  to  show  such  settle- 
ment. The  Union,  Empire,  United  and  National  Transit  have,  in  succession,  fallen 
heir  to  the  arrangement.  It  has  been  investigated  several  tim.es — by  Mr.  Hatch  for 
and  in  behalf  of  the  Union  (afterwards  the  Empire)  Line,  by  the  pipe  lines  when 
operated  in  the  pooling  arrangement,  and  by  Mr.  Waller  in  behalf  of  the  United, 
after  the  purchase  by  the  latter  of  the  Empire  Line. 


*Black   faced   type   indicates   matter   omitted,  in  the  course  of  editing,  from  the 
oflicial  report. 

36 


562  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

The  wells  are  called  Mellon  (or  Andes)  and  Brett.  The  last  paid  by  the  United 
was,  up  to  and  including  the  runs  for  April,  1879,  as  follows: 

April  runs,  Mellon,  903.66  barrels,  at  5  cents   $45  18 

April    runs,    Brett,    133.01   barrels,  at  5   cents    6  65 

The  charge  of  20  cents  pipage  being  in  excess,  we  claim  an  allowance  of  5 
cents  per  barrel  on  all  oil  runs  since  that  date,  and  to  continue  as  long  as  we  pro- 
duce from  that  particular  territory.  The  wells  have  run  down  to  a  small  business, 
but  small  as  the  claim  niay  appear,  I  must  get  it  settled,  either  amicably  or  by 
law.  I  much  prefer  the  former,  but  one  of  my  partners  is  a  lawyer  (B.  B.  Camp- 
bell) and,  'ike  all  lawyers,  is  ready  for  the  job.  I  write  this  in  a  spirit  of  kindness 
and  fairness,  as  one  business  man  should  to  another,  and  trust  it  will  receive 
your   prompt    and    careful    consideration. 

R.  P.   CRAWFORD, 

Trustee. 

To   which   Mr.    McSweeney   makes  reply   under  date  of  Oil   City,   Octo- 
ber 23,  1884. 
R.   P.   Crawford,   Esq.,   Pittsburg,   Pa.: 

Dear  Sir — Your  letter  of  the  22d  instant  claiming  over-charge  of  pipage  is  re- 
ceived. Please  send  me  copies  of  all  papers  upon  which  you  base  your  claim,  as 
well  as  a  full  and  specific  statement  of  the  amount  alleged  to  be  due  you,  etc.  As 
soon  as  I  hear  from  you,  I  will  carefully  examine  your  claim  and  advise  you  as  to 
the   result.  i 

Yours    truly, 

H.   McSWEENEY. 
Letter  No.  4,  written  on  the  letter  head  of  the  Bear  Creek  Refining  Com- 
pany,  Limited. 

Pittsburg,   Pa.,   November  14,  1884. 
Mr.   H.    McSweeney: 

Dear  Sir— I  answer  yours  of  23d  ultimo  as  follows:  I  enclose  sheets  marked 
Nos.  1  and  2,  showing  runs  from  Mellon  or  Andes  wells  (two  numbers),  and  from 
Brett   wells,   upon  which  there  is  due  5  cents    per    barrel: 

Andes  or  Mellon,  25,199.65  barrels,  at  5  cents  $1,259  98 

Brett,    2,061.84    barrels,    at    5    centts    103  09 

Total   $1,363  07 

I  also  inclose  sheet  No.  4,  showing  a  few  runs  from  each  Mellon  and  Brett, 
running  backward  of  runs  upon  which  the  5  cents  per  barrel  over-charge  was  paid, 
to  give  you  a  start  toward  tracing  it.  As  to  the  contract,  I  refer  you  to  Charles 
P.  Hatch,  Roanoke,  Roanoke  Co.,  Va.,  formerly  manager  of  the  Empire  Pipe  Line, 
also  John  T.  Galey,  who  was  stockholder  in  the  contemplated  pipe  line  from  these 
wells.  Thomas  F.  Galey,  Pollock  postofhce,  Clarion  Co.,  Pa.,  can  give  John's 
address.  I  do  not  know  where  G.  R.  Harms  is  at  present.  The  last  I  heard  from 
him  he  was  at  Cincinnati,  Ohio.  There  is  no  doubt  about  this  claim  being  a  just 
one.  It  is  just  what  Mr.  Hatch  called  it,  "an  over-charge,"  and  knowing  all  about  It  I 
say  the  same  thing.  I  think  Mr.  O.  P.  Swisher  could  tell  you  something  about 
it,  if  he  will  be  kind  enough  to  freshen  his  memory. 
Hoping  to  hear  from  you  soon,  I  am. 

Yours    respectfully, 

R.  P.  CRAWFORD, 

Superintendent. 
Letter  No.  5.  on  letter  head  of  Bear  Creek  Refining  Company,  Limited. 

Pittsburg,  Pa.,   November  15,   1884. 
II.   McSweeney: 

Dear  Sir — In  making  up  the  account  for  over-charge  pipage,  which  I  mailed  to 
you  yesterday,  I  left  out  the  old  Galey  well,  which  was  included  in  the  contract. 
It  is  a  very  small  producer,  and  if  the  others  are  settled  I  will  let  it  go.  I  sold  it 
last  spring  and  have  nothing  to  do  with  it  now. 

I  wish  to  say  to  you  frankly  that  we  made  a  mistake  agreeing  to  15  cents  per 
barrel  pipage  from,  those  regions,  as  we  should  have  built  the  line,  which  would 
have  been  a  fraction  over  one  mile,  and  pumped  our  oil  to  the  railroad  at  less  than 
6  cents  per  barrel.  But  the  contract  was  made,  complied  with  for  years,  and  now 
I  only  ask   for  compliance  and   continuance  of  same. 

Respectfullv, 

R.  P.  CRAWFORD, 

Superintendent. 


PATRICK  C.  BOYLE.  563 

Letter  No.  6,  on  letter  head  of  the  Norfolk  &  Western  Railway  Com- 
pany, Charles  F.  Hatch,  general  freight  agent. 

Roanoke,  Roanoke  Co.,  Va.,  November  24,  1884. 
H.     McSweeney,     Esq.,     Solicitor     National    Transit    Company,    Oil  City,    Venango 

County,   Pa.: 

Dear  Sir— I  have  your  favor  of  20th  referring  to  the  matter  of  the  claim  of  R. 
P.  Crawford  against  the  National  Tran&it  Company  on  account  of  alleged  over- 
charge on  pipage  of  oil  produced  from  wells  drilled  on  lands  leased  from  Hon. 
Thomas  Mellon  and  Robert  Galey,  on  Clarion  river,  about  one  mile  from  the  mouih. 

When  the  Empire  Transportation  Company  purchased  the  Mutual  Pipe  Line, 
in  1872,  we  found  among  others  was  a  contract,  entered  into  by  Messrs.  Martin  and 
Harms,  owners  of  the  Mutual  Pipe  Line,  and  R.  P.  Crawford  and  others  upon  tne 
subject  mentioned,  by  which  the  Mutual  Pipe  Line  agreed  to  transport  the  oil  frum 
the   wells  mentioned   at   a  rate   of  15  cents   per   barrel. 

This  agreement  was  an  oral  one  and  there  was  no  v/ritten  agreement  embody- 
ing It,  uut  me  facts  were  conceded  upon  the  representation  of  Mr.  Crawford,  as 
well  as  Mr.  Harms,  representing  the  re&peccive  interests.  Following  this  the  Mu- 
tual Pipe  Line  and  its  successor,  the  Uni^n  Pipe  Company,  continued  to  transport 
the  oil  mentioned  at  the  15-cent  rate,  'the  Union  Pipe  Company  was  the  name 
giwn  to  the  pipe  lii;e  interests  in  the  lower  country  belonging  to  the  Empire  Trans- 
poiLation  Ccmipany.  When  the  Empire  Transportation  Company  sold  its  pipe  line 
propefly,  in  1877,  all  papers  and  agreements  were  turned  over  to  the  representa- 
tives of  the  Standard  Oil  Company,  or  the  United  Pipe  Lines,  and  if  my  recollec- 
tion serves  me  right  I  gave  their  representative  a  statement  showing  the  special 
contracts  and  rates  for  the  transportation  of  oil,  among  which,  I  think,  was  tne 
one  to  which  you  refer. 

There  is  no^  doubt  that  the  agreement  referred  to  was  made  between  Mr. 
Crav.^ford  and  Messrs.  Martin  and  Harms,  and  that  it  was  fully  observed,  as 
they  owned  the  pipe  line,  and  that  this  oral  agreement  was  fully  respected  by 
their  successors  up  to  the  time  of  the  sale  of  the  pipe  interests  of  the  Empire 
Transportation  Company  in  1S77.  The  reason  for  this  contest  rests  upon  the  fact 
that,  at  the  time  Messrs.  Martin  and  Harms  had  built  their  pipe  lines,  the  parties 
owning  the  wells  on  the  Clarion  river,  mentioned  above,  projected  the  construc- 
tion of  a  short  line  from  the  wells  to  the  railroad,  and  the  agreement  entered  into, 
establishing  a  15-cent  rate,  was  a  compromise  under  which  Mr.  Crawford  and 
others    abandoned    their    project    of    constructing   the    Clarion   line. 

Yours    very    truly, 

CHARLES    P.    HATCH. 

Letter  No.  7.  dated  Oil  City,  November  20,  1884. 
R.  P.  Crawford,  Esq: 

Der  Sir— Your  favor  of  the  14th  instant,  in  relation  to  the  alleged  over-charge 
of  pipage,  was  duly  received.  I  will  investigate  the  matter  and  advise  you  of  the 
course    this    company    will    pursue    as    early  as  possible. 

Yours    truly, 

H.    McSWEENEY. 
Letter  No.  8,  on  letter  head  Standard  Oil  Company,  44  Broadway;   S.  C. 
T.  Dodd,  solicitor;    dated  New  York,   September  15,  1884. 
H.    McSweeney,    Esq.,    Oil   City,   Pa.: 

Dear  Sir— About  the  year  1879  R.  P.  Crawford,  B.  B.  Campbell,  and  others  caused 
a  quo  warranto  to  be  filed  against  the  United  Pipe  Lines,  asking  for  a  forfeiture 
of  its  charter  upon  this  ground,  among  others,  that  it  had  made  discriminations 
in  its  pipage  charges.  About  the  same  time  actions  were  brought  in  the  Supreme 
Court  of  the  State  against  the  Standard  Oil  Company  and  the  United  Pipe  Lines 
and  various  railroads,  the  burden  of  the  complaint  in  each  case  being  discrimina- 
tion. A  criminal  action  was  begun  in  Clarion  county  against  J.  J.  Vandergrift,  J. 
D.  Rockefeller  and  others  upon  the  charge  that  they  had  conspired  with  the  rail- 
roads to  give  and  receive  discriminations  in  freight.  R.  P.  Crawford  was  a  lead- 
ing man  in  all  these  proceedings.  When  I  investigated  the  facts,  so  far  as  the 
United  Pipe  Lines  were  concerned,  1  discovered  that  the  only  discrimination  of 
which  it  had  been  guilty  was  in  reference  to  several  contracts  which  it  had  in- 
herited, one  of  which  was  the  contract  to  which  you  refer,  between  R.  P.  Craw- 
ford,  or   the   Bear   Creek  Oil   Company,   and  the  Mutual   Pipe   Line   Company. 

The  parties  who  were  making  all  this  fuss  about  the  discriminations  were  tiie 
only  parties  receiving  any  benefits  from  the  discrimination.  They  claimed  that 
the  discrimination  was  not  only  contrary  to  public  policy,  but  was  absolutely  crimi- 
nal. I  agreed  with  them  so  far  as  the  public  policy  was  concerned,  and  I  directed 
the  United  Pipe  Lines  to  repudiate  all  such  contracts.  R.  P.  Crawford  applied  to 
me  frequently  in  relation  to  this  maMer,  and  I  always  gave  him  the  same  reply, 
that  we  would  charge  the  same  rate  of  pipage  to  every  man  and  would  recognize 
no  contracts  whatever   for  a  less   rate.     I  do  not  think  that  we  ought  to  depart  from 


564  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

this  line  of  policy  and  particularly  not  in  favor  of  R.  P.  Crawford.  I  would  be 
glad  to  have  him  bring  suit.  If  such  contracts  are  good  in  law  I  would  like  to 
have  it  so  established  at  the  suit  of  R.  P.  Crawford  or  B.  B.  Campbell,  the  parties 
who  so  few  years  ago  were  endeavoring  to  put  us  in  the  penitentiary  for  the 
very  thing  for  which  they  now  claim   the  benefit. 

Yours  truly, 

S.   C.  T.   DODD. 

Letter  No.  9,  dated  Oil  City,  Pa.,  December  17,  1884. 
R.  P.   Crawford,  Esq.,   Pittsburg,   Pa.: 

Dear  Sir— After  a  careful  consideration  of  the  matter  I  have  decided  that  this 
company  must  decline  to  recognize  the  claim  made  by  you  on  account  of  alleged 
over-charges  of  pipage. 

Yours    truly, 

H.    McSWEENEY, 

Solicitor  United  Pipe  Line 

Q.  (By  Vice-Chairman  PHILLIPS.)  What  is  the  difference  between  pay- 
ing a  premium  on  a  given  field  where  the  oil  is  sold,  and  allowing  a  rebate 
to  another,  *in  your  judgment?  Paying  a  premium  of,  say,  from  10  to  15  or 
20  cents  a  barrel  on  oil  that  is  not  any  better  in  one  section  than  it  is  in  an- 
other. Was  that  done  to  evade  the  law,  *as  described  by  Mr.  Dodd,  or  not? 
What  is  your  view  about  that?  A.  I  think  I  have  already  given  my  views 
on  the  question  of  premium.  I  think  I  have  stated  that  they  are  in  the 
nature  of  bids,  and  they  were  generally  offered  at  such  times  as  there  was 
competition  for  a  certain  grade  of  oil;  where  there  was  competition  for  a 
particular  grade  of  oil. 

Q.  (By  Vice-Chairman  PHILLIPS.)  You  do  not  know  of  your  own 
knowledge  then,  of  any  premium  being  paid  *by  the  National  Transit  Com- 
pany, from  5  to  15  or  20  cents,  where  the  oil  was  not  any  better  in  one  field 
than  another.  A.  Oh,  as  to  the  quality  of  the  oil,  I  am  not  competent  to 
speak.  I  am  *not  a  manufacturer,  and  I  am  a  producer  only  in  a  very  small 
way,  and  I  would  not  care  to  testify  as  to  the  quality  of  the  oil;  but  I  know 
that  the  practice  of  paying  a  premium  was  at  one  time  general  over  the 
whole  region;  *the  whole  region  received  a  premium — Allegheny,  New  York 
and  Bradford. 

Q.  (By  Mr.  SMYTH.)  Who  paid  those  premiums?  A.  The  purchasers 
of  the  oil. 

*Q.  And  they  were  the  different  companies?  A.  They  were  the  differ- 
ent companies,  yes,  sir. 

Q.  It  was  a  custom  of  the  trade  at  that  time?  A.  It  was  a  custom  of 
the  trade  then;  anyone  buying  any  oil  then  was  obliged  to  allow  the  premium. 

Q.  (By  Vice-chairman  PHILLIPS.)  But  the  National  Transit  Company, 
or  the  Standard  Oil  Company  purchasing  agency,  would  pay  this  prem.ium 
on  all  credit  balances — always.  They  have  made  it  a  rule,  have  they  not, 
to  buy  all  credit  balances  at  the  market  value,  whatever  it  was,  on  the  ex- 
change?    A.  I  think  that  rule  was  abandoned  in  1895,  Mr.  Phillips. 

Q.  (By  Vice-chairman  PHILLIPS.)  Well,  for  a  great  many  years  it  was 
done?     -''A.   Previous  to  that  time. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Previous  to  that  time?  A.  Previous 
to  1895  they  did  buy  at  the  ruling  price  of  the  exchange. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Now,  they  fixed  the  price  them- 
selves, before  the  time  to  which  we  allude,  by  this  great  discrimination. 
A.  If  I  am  required  to  answer  as  to  an  understanding  of  the  point  of  their 
fixing  it,  I  will  say  that  I  do  not  so  understand  it.  I  do  not  understand  that 
they  fixed  the  price;  the  price  was  fixed  by  the  demand.  The  price  of  crude 
oil  is  reflected  in  the  price  of  refined. 

Q.  (By  Vice-Chairman  PHILLIPS.)  But  who  reflects  both  the  price  of 
the  crude  and  refined?  A.  The  consumer;  the  consumer  makes  the  price. 
He  is  the  man  who  states  what  he  will  pay. 

Q.  (By  Mr.  SMYTH.)  You  have  said  tliat  it  was  largely  caused  by  the 
export  demand?     A.  Yes;   *by  the  consumer. 

Q.  I  mean,  not  in  this  country?     A.     Wherever  the  consumer  is. 


♦Black   faced   type   indicates   matter   omit.ted,   in  the  course  of  editing,  from  the 
official  report. 


PATRICK  C.  BOYLE.  565 

Q.  In  your  judgment  the  price  is  fixed  by  the  foreign  demand?  A.  In  my 
judgment  the  price  is  fixed  by  the  foreign  demand. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Then  when  the  Standard  marks  oil 
up  10  or  15  or  20  points  this  is  fixed  by  the  market,  is  it?  A.  My  reply  was 
to  a  different  question  entirely.  Mr.  Phillips.  I  think  you  are  taking  a  little 
advantage  of  the  witness  in  putting  it  in  that  way. 

Q.  (By  Vice-chairman  PHILLIPS.)  Well,  I  would  be  sorry  to  take  any 
advantage  of  you;  I  do  not  wish  to  do  so.  A.  I  haven't  testified  on  that 
branch  of  the  question.  I  stated  a  little  while  ago  that  in  my  opinion  the 
premium  was  the  result  of  the  bid  for  oil  where  there  was  a  demand.  In 
districts  where  there  is  a  demand  for  oil  a  premium  is  usually  placed  on  it, 
as  a  premium  is  placed  on  leases  where  there  is  a  demand  for  land.  The 
producers  carry  out  the  same  idea  in  their  competition. 

Q.  (By  Vice-chairman  PHILLIPS.)  For  the  15  or  20  years  past  has  there 
been  any  special  demand  by  outside  refiners — anything  to  speak  about? 
Have  not  the  Standard  Oil  Company  and  the  National  Transit  Company 
handled  the  great  bulk  of  it?  A.  You  have  just  mentioned  a  great  line  in 
the  Washington  territory,  the  Western  and  Atlantic;  that  was  a  demand;  it 
brought  capital  in  large  quantities;   it  employed  several  millions  of  dollars. 

Q.  (By  Mr.  SMYTH.)  Do  you  think  that  the  fluctuation  in  the  market 
value  of  oil  is  caused  by  the  demand  for  oil,  or  is  it  the  result  of  manipula- 
tion entirely  on  the  part  of  the  refiners?  A.  It  is  unquestionably  the  de- 
mand for  oil. 

Q.  A  large  demand  for  oil,  in  your  judgment,  causes  an  advance  in 
price?    A.  A  large  demand  for  oil  causes  an  advance  in  price. 

Q.  And  when  the  production  increases  that  causes  a  decline.*  A.  Sup- 
ply and  demand  regulate  the  price,  tand  I  make  that  statement  on  the  com- 
petent authority  of  your  chairman.  He  is  on  lecord  as  stating  that  himself, 
in  written  communications  to  my  newspaper,  recognizing  the  law  of  supply 
and  demand  in  connection  with  the  shut-down  movement  in  1884.  Everybody 
recognizes  that.  In  the  documents,  which  I  read  this  morning,  the  com- 
plaints of  the  producers  from  the  first  movement  dovvn  have  been  always 
of  over-production.  tThe  burden  of  their  song  was  over-production,  and  the 
general  admission  was  that  the  price  was  made  by  supply  and  demand. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Has  that  law  worked  well  in  the 
case  of  the  Standard  Oil  Company?  Have  their  profits  gone  down  on  ac- 
count of  over-production?  Has  the  business  not  been  continuously  profitable 
to  them  regardless  of  the  law  of  supply  and  demand.  Do  you  know  any 
one  year,  of  your  own  knowledge,  in  which  they  have  lost  money?  A.  I 
know  nothing  about  their  commercial  business  at  all,  Mr.  Phillips. 

Q.  (By  Mr.  SMYTH.)  I  don't  suppose  they  would  admit  that  tthey  had 
lost  money.     A.  Well 

Q.  (By  Mr.  FARQUHAR.)  You  do  not  know  anything  about  their  com- 
mercial  business?     A.   I   do   not  know  anything  about  it. 

Q.  Or  anybody  else  outside  of  their  own  people?  A.  I  would  hardly 
think  so.J 

Q.  It  would  simply  be  a  matter  of  rumor?  A.  It  would  simply  be  a 
matter  of  rumor,  yes,  sir. 

Q.  Have  you,  of  your  own  knowledge,  ever  known  of  a  single  statement 
issued  giving  away  their  business  to  anybody?  A.  Well,  if  it  was  knov.'n 
generally  that  any  money  was  being  lost  by  any  company,  its  stock  "r  ould 
tumble  very  rapidly. 

Q.  Did  you  ever  know  of  any  statement  ever  being  given  out  by  the 
Standard  Oil  Company  under  any  of  the  two  or  three  organizations  that  they 
have  been  in?     A.  I  never  have. 

Q.  (By  Vice-Chairman  PHILLIPS.)  What  was  the  Ciipital  stock  of  the 
Standard   Oil  Company  tbefore   it  was   reorganized   as   probably   has   been? 

*In  the  official  report  this  question  is  given  in  the  following  form:  "And  when 
the   demand    slackens,    the    production    decreases?" 

i'Black  faced  type  indicates  matter  omitted,  in  the  course  of  editing,  from  the 
official  report. 

^n  place  of  the  three  questions  and  answers  above,  the  official  report  gives  the 
following:  "Q.  (By  Mr.  SMYTH.)  I  do  not  suppose  they  would  admit  it.  A.  I  do 
not   suppose   anybody   would." 


566  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

*What  was  the  capital  stock,  say  six  or  ten  years  ago.  (A  pause.)  Was  it 
more  or  less  than  $100,000,000?  A.  I  think  it  was  a  little  less  than  a  hun- 
dred million. 

Q.  (By  Vice-chairman  PHILLIPS.)  How  much  less?  A.  Three  or  four 
millions  possibly. 

Q.  (By  Vice-chairman  PHILLIPS.)  Do  you  know  the  highest  point, 
or  about  the  highest  point,  that  stock  has  reached  on  the  market?  A.  I  have 
heard  it  stated  that  it  was  very  close  to  five  hundred. 

Q.  (By  Vice-chairman  PHILLIPS.)  Five  hundred  million  dollars?  A. 
Yes,  sir. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Then  the  law  of  supply  ynd  de- 
mand has  not  very  materially  affected  them  through  this  over-production  in 
a  great  many  years? 

The  WITNESS.  Is  that  for  the  purpose  of  showing  the  profits  of  their 
business? 

Vice-Chairman  PHILLIPS.  I  presume  that  the  stock  would  not  be 
there  unless  it  was  earning  that;  it  would  not  reach  that  price  without 
having  that  earning  capacity.  A.  Well,  I  may  say,  in  the  same  connection, 
that  the  opposition  companies  show  even  a  greater  increase  in  value.  The 
Tidewater  Pipe  Line  Company  stock  was  quoted  at  about  1,000  to  2,000, 
I  think. 

Q.  (By  Mr.  SMYTH.)  Will  you  give  us  the  price  there;  what  is  the 
capital  of  that?     A.  The  capital  is  $10,000,000. 

Q.  And  what  is  the  market  value?     A.  Two  thousand. 
Q.   (By    Vice-Chairman    PHILLIPS.)      Isn't    that    absolutely    under    the 
control  of  the  Standard  Oil  Company?     A.  Oh,  no,  sir. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Have  they  not  running  rates  and 
agreements  with  the  Standard  Oil  Company?  A.  There  may  be  agreements, 
but  it  is  controlled  by  themselves;   *it  is  controlled  by  other  parties. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Are  they  not  limited  as  to  the 
quantity  of  oil  that  they  ship  through  that  line?  A.  By  agreements;  pos- 
sibly there  are  agreements  there. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Without  an  agreement  with  the 
Standard  Oil  Company,  have  you  any  idea,  from  your  knowledge  of  the 
business,  that  that  stock  would  have  gone  to  that  price — *without  an  agree- 
ment with  the  Standard  Oil  Company?  A.  Well,  that  involves  an  opinion 
that  I  do  not  care  to  express,  Mr.  Chairman.  I  have  no  knowledge  upon  the 
subject;   *we  cannot  tell  what  might  happen. 

Q.  (By  Mr.  KENNEDY.)  *l  want  to  ask  a  question  right  here.  Mr. 
Boyle  was  speaking  on  the  subject  of  pipe  lines  just  before  this  digression, 
and  I  want  to  ask  him  a  question  that  I  thought  should  have  been  asked  yes- 
terday, and  I  am  surprised  that  the  question  was  not  asked.  He  stated  yes- 
terday that  he  knew  of  one  or  two  pipe  lines  that  had  been  sued  on  account 
of  misrepresentation  in  regard  to  the  quantity  of  oil  on  hand,  I  believe; 
*and  he  was  not  asked  the  name  of  that  pipe  line.  I  would  like  to  ask  Mr. 
Boyle  now  to  state  the  name  of  the  pipe  line  and  the  circumstances  sur- 
rounding that  suit. 

Vice-chairman  PHILLIPS.     And  the  date  of  it. 

Mr.  KENNEDY.  And  the  date  of  it,  yes,  sir.  You  stopped  short  with 
the  statement  yesterday. 

The  WITNESS.  The  pipe  line  was  the  Pennsylvania  Transportation 
Company,  and  the  date  some  time  in  the  summer  of  1876.  The  suit  was 
brought  in  connection  with  the  gauge  movement  in  which  false  representa- 
tions had  been  made  about  the  quantity  of  oil  in  the  storage  tanks;  a  dis- 
crepancy of  some  50,000  barrels,  and  the  gauging  of  the  tanks  was  a  public 
one,  and  this  was  an  examination  of  the  integrity  of  the  pipe  lines  at  the 
time.  All  the  lines  were  examined,  by  an  agreement  with  the  Oil  Exchange. 
A  statement  was  issued  by  the  gangers  of  the  Pennsylvania  Transportation 
Company  that  they  had  50.000  barrels  in  excess  of  the  actual  quantity  on 
hand.  It  was  a  misrepresentation,  to  that  extent,  to  the  trade.  Suits  were 
entered    against   the   gaugers,    involving   the   president   of   the   line   and    the 


•Black  faced  type  Indicates  matter  omitted.  In  the  course  of  editing,  from  the 
ofTicial   report. 


PATRICK  C.  BOYLE.  567 

superintendent.  Criminal  action  was  brought,  I  think,  in  Kittanning,  but 
the  case  was  never  tried.  But  it  was  known  in  those  days,  in  the  early  pipe 
line  days,  under  the  wildcat  pipe  line  system,  for  pipe  lines  to  be  short. 
Subsequent  to  1874,  when  the  pipe  line  law  requiring  the  publication  of 
statements  of  the  condition  of  the  line  and  its  responsibility,  went  into 
effect,  they  caught  a  great  number  of  them.  One  was  the  Atlantic  Pipe 
Line  Company,  which  was  found  short  15,000*  barrels  on  one  occasion. 

Q.  Have  there  been  such  shortages  in  recent  times?  A.  There  have 
been  no  such  shortages  in  recent  times,  no,  sir.  There  have  been  suspected 
shortages,  and  there  have  been  several  gauge  movements  organized  by 
the  oil  exchanges  to  verify  the  statements  of  the  National  Transit  Company. 
There  was  one  very  prominent  one  in  1884,  when  the  stocks  amounted  to 
nearly  40,000,000  barrels.  An  examination  of  the  thousands  of  tanks  in 
which  this  oil  was  stored  in  various  parts  of  the  region  proved  the  correct- 
ness of  their  statements  and  the  report  of  the  gauges  were  accepted  by  the 
various  oil  exchanges,  and  the  public  mind  quieted  as  to  the  rumors  of  the 
shortages. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Have  you  any  knowledge  of  what 
it  requires  to  fill  the  National  Transit  Lines,  and  of  the  residuum  in  the 
bottom  of  the  tank,  which  would  be  called  not  merchantable  oil? 

fThe  WITNESS.     Oh,  what  would  be  in  there? 

Vice-Chairman  PHILLIPS.  Yes,  sir;  what  would  naturally  be  in  there 
to  fill  the  whole  line  of  the  system;  and  how  much  in  the  bottom  of  the 
tanks;  how  much  oil  would  they  require?  Have  you  an  idea  of  that?  A.  No, 
fl  haven't  an  idea  of  that. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Or  have  you  any  knowledge?  A. 
My  knowledge  of  that  would  be  hearsay  or  assumption  altogether.  I  doubt 
if  an  experiment  has  ever  been  conducted  with  that.  There  have  been  esti- 
mates based  on  the  capacity  of  the  line,  tand  the  given  quality  of  oil 
required,  and   I   have  heard  it  stated 

Q.  (By  Vice-Chairman  PHILLIPS.)  Do  you  suppose  it  would  take 
3,000.000  or  4,000,000?     A.  I  have  heard  it  estimated  higher  than  that. 

Q.  (By  Vice-chairman  PHILLIPS.)  Higher  than  4,000.000  barrels  of 
residuum?  A.  Yes,  sir;  I  have  heard  the  quantity  necessary  to  fill  the  lines 
estimated  higher  than  4,000,000  barrels. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Do  you  know  about  how  much  oil 
was  in  the  United  Pipe  Lines  when  oil  took  such  a  sudden  advance  about 
two  or  three  years  ago?  A.  Well,  I  think  the  capacity  of  the  lines  was  fully 
represented  in  transit. 

tQ.  (By  Vice-Chairman  PHILLIPS.)  I  mean,  did  they  make  monthly 
statements?     A.  Yes,  sir. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Do  you  know  about  how  much  oil 
they  had  on  hand  at  that  time?     A.  We  ought  to  be  able  to  show  it  to  you. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Yes,  I  would  be  very  much  obliged 
for  that  information  for  about  April,  1895.  A.  The  amount  of  the  stocks  in 
April,  1895,  was  4,545.784  barrels. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Do  you  know  how  many  certificates 
of  the  Standard  Oil  Company's  oil  were  outstanding  at  that  time?  A.  j\ 
cannot  state  from  this  work. J     I  cannot  state,  sir. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Do  you  know  the  credit  balances 
that  were  on  hand  at  that  time  belonging  to  their  people?  A.  I  cannot 
state  that.     Only  the  monthly  pipe  line  report  would  show  that. 

Q.  (By  Vice-chairman  PHILLIPS.)  Well,  is  it  not  reported  there  for 
the  month?     A.  I  am  looking  for  the  stocks;   this  book  runs  by  shipments. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Does  it  show  the  credit  balances 
each  month?    A.     I  don't  think  so. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Are  the  certificates  shown?  A.  I 
think  not.     Only  the  runs,  shipments  and  stocks. 

♦This  figure  is  given  as  "6,000"  in  the  official  report. 

tBlack  faced  type  indicates  matter  omitted,  in  the  course  of  editing,  from  the 
cflicial  report. 

JThe  witness  referred  to  the  Derrick's  Handbook  of  Petroleum. 


568  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

Q.  (By  Vice-Chairman  PHILLIPS.)  You  have  said  that  you  heard  it 
estimated,  *and  I  presume  your  estimate  is  not  far  wrong,  at  4.000,000  bar- 
rels. Could  that,  including  the  indifferent  oil  in  the  bottom  of  the  tank,  be 
delivered  to  the  purchaser  if  there  was  a  purchaser?  A.  If  all  production 
ceased  at  a  given  hour  and  everything  entirely  shut  off,  they  would  probably 
not  be  able  to  continue  their  operations  beyond  a  day  or  two  at  the  outside. 
But  the  production  at  this  period  was  upwards  of  85,000  barrels  a  day,  and 
that  going  constantly  into  the  line,  equalled  the  shipments  required  to  meet 
the  demands  of  the  trade.  That  going  into  the  line  constantly,  day  by  day, 
met  the  demands  of  the  trade. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Did  the  Standard  Oil  Company  or 
the  National  Transit  Company  own  all  that  went  into  the  line  day  by  day  at 
that  time?  A.  As  I  stated  before,  we  have  no  means  of  showing  that  except 
by  the  statement  published  every  month. 

To  return  to  Mr.  Kennedy's  question,  reports  of  this  kind  were  not  at 
all  infrequent  in  the  days  of  w'ild-cat  pipe  lines  and  they  were  not  alarming 
the  trade  when  made.  It  was  a  condition  that  was  so  common  as  to  be  met 
with  anywhere,  but  it  showed  at  the  same  time  that  pipe  lines  then  ran  very 
close  to  the  shore.  They  used  oil  wherever  they  had  it,  and  expected  to 
make  it  up  in  the  future.  The  report  of  the  Atlantic  Pipe  Line  was  posted 
in  Titusville,  March  17,  and  quoted  by  the  Oil  City  Derrick  on  March  18, 
1876,  under  the  head  of  Titusville  Doings.  Pipe  Line  Returns.  (Reading.) 
From  our  special  reporter.  Titusville,  March  17.— The  Atlantic  Pipe  Line,  w'tli 
headquarters  at  St.  Petersburg,  and  no  connection  with  the  associated  lines,  makes 
substantially  the  subjoined  report  in  round  numbers.  It  will  be  seen  that  a  shortage 
of  6,000  barrels  appears,  the  actual  loss  in  handling  over  and  above  the  2  per  cent, 
deducted  for  this  cause  by  each  line  'n  the  regions.  This,  however,  is  amply  cov- 
ered by  the  purchase  from  reliable  par':ies  of  15,000  barrels,  paid  for  and  ready  for 
delivery  when  required.  Notwithstanding  the  very  large  percentage  of  certificates 
in  proportion  to  the  total  stocks,  the  line  is  in  the  most  prosperous  condition,  and 
by  the  1st  of  May  is  expected  to  be  entirely  free  of  debt,  with  the  whole  cost  of  con- 
struction fully  liquidated.  During  February  the  receipts  were  above  the  usual  aver- 
age, footing  up  to  55,000  barrels.    The  statement  for  the  month  is  as  follows: 

Barrels. 
Total  amount  of  crude  oil  in  the  pipes  and  tanks  of  the  company,  February  29, 

1S76   84,045 

Total  amount  of  crude  oil  for  which  the  company  was  liable  on  the  29th  of  Feb- 
ruary, 1876  90,000 

Represented  by  certificates 78,000 

Represented  by  credit  balances 12,0<JO 

Purchased  from  reliable  parties  and  paid  for,  oil  to  be  new  from  the  wells 15,000 

Total  amount  of  crude  received  during  the  month  55,500 

Then  follows  a  line  of  figures  showing  that  there  was  an  existing 
shortage  at  that  time  of  about  6,000  barrels  on  less  than  2,000  barrels  a  day 
of  business.  And  that  was  a  very  common  experience  in  the  days  of  wild- 
cat pipe  lines. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Have  you  anything  else  to  present? 
A.  *Well,  I  have  a  great  deal,  but  if  you  have  any  further  questions  to  ask, 
of  course  I  am  ready  to  answer  them.  There  are  other  points  of  interest 
upon  which  the  public  mind  has  been  much  befogged,  that  I  would  like  to 
make  a  brief  statement  on,  and  one  of  them  is  on  a  question  that  you  have 
already  brought  up.  You  have  already  brought  up  the  premium  question, 
and  that  has  already  been  discussed.  Now,  then,  there  is  another  one  which 
occurred  during  the  period  of  the  Bradford  development,  that  created  a 
great  deal  of  discussion,  and  that  w^as  immediate  shipment;  an  order  known 
as  immediate  shipment.  Oil  was  produced  so  rapidly  at  one  period  in  the 
Bradford  field,  that  the  tankage  system  of  all  the  pipe  lines  as  well  as  the 
private  tankage  of  the  country  at  that  time  was  insufficient  to  take  care  of 
it.  and  the  clamor  to  have  their  oil  cared  for  compelled  the  pipe  lines  to 
issue  an  order  for  immediate  shipments;  that  is,  they  would  take  oil  for 
immediate  shipment.  A  purchaser  could  come  into  the  market,  having 
tankage  or  cars  by  which  he  could  ship  his  oil  to  market,  and  would  be  able 
to  purchase  it  at  a  lower  price  than  the  price  offered  in  the  oil  exchanges. 


*Black   faced   type  indicates  matter   omitted,  in  the  course  of  editing,  from   tlie 
ofTicial  report. 


PATRICK  C.  BOYLE.  569 

That  was  called  the  immediate  shipment  order,  and  the  point  upon  which 
the  public  mind  was  befogged  at  that  time  was  the  supposition  that  that  was 
the  only  time  that  the  immediate  shipment  went  into  effect.  The  first  im- 
mediate shipment  went  into  effect  in  the  fall  of  1872,  following  the  30  days' 
shut-down,  or  very  close  upon  the  heels  of  the  30  days'  shut-down.  The 
epidemic  known  as  epizootic,  then  a  new  disease  among  horses  in  our 
region,  was  prevalent  at  that  time,  and  there  was  a  compulsory  shut-down 
of  almost  30  days  more  following  the  shut-down  by  agreement.  It  was  dur- 
ing this  period  that  the  Empire  Pipe  Line  established  an  order  of  immediate 
shipment.  The  field  gatherers  were  instructed  by  orders  from  the  general 
office  at  Parker's  Landing  to  ship  the  quantity,  regardless  of  the  practice  at 
the  time,  and  the  office  directed  the  quantity  of  oil  to  be  taken  and  the  time 
it  was  to  be  taken  precisely  as  it  was  done  six  years  later  in  the  Bradford 
field,  and  also  in  Butler  county. 

Q.  (By  Mr.  KENNEDY.)  If  Mr.  Boyle  is  through  and  ready  for  ques- 
tions, I  want  to  ask  him  one  question,  Mr.  Chairman.  Mr.  Boyle,  you  spoke 
yesterday  about  several  million  barrels  of  oil  having  been  set  apart  by  the 
Standard  Oil  Company  and  the  producers,  for  the  benefit  of  the  drillers,  I 
believe?  A.  For  the  benefit  of  all  the  oil  well  workers;  the  pumpers  were 
cared  for. 

*Q.  (By  Vice-chairman  PHILLIPS.)  And  the  pumpers,  too?  A.  The 
pumpers  were  cared  for,  too. 

Q.  (By  Mr.  KENNEDY.)  Was  that  the  result  of  philanthropy  on  the 
part  of  the  Standard  Oil  Company  and  the  producers,  or  was  it  for  the  pur- 
pose of  keeping  these  workers  from  engaging  in  the  work  in  other  fields  in 
developing  the  oil  industry?  A.  Well,  I  may  say  that  both  motives  sug- 
gested by  that  question  operated.  The  purpose  was  to  do  justice  to  labor, 
on  the  one  hand,  and  give  it  an  inducement 

Q.  (By  Vice-Chairman  PHILLIPS.)  And  to  have  co-operation  on  the 
other  side.  Was  that  right?  A.  And  to  have  co-operation  on  the  other  side, 
yes,  sir;  to  have  their  co-operation. 

Q.  (By  Mr.  KENNEDY.)  There  was  the  idea,  though,  of  keeping  them 
out  of  the  other  fields?     A.  Oh,  yes,  sir;  that  was  the  central  idea. 

Q.  That  was  the  central  idea,  then?  A.  Yes,  sir;  because  a  practical 
man  in  digging  oil  wells  can  always  obtain  the  necessary  caijital,  where 
there  is  any  inducement  for  the  drilling  of  wells. 

Q.  That  was  more  the  idea,  then,  than  the  motive  of  philanthropy? 

*Q.  (By  Mr.  SMYTH.)  It  was  essential  to  the  success  of  the  shut-down 
that  tiie  laborers  should  not  engage  in  the  same  employment?  A.  It  was 
essential  to  the  success  of  the  shut-down  that  the  laborers  should  not  engage 
in  the  same  employment.  With  the  producers  and  others,  no  labor  of  any 
class  is  any  better  cared  for  than  in  the  oil  regions,  and  labor  nowhere  is 
any  more  loyal  than  there.  That  is  true  of  the  Standard  Oil  Company  and 
the  producers  also. 

Q.  (By  Mr.  KENNEDY.)  Are  they  organized?  A.  Yes,  sir;  there  is  a 
well  drillers'  organization;  I  believe  it  is  in  existence,  but  I  doubt  whether 
they  hold  meetings  very  often.  *There  is  scarcely  any  necessity  for  organi- 
zation there. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Was  it  or  not  generally  stated  that 
it  would  be  a  great  injustice  to  labor  to  shut-down  for  a  period  of  a  year 
without  any  compensation  for  them;  leaving  them  out  of  work  with  no 
other  business?  A.  That  was  stated,  and  I  will  say  furthermore  that  it  was 
a  custom  in  previous  shut-downs  to  take  care  of  labor. 

Q.  (By  Mr.  KENNEDY.)  But  your  testimony  is  that  the  central  idea 
was  to  keep  these  men  from  engaging  in  the  work  of  developing  wells  else- 
where— in  other  fields.  A.  Well,  if  placed  upon  ther  owm  resources,  without 
the  means  of  a  livelihood,  nothing  would  be  left  but  to  engage  in  the  first 
employment  that  offered.  The  laborers  shared  in  this  entire  movement, 
were  taken  care  of  as  a  matter  of  justice  to  labor  as  much  as  anything  else. 
That  is  the  view  that  I  have  always  adopted;  *l  think  they  are  entitled  to 
it  as  a  matter  of  justice. 

*Black  faced  type  indicates  matter  omitted,  in  the  course  of  editing,  from  the 
official  report. 


570  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

Q.  (By  Mr.  RATCHFORD.)  Are  we  to  understand  that  labor  received 
compensation  during  that  period  during  which  they  were  thrown  into  idle- 
ness by  the  shut-down?     A.  They  received  compensation,  yes,  sir. 

Q.  Equal  to  their  wages?  A.  I  will  have  to  answer  that  by  an  explana- 
tion. The  labor  in  the  oil  regions  is,  for  the  most  part,  by  contract.  While 
these  drillers  receive  so  much  per  day,  the  competition  is  so  great  that  they 
rush  through  their  work,  and  the  aim  of  the  labor  in  drilling  a  well  is  to 
drill  it  in  as  short  a  period  as  possible;  the  interval  between  wells  is  often 
extended,  and  it  is  very  difficult,  for  that  reason,  to  arrive  at  any  estimate 
of  what  the  drillers'  year  would  be.  It  might  be  estimated  at  200  days;  if 
the  drillers'  year  is  estimated  at  200  days,  at  the  prevailing  prices  a  first- 
class  man  would  receive  about  $1,000  a  year. 

Q.  (By  Vice-chairman  PHILLIPS.)  At  that  period  it  was  about  $3  to 
$3.50?     A.  Yes,  sir. 

Q.  (By  Vice-Chairman  PHILLIPS.)  And  when  it  closed,  it  was  ad- 
vanced to  $4  and  $4.50,  was  it  not?  A.  An  advance  took  place  immediately 
afterward. 

Q.  (By  Mr.  RATCHFORD.)  Are  you  prepared  to  state  how  much  they 
got,  Mr  Boyle;  what  the  average  pay  amounted  to?  A.  I  believe  that  will 
appear  in  the  testimony  of  the  secretary  of  the  Well  Drillers'  Union  of 
Bradford,  in  connection  with  the  report  of  the  committee  of  Congress  in 
18SS.  That  subject  is  fully  gone  into  and  discussed  there;  I  believe  some 
figures  are  to  be  found  in  that  report. 

Q.  Can  you  state  the  number  of  men  involved.  A.  The  number  of  men, 
as  stated  in  that  report,  was,  I  think,  about  2,000;  I  think  it  was  more  than 
2,000.     Henry  Webster's  testimony  would  throw  some  light  on  that  question. 

Q.  (By  Mr.  KENNEDY.)  It  is  so  extraordinary  for  corporations  to  care 
for  the  interest  of  the  workingmen  in  this  way  that  I  would  like  to  have  a 
better  understanding  in  regard  to  it.  You  say  that  the  motive  of  philan- 
thropy on  the  part  of  the  Standard  Oil  Company  and  these  producers  was 
one  consideration,  and  self-interest,  keeping  the  men  out  of  work  in  other 
fields,  was  another  consideration.  I  would  like  to  ask  you  which  you  con- 
sider over-balanced  the  other — the  matter  of  philanthropy  or  the  matter  of 
self-interest  on  the  part  of  the  oil  interests? 

*Vice-Chairman  PHILLIPS.  In  that  question,  if  the  word  "philanthropy" 
was  eliminated — it  was  justice.  They  had  a  right  to  this,  as  much  as  the 
producer,  and  it  was  so  understood. 

The  WITNESS.  Inasmuch,  Mr.  Commissioner,  as  it  was  a  business 
arrangement,  I  would  say  that  the  business  consideration  had  a  great  deal 
to  do  with  it,  and  it  was  principally  interest  on  both  sides.  It  was  purely  a 
business  consideration,  and  you  might  call  it  a  selfish  one  in  that  respect 
and  to  that  extent. 

Q.  (By  Mr.  FARQUHAR.)  Have  not  the  parties  taken  credit  for  sym- 
pathy and  philanthropy  in  granting  the  terms  that  they  did  grant  towards 
the  drillers?  A.  Oh,  yes,  sir;  yes,  sir;  there  is  some  credit  taken  in  that 
way. 

Q-.  (By  Mr.  KENNEDY.)  Do  the  Standard  Oil  Company  and  the  inde- 
pendent companies  look  with  favor  upon  labor  organizations?  A.  So  far  as 
I  am  informed  on  the  subject  I  believe  they  do,  although  so  far  as  labor 
organization  applies  to  the  oil  industry,  we  have  very  little  of  it.  It  is  a  matter 
of  doing  the  work,  and  the  wage  is  dependent  largely  upon  the  skill  of  the 
operator.  For  that  reason  we  have  very  little  of  the  union  of  labor  there. 
The  question  of  uniting  enters  less,  perhaps,  in  the  oil  industry  than  in  any 
other,  because  all  men  are  not  placed  exactly  upon  the  same  plane.  Now, 
in  drilling,  we  can  take  a  contracting  firm  employing  a  dozen  drillers,  and 
half  a  dozen  may  receive  50  cents  or  a  dollar  a  day  more  than  the  other 
half.  It  is  a  matter  of  skill;  but  when  it  comes  to  the  operation  of  lifting  oil, 
the  wage  is  pretty  generally  uniform,  I  think.  The  pumpers  receive  uni- 
formly from  $40  to  $55  a  month. 


*Black   faced   type   indicates   matter   omitted,  in  the  course  of  editing,   from   the 
official  report. 


PATRICK  C.  BOYLE.  571 

Q.  (By  Mr.  CLARKE.)  You  have  stated  that  when  there  was  a  curtail- 
ment of  production,,  through  a  cessation  of  drilling  new  wells,  labor  was  the 
one  interest  which  suffered?    A.  In  that  connection;  yes,  sir. 

Q.  Do  you  mean  the  labor  that  would  otherwise  have  been  employed  in 
drilling  new  wells,  or  all  labor  in  the  oil  industry?  A.  In  drilling  new 
wells.  I  mean  to  say  it  was  the  labor  employed  in  drilling  800  fewer  wells 
than  were  drilled  the  year  previous.  In  that  connection  I  stated  that  there 
were  800  fewer  wells  drilled  in  the  year  1888,  during  the  shut-down,  than 
there  were  the  year  previous,  and  labor  suffered  to  the  extent  of  the  wage 
involved  in  the  drilling  of  800  wells. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Less  what  they  received  from  the 
sale  of  the  oil?    A.  Less  what  they  received  from  the  sale  of  oil,  of  course. 

Q.  (By  Vice-Chairman  PHILLIPS.)  I  believe  you  stated  yesterday  that 
they  received  more  than  the  producers  did  in  the  way  of  profit?  A.  Well, 
that  was  my  impression — that  they  received  considerably  more.  Their  oil 
sold  at  a  higher  rate ;  it  was  sold  at  various  times. 

Q.  (By  Mr.  CLARKE.)  Then,  that  curtailment  was  for  the  general 
interest  or  oil  production;  it  benefited  a  certain  portion  of  labor  as  well  as 
injured  a  certain  portion.  A.  Oh,  it  certainly  benefited  them.  Labor  was 
benefited  equally  with  the  producers,  in  my  opinion,  because  drilling  did 
not  entirely  cease,  and  the  drillers  could  get  permission  from  their  union  to 
engage  in  the  drilling  of  gas  wells  and  drilling  outside  of  the  prescribed  ter- 
ritory. The  prescribed  territory  was  limited  to  the  oil  produced  from  the 
sedimentary  rocks,  and  that  is  New  York  State,  Pennsylvania,  Southeastern 
Ohio  and  West  Virginia.  The  oil  produced  from  the  Mentor  rock*  was  not 
included,  and  that  took  in  Indiana  and  Ohio.  I  presume  during  this  period 
that  50  wells  a  month  were  drilled  in  the  country  at  large  for  gas,  furnishing 
constant  employment,  four  men  to  a  well,  for  200  men,  200  expert  drillers 
and  tool  dressers.     1  think  that  is  not  over-estimated. 

tQ.  (By  Vice-Chairman  PHILLIPS.)  If  you  are  through  with  the  main 
statement,  Professor  Jenks  would  like  to  ask  you  a  few  questions.  A.  I 
have  plenty  to  say  here,  but  the  time  is  unfortunately  limited. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Yes,  I  am  sorry  that  it  is  so  lim- 
ited, but  the  chair  will  state  that  you  have  occupied  as  much  time  and  more 
than  any  other  person  who  .has  been  before  us.  We  would  be  glad  to  give 
you  more  time,  if  we  were  so  situated  as  to  do  it.  Have  you  any  special 
exhibits,  iVlr.  Boyle,  that  you  wish  to  put  in?  A.  No,  I  think  not  now.  We 
have  covered  the  subject  pretty  thoroughly,  but  rather  more  discoursively 
than  I  would  like.  I  should  rather  have  taken  it  up  seriatum,  from  year  to 
year,  and  traced  the  development.  As  it  was,  we  have  taken  long  leaps; 
10  years  at  a  time. 

Q.  (By  Mr.  SMYTH.)  Do  you  wish  to  make  a  statement  as  to  the 
present  condition  of  the  oil  industry?  A.  I  will  say  that  it  is  exceedingly 
satisfactory  to  the  oil  producers. 

Q.  Both  to  the  independents  and  the  Standard?  A.  Both  the  independ- 
ents and  the  Standard;  yes,  sir.  All  the  interests  together  are  satisfied 
with  the  existing  conditions. 

Q.  (By  Mr.  RATCHFORD.)  How  is  it  as  compared  with  some  periods 
in  the  oil  industry  that  we  might  name;  say,  for  instance,  three  or  five 
years  ago.  A.  Well,  there  was  a  brief  period  four  or  five  years  ago  when 
it  was  better.     Oil  temporarily  ran  up  to  tmore  than  $2  a  barrel. 

Q.  That  was  two  or  three  years  ago?  A.  Well,  it  was  quite  favorable 
two  or  three  years  ago. 

Q.  You  made  a  statement  yesterday,  Mr.  Boyle,  that  I  should  like  to 
have  you  explain  if  you  are  in  a  position  to  explain  it  further.  Your  state- 
ment was,  I  believe,  that  were  it  not  for  the  cost  of  transportation,  oil  might 
be  sold  by  the  Standard  Oil  Company  in  Denver,  Col.,  as  cheaply  as  it  is  sold 
at  the  initial  point  of  production.  That,  I  think,  was  the  statement  in  sub- 
stance. Are  you  familiar  with  the  oil  interests  in  Colorado  and  their  rela- 
tion to  the  Standard?     A.  Only  in  a  general  way,  Mr.  Ratchford. 


*"Trenton,"  in.stead  of  "Mentor."  in  the  official  report. 

tBlack   fared    type   indicates  matter  emitted,  In  the  course  of  editing,   from   the 
ofRcial  report. 


572  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

Q.  Are  you  aware  of  the  operations  of  the  Standard  in  that  State?  A^ 
No,  sir. 

Q.  The  commission  has  testimony  bearing  upon  that  subject  to  the 
effect  that  tlie  producers  of  Colorado  find  it  to  their  advantage  to  sell  all  of 
their  crude  product  to  the  Standard  Oil  Company.  Do  you  wish  to  say  any- 
thing on  that,  Mr.  Boyle?  A.  Well,  I  did  not  understand  that  the  Standard 
Oil  Company  were  manufacturing  oil  in  Colorado. 

Q.  (By  Mr.  FARQUHAR.)  They  are  the  producers  of  the  manufactured 
oil,  are  they  not?  A.  I  have  understood  that  they  were  the  producers  of  the 
manufactured  oil.  I  am  not  familiar  with  the  price  of  crude  oil  in  Colorado. 
The  field  is  so  distant  that  there  is  no  relation  whatever  between  that  prod- 
uct and  ours.  There  is  no  intercourse  between  the  oil  fields  of  this  section 
of  the  country  and  those  west  of  the  Mississippi  river.  One  does  not  enter 
into  any  consideration  with  the  other,  so  far  as  I  am  aware,  and  therefore 
we  pay  no  attention  to  the  product  of  that  region.  If  it  entered  into  any 
competition  with  us,  in  the  east,  we  would  have  reporters  there  and  know 
all  about  it;  but  as  it  is,  and  until  it  does  that,  there  is  no  occasion  to  be 
put  to  the  expense  of  getting  reports  from  it. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Are  they  or  not  prohibited  from 
refining  oil  in  those  western  fields;  is  not  oil  confined  to  fuel  products,  sold 
for  fuel,  and  seldom  refined?  A.  I  don't  know;  I  am  not  familiar  with  the 
operations  v/est  of  the  Mississippi  river. 

Mr.  Boyle  said  his  statistics  of  prices  of  export  oil  in  the  Derrick  Hand- 
book came  from  the  government,  and  his  figures  as  to  the  profits  of  pro- 
ducers were  his  own  deductions  after  studying  the  statistics.  His  statistics 
on  crude  oil  came  from  pipe  line  statements  at  the  time  they  were  posted, 
the  pipe  lines  being  required  by  legislative  enactment  to  post  such  state- 
ments. Trade  journals.  State  and  trade  publications  were  also  his  sources 
of  information. 

Q.  (By  Professor  JENKS.)  Have  you  any  specific  information  in  refer- 
ence to  the  methods  of  the  Standard  Oil  Company  for  obstructing  the  com- 
pletion of  the  independent  pipe  lines  to  the  seaboard.  A.  I  never  understood 
that;  but  I  *just  told  the  chairman  that  I  had  information  of  others  stop- 
ping operations  by  the  Standard  Oil  Company.f 

*Q.   Have   you    any   specific    information    on    that   subject?      A.  Yes,    sir. 

Q.  Have  you  furnished  it?  A.  No,  I  was  not  asl<ed  for  it.  They  did  not 
ask  me  for  it. 

Q.  Can  you  give  it?  A.  Yes,  sir;  I  haven't  it  in  my  hands,  but  I  can  give 
it  to   you   verbally. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Just  allow  me  to  apologize;  I  will 
say  it  was  an  oversight.  We  will  be  very  glad  to  have  It.  A.  In  1884,$  the 
National  Transit  Company  undertook  to  lay  a  pipe  line  from  Macksburg  to 
Park6rsburg  *to  connect  with  the  refineries  there,  and  they  were  stopped  at 
several  points  by  Mr.  George  Rice,  who  obtained  a  lease  across  the  track  of 
their  right  of  way.  That  is,  Mr.  Rice  employed  a  man  to  take  rights  of  way 
across  the  track  of  the  pipe  line — a  man  by  the  name  of  Ogle. 

*Q.  (By  Vice-chairman  PHILLIPS.)  Can  you  give  the  full  name?  A. 
I  have  forgotten  the  full  name;   Ogle. 

Q.  (By  Vice-chairman  PHILLIPS.)  What  is  the  source  of  your  infor- 
mation—Mr. Ogle  himself?  A.  No,  sir;  I  was  present  *and  cognizant  of  it. 
Mr.  Ogle  first  informed  me  that  he  was  engaged  in  the  work  and  he  showed 
me  his  contracts. 


♦Black  faced  type  indicates  matter  omitted,  in  tiie  course  of  editing,  from  the 
official  report. 

tin  the  oincial  report  this  reply  is  erroneously  stated  as  follows:  "I  never  under- 
stood that;  but  I  have  information  on  the  other  side  concerning  the  stopping  of  op- 
erations by  the  Standard  Oil  Company." 

tin  the  official  report  thi.s  date  is  erroneously  given  as  1874. 


PATRICK  C.  BOYLE.  573 

Q.  (By  Vice-Chairmarx  PHILLIPS.)  With  Mr.  Rice?  A.  No,  with  the 
farmers.  He  made  contracts  with  the  farmers  for  the  exclusive  right  *to 
lay  a  pipe  line  across  their  land.  This  exclusive  right  was  for  an  enormous 
sum  of  money;  an  exorbitant  sum  of  money  was  named  for  the  exclusive 
right,  when  the  pipe  line  was  to  be  laid.  He  had  the  exclusive  right  to  it, 
but  no  consideration  passed  until  the  work  was  done.f 

Q.  (By  Vice-chairman  PHILLIPS.)  And  he,  it  seems,  informed  you  that 
he  was  doing  this  work  for  Mr.  Rice?  A.  Yes,  sir;  he  informed  me  that  he 
did  it  in  Mr.  Rice's  name.    The  work  was  done  in  Mr.  Rice's  name. 

Q.  (By  Vice-Chairman  PHILLIPS.)  And  the  special  purpose  of  that 
work  was  to  shut  off  the  National  Transit  Company?  A.  Yes,  sir;  stop  the 
progress  of  the  pipe  line  from  the  oil  field  to  its  destination. 

Q.  (By  Vice-chairman  PHILLIPS.)  Did  Mr.  Rice  himself  ever  intend 
to  build  a  pipe  line  *on  that  land?  A.  Not  under  those  contracts.  He  built 
the  pipe  line,  but  not  under  those  contracts. 

Q.  (By  Mr.  KENNEDY.)  Was  that  work  of  Mr.  Rice  successful  in  pre- 
venting the  building  of  that  pipe  line?  A.  No,  the  line  was  laid,  but  Mr. 
Rice  was  outbid. 

*Q.  (By  Professor  JENKS.)  Have  you  further  information  of  a  similar 
nature?     A.  That  is  the  only  case  that  ever  came  under  my  observation. 

Q.  *Have  you  any  specific  knowledge  in  reference  to  the  way  in  which 
the  Standard  Oil  Company  has  sold  different  grades  of  oil?  It  has  been 
stated  here  that  the  Standard  Oil  Company  has  sold  different  grades  of  oil 
at  the  same  price.  Have  you  any  knowledge  in  reference  to  the  methods  of 
the  Standard  Oil  Company  with  reference  to  grading  its  oil?t  A.  That  would 
come  within  the  domestic  trade  department,  and  in  the  oil  region  it  does 
not  enter  into  our  trade  at  all. 

Q.  *ln  giving  us  the  history  of  the  developments  of  the  oil  region,  you 
mentioned  a  number  of  very  valuable  improvements  that  have  been  made 
in  developing  the  oil  region.  In  your  judgment  have  the  most  important 
improvements  been  made  by  the  Standard — the  men  working  for  the  Stand- 
ard— or  by  the  independents?  A.  Well,  so  far  as  that  is  concerned,  as  be- 
tween the  Standard  and  the  independents,  no  one  has  a  monopoly  on  genius. 
But  the  Standard  Oil  Company  is  undoubtedly  entitled  to  more  credit  than 
it  has  received  for  its  achievement  in  refining  Lima  oil. 

Q.  The  chief  improvements  along  that  line,  you  think,  have  come  through 
the  Standard?  A.  Yes,  sir;  I  think  they  have  come  through  the  Standard, 
the  manufacturers  of  Lima  oil. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Did  or  did  not  George  Van  Vleck 
and  some  others  make  very  good  oil?  A.  Well,  I  am  very  glad  you  asked 
me  that  question.  Their  process  was  an  old  one,  not  a  new  one.  Let  me 
explain  to  you  that  that  process  of  Van  Vleck  belonged  to  some  gentleman 
in  Buffalo — professor  somebody.  I  cannot  call  his  name  just  now;  but  in 
that  process  of  his,  metallic  oxide  was  used  by  the  gas  men  for  the  purifica- 
tion of  gas.  It  has  been  used  ever  since  the  manufacture  of  gas  was  known, 
and  as  early  as  1860  and  1861  Homer  T.  Yaryan,  *a  man  now  living  in 
Indiana,  used  that  same  process  to  manufacture  Canadian  oil — metallic 
oxide.  Now,  the  the  Standard's  process  is  very  different  from  that;  the 
Standard's  process  is  very  different  and  far  more  successful. 

Q.  (By  Vice-Chairman  PHILLIPS.)  But  that  enters  largely  into  it,  does 
it  not?     A.  Oh,  yes.  sir;   these  appliances  enter  largely  into  it. 


*Black  faced  type  indicates  matter  omitted,  In  the  course  of  editing,  from  the 
official  report. 

tThis  answer  as  given  in  the  ofRcial  report  indicates  tliat  Mr.  Boyle  stated  that 
no  consideration  was  given  Mr.  Ogle  unlil  the  work  was  done,  whereas  the  answer 
as  shown  in  tlie  stenographic  report,  as  above,  indicates  that  there  was  to  be  no 
consideration  for  this  right  secured  from  the  farmers  until  the  work  was  done.  The 
answer  as  given  in  the  official  rejiort  is  as  follows: 

"A.  No,  with  the  farmers;  he  made  contracts  with  the  farmers  for  getting  these 
exclusive  rights.  An  exorbitant  sum  was  named  for  this  exclusive  right,  when  the 
pipe  line  was  to  be  laid.  He  had  the  exclusive  right  of  it,  but  no  consideration  passed 
to  him  until  the  work  was  done." 

tin  the  official  report  th!s  s^nten^e  appears  in  the  following  form:  "Have  you 
any  knowledge  of  the  methods  of  the   Standard  in  selling  refined  oil?" 


574  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

Q.  (By  Professor  JENKS.)  Statements  have  been  made  in  reference  to 
the  railroad  discriminations  that  were  received  by  the  Standard  Oil  Com- 
pany in  the  early  days.  Have  you  any  knowledge  of  discrimination  in  freight 
rates  within  the  last  15  years?  A.  No;  but  I  have  some  records  to  show 
where  railroads  went  into  contracts  with  pipe  lines,  and  furnished  them  a 
rebate  of  10  cents  a  barrel  on  all  oil  shipped,  except  the  shipments  on  a 
certain  line. 

Q.  Within  what  period  was  this?     A.  Oh,  that  was  30  years  ago. 

Q.  There  is  a  record  of  that  kind  in  general?    A.  Yes,  sir;  I  suppose  so. 

Q.  Have  you  any  instances  that  are  different  from  those  that  have 
already  appeared  before  the  Congressional  Committee,  for  example?  A. 
Well,  I  have  the  averments  of  the  Pennsylvania  Transportation  Company 
in  its  litigation  with  the  Oil  Creek  Railroad. 

Q.  You  have  not  been  informed  then  along  that  line  within  the  last 
10  years?    A.  No,  sir. 

Q.  In  your  judgment,  have  there  been  any  special  discriminations  made 
in  favor  of  the  Standard  Oil  Company,  or  in  favor  of  the  independent  re- 
finers; particularly  have  they  been  made  within  the  last  10  years?  A.  I  am 
told  there  is  not;   I  do  not  know  anything  about  it. 

*Q.  You  have  no  specific  knowledge  on  the  subject?  A.  I  have  no 
specific  knowledge;    1  am  told  there  is  no  discrimination. 

Q.  You  have  heard,  of  course,  the  charges  made  here  that  the  Standard 
Oil  Company  has  at  different  times  used  its  influence  with  the  press  to 
further  its  own  interests,  by  having  special  articles  put  in  as  editorials,  for 
example,  that  were  paid  for  as  advertisements  and  matters  of  that  kind. 
Have  you  any  knowledge  on  that  subject?  A.  Yes,  sir:  I  have  had  some 
knowledge  of  a  business  arrangement  with  certain  newspapers  in  Pittsburg. 

Q.  Can  you  give  us  some  information  *on  that  point?  I  will  be  glad  if 
you  will.  A.  Only  concerning  its  existing  contracts  for  advertising.  The 
Standard  Oil  Company  has,  at  various  times,  been  attacked  by  persons  as- 
sociated with  the  Producers'  *Protective  Association.  They  have  been  at- 
tacked, and  their  replies  have  been  published  and  paid  for,  while  the  at- 
tacks themselves  were  inserted  free. 

*Q.  Will  you  make  that  clear — the  attacks  upon  the  Standard  Oil  Com- 
pany? A.  The  attacks  upon  the  Standard  Oil  Company  were  received  as 
contributions;  the  replies  in  favor  of  the  Standard  Oil  Company  were 
charged  up  at  advertising  rates. 

Q.  By  what  papers?  A.  By  all  of  them.  Not  one  of  them  will  receive 
a  line  in  defence  of  the  Standard  Oil  Company  except  at  advertising  rates, 
*50  cents  a  line  or  more.  I  do  not  know  of  a  single  paper  in  Pittsburg  that 
will  accept  a  line  in  contradiction  of  the  most  outrageously  infamous  articles. 

Q.  That  is  to  say,  if  I  understand  you,  that  the  Standard  Oil  Company, 
instead  of  buying  up  the  papers,  is  practically  blackmailed.  *ls  that  your 
idea?     A.  I   haven't   said   so;    no,   sir. 

Q.  You  do  not  intend  to  make  a  charge  of  that  kind?  A.  No,  sir.  I 
make  this  assertion,  though,  that  the  Standard  Oil  Company  does  not  re- 
ceive the  same  courtesies  from  the  press  that  other  corporations  and  indi- 
viduals do. 

Q.  In  reference  to  your  paper — it  is  perhaps  a  fair  question — does  the 
Standard  Oil  Company  receive  similar  courtesies  from  your  paper  that  the 
other  oil  interests  do?  A.  Exactly  the  same;  exactly  the  same,  sir.  I  have 
rendered  a  bill  to  no  man  for  a  courtesy  since  my  connection  with  it. 

Q.  Both  parties  are  treated  equally  by  your  paper?  A.  Yes,  sir;  both 
parties  are  treated  equally  by  my  paper. 

Q.  (By  Professor  JENKS.)  Have  you  yourself  in  connection  with  the 
publishing  of  your  paper  been  attacked  legally?     A.  Oh,  yes,  sir. 

Q.  Can  you  give  us  some  account  of  that?  A.  Some  little  account,  I 
guess.      (Producing   court   records.) 

Q.  You  can  perhaps  state  the  substance  of  them  and  put  them  in  the 
exhibits. 

Mr.  SMYTH.     No,  let  us  have  the  whole  thing. 


*Black  faced  type  indicates  matter  omitted.  In  the  course  of  editing,  from  the 
official  report. 


PATRICK  C.  BOYLE.  575 

A.  Well,  I  have  a  great  many  records  here,  gentlemen. 

Q.  (By  Vice-chairman  PHILLIPS.)  Are  they  court  records?  A.  Yes, 
sir;   they  are  court  records. 

Q.  (By  Professor  JENKS.)  Can  you  make  a  brief  statement  in  refer- 
ence to  the  libel  suits?  A.  If  you  ask  me  a  particular  question  concerning 
any  particular  suit  at  a  given  time  I  will  be  glad  to  answer  it. 

Q.  How  many  suits  have  you  had  for  libel?  A.  I  suppose  half  a  dozen, 
all  of  them  by  the  same  persons  and  the  same  interests. 

Q.  And  who  are  those  persons?  A.  Well,  the  officers  and  members  of 
the  Producers'  Protective  Association. 

Q.  What  has  been  the  result  of  those  suits?  A.  Conviction  was  ob- 
tained in  two  of  them.  In  two  others  there  was  a  confession  of  judgment, 
and  in  one  other  there  was  a  failure  to  convict.  Every  one  of  these  suits 
was  taken  into  a  foreign  county,  where  their  own  element  was  the  strongest 
and  where  prejudice  was  the  greatest.  I  do  not  think  anything  more  in- 
famous was  ever  practiced  on  the  press  of  this  land  since  the  first  news- 
paper was  published  than  was  practiced  by  those  gentlemen  who  called 
themselves  men  in  trying  to  muzzle  the  press  by  dragging  it  before  hostile 
courts  and  hostile  juries.  They  did  not  even  possess  the  decency  to  give 
me  a  trial  at  home  in  my  own  court,  where  I  could  stand  up  among  my 
neighbors  and  be  judged  by  them  according  to  my  merits.  The  very  judge 
that  convicted  me — no,  he  did  not  convict  me — but  the  very  judge  who  at- 
tempted conviction  was  a  partner  of  at  least  two  of  the  men  who  brought 
suit  against  me;  and  yet  he  had  the  hardihood  to  sit  there  in  judgment, 
filled  with  prejudice,  and  poisoned  with  it,  *entering  into  a  case  in  whicli  the 
public  was  very  little  concerned — into  the  question  of  industrial   economics. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Can  you  name  that  judge?  A.  No, 
I  do  not  care  to  name  him.  No,  I  will  not  name  anybody  in  connection  with 
those  suits,  except  where  it  becomes  necessary  *to  name  the  parties  who 
brought  them.  I  have  no  purpose  in  using  this  commission  to  get  even  with 
anybody. 

Q.  (By  Vice-Chairman  PHILLIPS.)  You  can  perhaps  give  us  a  citation 
of  these  cases  *so  that  we  can  look  them  up  as  fully  as  we  wish.  A.  I  have 
not  the  citations  here.  Senator  Lee,  in  his  capacity  as  president  or  director 
or  manager  of  one  of  the  oil  companies,  sued  me  for  some  expressions  in 
my  newspaper.  In  that  case  there  was  a  confession  of  judgment.  A.  D. 
Wood,  an  oflficer,  treasurer  of  all  these  companies,  sued  me  for  a  certain 
expression  in  the  newspaper,  and  on  the  first  trial  of  that  case,  before  a 
hostile  court  and  before  a  packed  jury,  I  was  convicted,  but  obtained  a  new 
trial  on  the  judge's  charge.  Upon  the  second  trial  there  was  a  failure  of 
conviction. 

*Q.  (By  Vice-chairman  PHILLIPS.)  Will  you  perhaps  furnish  me  later 
with  a  statement  of  the  details  and  the  exact  citations?  A.  Yes,  sir;  cer- 
tainly. 

Q.  (By  Mr.  FARQUHAR.)  I  fail,  as  a  member  of  this  commission,  to 
know  what  these  questions  are  for.  A.  I  can  tell  you:  Their  purpose  is  to 
discredit  the  witness,  to  show  that  he  has  been  sued;  and  I  have  all  the 
testimony  here. 

Mr.  SMYTH.  It  seems  to  me  that  this  is  entirely  a  personal  matter  and 
should  be  stricken  from  the  records. 

Mr.  FARQUHAR.  I  am  beginning  to  learn  a  good  deal  about  this.  If 
they  have  any  quarrels  to  settle  on  this  oil  question  let  them  settle  it  out- 
side. This  commission  will  not  lumber  its  records  with  anything  at  all  about 
the  character  of  Mr.  Boyle  unless  specific  charges  are  brought  here  in  that 
regard.  The  attempt  was  made  at  the  beginning  of  his  examination  to  do 
It,  and  I  objected  to  it  then  and  I  object  to  it  now.  If  the  testimony  is  closed 
I  shall  move  to  adjourn.  It  is  not  pertinent  testimony,  and  there  is  no  way 
in  which  we  can  bring  it  in  in  any  case,  and  I,  for  one,  will  not  be  a  party 
to  the  impeachment  of  any  man's  character  in  this  body,  and  I  have  said 
that  already  before  in  this  commission. 


*Black  faced  type  indicates   matter   omitted,  in  ttie  course  of  editing-,  from  the 
oflicial  report. 


576  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

*Vice-Chairman  PHILLIPS.  Without  objection  the  questions  in  this  re- 
gard will  not  be  put  into  the  record,!  and  the  commission  will  take  action  on 
this  sometime  in  the  future.  The  testimony  will  not  proceed  any  further 
unless  there  is  a  request  for  it. 

Q.  (By  Mr.  SMYTH.)  Do  we  understand  from  your  testimony,  Mr. 
Boyle,  that  you  consider  that  the  existence  of  the  Standard  Oil  Company  is 
not  so  detrimental  to  the  development  of  the  oil  industry  in  Pennsylvania, 
Ohio  and  other  States?  A.  It  certainly  is  not;  it  has  been  very  beneficial 
to  the  industry  as  a  whole.  The  organization  effected  by  the  Standard  Oil 
Company  could  not  be  duplicated  in  the  whole  world. 

Q.  bo  you  consider  that  the  Standard  Oil  Company,  the  existence  of 
that  company,  has  been  of  benefit  to  the  American  people?  A.  Of  very  great 
benefit:  very  great  benefit  indeed  in  the  development  of  an  industry  that 
otherwise  was  without  the  organizing  capacity  or  great  mercantile  ability. 
Now,  I  give  them  no  credit  whatever  for  manufacturing;  others  manufacture 
just  as  cheaply  as  they,  but  where  others  fail  in  organizing,  operating  or  in 
their  mercantile  capacity,  they  have  succeeded  so  wonderfully.  They  are 
the  greatest  merchants  on  earth. 

Q.  Do  you  not  consider  the  Standard  Oil  Company  a  trust?  A.  No,  sir; 
not  now. 

Q.  Why  not  now?  A.  The  trust  has  been  dissolved  and  the  companies 
have  gone  back  into  their  original  corporations.  The  trust  agreement  under 
which  they  operated  for  10  years  prior  to  1892  has  been  dissolved,  and  the 
parts  composing  that  trust  have  been  returned  to  the  various  organizations 
and  stockholders,  and  have  been  operated  since  1892  as  separate  concerns, 
each  one  as  a  separate  concern. 

Q.  Is  there  any  trust  in  existence  now  in  reference  to  the  crude  or  re- 
fined oil  business?  A.  The  Pure  Oil  Trust  has  developed  in  that  direction; 
not  wholly  accomplished,  but  it  is  hoped  to  be  accomplished. 

Q.  That  is  the  company  that  you  gave  us  information  about  before? 
A.  Yes,    sir. 

Q.  Is  that  the  only  organization  of  any  moment  in  opposition  to  the 
Standard  Oil  Company?  A.  Oh,  no;  there  are  several.  There  are  a  great 
many  companies  in  opposition  to  the  Standard  Oil  Company,  but  that  is  the 
only  one  that  copies  the  Standard  Oil  Company  organization  from  the  be- 
ginning to  the  end,  even  to  the  trust.  After  the  Standard  Oil  Company  re- 
linquished the  trust  the  Producers'  Protective  Association  picked  it  up  where 
they  left  off  and  are  attempting  to  carry  it  out  under  various  names,  pre- 
tences and  fictions  of  the  law. 

Q.  I  understood  you  to  say  that  the  Standard  Oil  Company  controlled 
about  80  per  cent,  of  the  output?  A.  I  think  that  would  be  a  liberal  esti- 
mate for  it. 

Q.  Now,  the  other  20  per  cent,  is  controlled  by  how  many  companies? 
A.  I  should  think  50  or  60. 

Q.  And  they  are  all  in  the  nature  of  rivals  of  the  Standard  Oil  Com- 
pany in  selling  their  product?  A.  Oh,  yes,  sir;  they  are  all  independent  in 
selling  their  products. 

Q.  Both  in  this  country  and  abroad?    A.  Both  in  this  country  and  abroad. 

Q.  Are  there  more  than  one  or  two  rivals  of  the  Standard  Oil  Company 
selling  oil  for  export?  A.  The  Pure  Oil  Company  is  selling  it.  The  Pure 
Oil  Company  is  selling  it  in  rivalry. 

Q.  Any  others?  A.  I  am  not  familiar  with  that  branch  of  the  business. 
*l  am  only  familiar  with  the  part  of  it  that  touches  the  oil  producing  region. 
The  export  industry  is  separate  and  apart  from  that  with  which  we  are 
familiar  as  producers,  and  we  come  very  little  in  contact  with  it.  That  is 
the   manufacturing   branch   of  the   business. 

Q.  And  you  think  the  great  profit  then  that  may  have  come  to  the  Stand- 
ard Oil   Company  has   come  from   its   superior  organization.     *By   common 


*Bl3.ck  faced  type  indicates  matter  omitted,  In  the  course  of  editing,  from  (he 
official  report. 

tNotwithstanding  this  announcement  by  the  vice-chairman,  as  a  result  of  the 
comments  by  other  commissioners,  the  questions  referred  to  were  published  in  the 
official  report. 


PATRICK  C.  BOYLE.  577 

*rumor  we  understand  that  they  have  made  a  great  deal  of  money  by  the 
great  use  of  large  capital  and  economic  methods  in  preparing  their  oil  for 
the  market.  A.  That  states  the  case  precisely — from  their  great  commercial 
ability. 

Q.  In  other  words,  they  have  hired  the  best  ability  and  the  best  brains 
that  they  could  find  in  the  market  to  manage  their  business?  A.  No;  they 
had  brains  of  their  own  to  start  with. 

*Q.  Undoubtedly.  A.  And  they  kept  adding  to  their  mental  talent  right 
along. 

Q.  (By  Viee-Chairman  PHILLIPS.)  *Has  any  other  member  of  the  com- 
mission any  questions  to  ask?  (A  pause.)  I  will  ask  just  one  other  ques- 
tion, and  that  is:  Do  you,  or  do  you  not,  think  that  if  the  oil  fields  had  been 
opened  to  competition  without  restriction,  without  monopoly  and  without 
discrimination,  there  would  have  been  developed  a  talent  equal  to  what  is 
exhibited  by  the  Standard  Oil  Company  now,  as  the  railroad  systems  and 
the  great  trunk  lines  have  developed  equal  talent?  Do  you,  or  not,  believe 
that?  A.  The  great  difficulty  with  the  region  was  too  much  jiroduction,  over- 
production, and  the  competition  finally  resulted  in  what  the  Standard  has 
accomplished.!  It  was  a  case  of  coming  to  the  front,  a  survival  of  the 
fittest,  that  made  the  Standard  Oil  Company.  *lt  was  the  bringing  to  the 
front  at  the  proper  time  of  the  right  man  in  the  right  place:  end  Darwin's 
theory  v.'as  never  more  fully  expressed  than  in  the  organization  of  the 
Standard  Oil  Company.  It  represented  the  best  ability  in  all  branches  of 
the  trade — the  bringing  together  of  the  best  ability. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Well,  then,  since  this  organization 
came,  and  the  best  elements  got  together,  have  they  constantly  kept  the 
best  elements,  or  have  they  not  proscribed  men  of  equal  ability,  by  their 
methods?  A.  Mr.  Phillips,  there  are  men  in  the  oil  business  who  have 
superior  ability,  and  not  in  the  Standard  Oil  Company.  There  are  men  of 
ability  to-day,  but  your  question  leads  but  to  one  answer:  "What  have 
they  done?"  That  answers  your  question.  We  know  what  has  been  done 
by  the  Standard  Oil  Company.  If  there  were  others  who  could  have  done 
it,  the  only  reply  is,  others  did  not.  It  is  the  old  case  of  Columbus  and  the 
egg  over  again.  Lots  of  people  could  sail  the  ocean,  and  do  now,  but  only 
Columbus  sailed  it  in  1492.:!; 

Q.  (By  Vice-Chairman  PHILLIPS.)  You  speak  of  the  survival  of  the 
fittest,  then  do  you  want  to  inform  this  commission  that  20  years  ago  people 


*BIack  faced  type  indicates  matter  omitted,  in  the  course  of  editing,  from  the 
official  report. 

|-A  portion  of  Mr.  Boyle's  reply  was,  in  the  oflicial  report,  erroneously  embouicd 
In  Vice-Chairman  Phillips"  question,  which  in  that  report  is  made  to  read  as  follows: 
"Q.  (By  Vice-chairman  PHILLIPS.)  Do  you  not  think  if  the  oil  fields  had  been 
opened  to  competitors  without  monopoly  and  without  discrimination,  that  talent  equal 
to  what  is  exhib'ted  by  the  Standard  now  would  have  been  developed?  Do  you  not 
believe  that  the  difficulty  with  the  region  was  too  much  competition — over-compe- 
tition." 

JThere  are  some  places  in  which  the  official  report  of  the  Industrial  Commis- 
sion becomes  humorous  because  of  absurdities  of  statements  erroneously  attributed 
to  witnesses.  One  of  these  instances  occurs  in  the  above  question  and  answer  as 
given  in  the  official  report.  Mr.  Boyle  is  made  to  say,  in  that  report,  that  there 
are  men  in  the  oil  business  who  have  superior  abilities  to  any  men  in  the  Standard 
Oil  Company,  for  certain  purposes,  that  they  can  beat  them  in  producing,  etc. 
Whether  or  not  Vice-Chairman  Phillips  was  lishing  for  a  compliment  of  this  kind,  he 
did  not  secure  it  from  the  witness,  though  what  he  failed  to  get  in  that  way  he  got 
through  the  erroneous  report  of  the  testimony.  By  the  stenographic  report  it  will  be 
seen  that  Mr.  Boyle  did  not  go  quite  so  far  in  complimenting  the  independents  as  to 
say  that  they  were  superior  to  all  others.  He  merely  said  they  were  men  of  superior 
ability.  The  above  question  and  answer  asgiven  in  the  official  report,   follows: 

"Q.  Since  it  was  organized  have  they  kept  the  best  element,  or  have  they  pro- 
scribed men  af  equal  ability  by  their  methods?  A.  Well,  there  are  men  in  the 
oil  business  who  have  superior  abilities  to  any  men  in  the  Standard  Oil  Company 
for  certain  purposes.  There  are  men  who  can  beat  them  in  producing;  but  your 
question  leads  to  but  one  answer.  What  they  have  done  answers  you.  What  you 
ask  has  been  done  by  the  Standard  Oil  Company.  If  there  were  others  who  could 
do  that  the  only  reply  is,  others  did  not.  It  is  a  case  of  Columbus  and  the  egg  over 
again.  Lots  of  people  could  sail  the  ocean,  and  do  now,  but  only  Columbus  sailed 
it   in   1492." 

37 


578  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

could  not  have  been  gotten  together  equal  in  talent,  equal  in  ability,  if  it 
had  not  have  been  for  the  monopoly  of  the  pipe  lines  and  the  monopoly  of 
the  trusts?  A.  Can  you  tell  me  why  they  did  not  get  together  and  do  so. 
That  is  the  best  answer  to  that  question.  If  you  can  tell  me  why  they  did  not 
get  together,  then  I  may  frame  some  answer. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Did  they  have  the  opportunity  after 
the  National  Transit  Company  reached  the  seaboard  and  before  the  free  pipe 
line  law  was  passed  in  the  State?  Did  they  have  the  opportunity  to  get 
together?  A.  Exactly  the  same  opportunity  that  the  Standard  had — exactly 
the  same.  The  Standard  could  go  into  business.  Now,  why  did  they  not 
do  so  before?  At  this  time,  when  the  region  was  in  a  state  of  chaos,  trans- 
portation was  in  a  topsy-turvey  condition,  and  the  Standard  Oil  Company 
came  in  with  $3,000,000  of  capital  and  organized  one  pipe  line  that  did  the 
business  of  15  or  20,  on  a  capitalization  of  $3,000,000.  That  was  all  that  was 
reported  to  the  transportation  department  at  that  time. 

Q.  (By  Mr.  SMYTH.)  Right  there:  Was  there  any  risk  considered  in 
that  venture?  Was  it  considered  an  experiment  in  any  sense?  A.  A  very 
high  risk  was  considered. 

Q.  Was  that  the  reason  that  other  people  did  not  go  into  the  business? 
A.  That  was  the  very  reason — the  amount  of  money  involved  and  the  risk. 
Q.  Your  idea  is  that  they  blazed  a  way,  as  it  were?    A.  They  blazed  a 
way;  they  had  the  nerve  and  ability  to  carry  it  through  to  success. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Did  they  first  start  the  pipe  line 
system  which  has  become  the  mode  of  transporting  oil?  A.  No,  they  de- 
veloped it;   others  started  it  and  they  developed  it. 

Q.  (By  Vice-Chairman  PHILLIPS.)  And  when  the  others  got  through 
they  controlled  them  to  the  seaboard.  They  control  the  line  now  to  the 
seaboard,  do  they  not,  and  limit  its  output?  A.  Oh,  yes,  sir;  they  do  so; 
but  that  is  merely  an  incident  in  the  business  and  cuts  no  figure  in  com- 
merce. It*  is  a  source  of  vexation  even  to  its  own  stockholders.  They  are 
not  agreed  as  to  matters  of  policy. 

Q.  (By  Mr.  A.  L.  HARRIS.)  Just  one  question.  It  may  have  been  asked 
and  answered  already,  but  anyhow  it  is  not  of  much  importance.  I  merely 
wish  to  know  what  per  cent,  of  the  80  per  cent,  that  the  Standard  Oil  Com- 
pany consumes  in  refining  is  produced  by  it?  A.  Well,  in  the  Pennsylvania 
district — and  that  includes  West  Virginia — in  the  Pennsylvania  district  I 
think  it  is  about  25  per  cent.;   yes,  25  per  cent. 

Q.  Where  do  they  get  the  other  75  per  cent.?  A.  By  purchase. 
Q.  In  the  market  from  the  producers?     A.  In  the  market  from  the  pro- 
ducers, yes,  sir. 

Q.  Is  the  price  satisfactory  to  the  producers?  A.  It  seems  to  be  satis- 
factory; there  is  no  complaint  on  the  question  of  price;  the  price  is  higher 
now  tlian  it  has  been  for  a  year  or  two. 

Q.  They  are  open  competitors  with  others,  are  they?  A.  Oh,  yes,  sir; 
there  are  other  buyers  in  the  field. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Now,  I  will  ask  you  this  question 
In  the  line  of  that:  In  what  part  of  the  Ohio  field  do  they  control  the  crude 
oil?     A.  What  proportion? 

Q.  (By  Vice-Chairman  PHILLIPS.)  Yes,  sir;  about  what  is  the  propor- 
tion of  the  Ohio  field?  A.  Well,  I  should  think  it  would  be  up  to  50  per  cent.; 
at  least  50  per  cent. 

Q.  (By  Vice-Chairman  PHILLIPS.)  They  control  more  in  the  Ohio 
field  than  they  do  in  Pennsylvania  and  West  Virginia?  A.  Yes,  sir;  the  Ohio 
oil  does  not  come  in  competition  to  a  very  great  extent  with  the  Penn- 
sylvania. 

Q.  (By  Mr.  A.  L.  HARRIS.)  You  stated  a  moment  ago  that  the  original 
trust  had  been  dissolved  after  they  reorganized  under  the  New  Jersey  law 
recently?  A.  I  believe  they  are  in  process  of  reorganization.  That  is  the 
condition  of  things  at  the  present  time. 

Q.  At  the  present  time  where  do  they  get  their  corporate  powers?  A. 
They  are,  I  think,  composed  of  some  20  different  companies. 


♦The  United  States  Pipe  Line. 


PATRICK  C.  BOYLE.  579 

Q.  Organized  in  the  different  States?  A.  Organized  in  the  different 
States  and  for  different  purposes  and  under  different  management. 

Q.  (By  Mr.  SMYTH.)  You  do  not  admit  that  the  Standard  Oil  Com- 
pany controls  the  price  of  crude  petroleum?     A.  No,  sir. 

*Q.  They  buy  it  from  the  producers  in  the  open  market?  A.  They  buy 
it  from  the  producers  in  the  open  market. 

Q.  They  have  no  means  of  controlling  that  price,  or  forcing  producers 
to  sell  it  at  their  pleasure?  A.  The  only  way  open  to  forcing  the  producers 
is  by  increasing  the  price. 

Q.  Buying  from  the  other  competitors?  A.  Buying  according  to  what 
seems  to  be  the  market  value  at  the  time. 

Q.  Do  you  believe  that  is  done?    A.  It  has  been  done. 

Q.  They  buy,  then,  in  the  open  market  from  the  producers?  A.  They 
buy,  then,  in  the  open  market  from  the  producers. 

Q.  Of  the  crude  oil?     A.  Yes,  sir. 

Q.  TBy  Vice-Chairman  PHILLIPS.)  Is  there  any  purchaser  for  the 
crude  oil  by  the  Standard  lines  to-day  except  the  Standard  themselves?  A. 
Well.  I  could  not  answer  that  question.  I  am  not  familiar  with  the  Standard 
business.  I  do  not  know  who  they  buy  from  nor  who  they  sell  to.  In  a  gen- 
eral way  I  know  they  buy  all  the  oil  offered,  but  to  whom  it  is  sold,  is  beyond 
my  knowledge  and  my  experience  and  observation. 

*Q.  (By  Vice-Chairman  PHILLIPS.)  Do  you  not  know  that  they  are  the 
very  largest  purchasers  of  oil  in  the  oil  lines,  and  in  your  judgment,  is  there 
any  considerable  amount  at  all  purchased  by  other  people?  A.  I  couldn't  say. 
As  I   said  before,   Mr.  Phillips,   I   am  not  familiar  with  their  business. 

Q.  (By  Mr.  SIMYTH.)  Is  there  any  complaint  from  the  producers  of  the 
crude  oil  of  a  lack  of  buyers?     A.  No,  sir;  none  whatever. 

Q.  Are  they  considered  to  be  making  money  to-day  on  crude  oil?  Do 
you  believe  that  the  producers  are  satisfied  with  the  price  that  they  are 
getting  for  the  crude  oil  to-day?  A.  They  are  satisfied  with  the  price  so 
far  as  we  can  observe. 

Q.  Then,  if  the  fact  is  that  the  Standard  Oil  Company  is  practically  the 
only  buyer,  you  imagine  they  are  paying  a  fair  and  legitimate  price  to  the 
producers  of  the  crude  oil?  A.  I  think  they  pay  for  the  article  all  that 
commerce  will  stand,  and  that  relation  has  existed,  according  to  figures 
submitted  yesterday,  since  189.5. 

Q.  If  the  Standard  Oil  Company  is  really  the  only  buyer,  *as  was  inti- 
mated in  the  question  asked  by  Mr.  Phillips,  what  would  become  of  the 
product  if  they  did  not  buy?  A.  Well,  it  would  mean  failure  *all  around;  a 
general  break  up. 

Q.  The  prostration  of  business?  A.  The  prostration  of  business,  and 
bankruptcy  at  once. 

*Q.   Idleness  of  employes?     A.     Yes,  sir. 

Q.  And  great  want  *and  great  disorder  in  your  country?  A.  Great  want 
would  ultimately   result   from   it;    yes,   sir. 

Q.  Now,  do  you  wish  the  commission  to  understand  that  in  your  judg- 
ment the  Standard  Oil  Company  has  been  a  large  factor  in  developing  this 
immense  oil  business  in  Pennsylvania  and  Ohio,  and  without  the  Standard 
Oil  Company  it  would  not  have  attained  its  present  enormous  proportions? 
A.  I  do  wish  to  be  understood  as  saying  everything  you  ask.  Without  the 
Standard  Oil  Company  you  would  have  no  oil  business  there  as  it  now  exists. 

Q.  You  think  the  business  would  be  on  a  very  much  smaller  scale?  A. 
I  think  the  business  would  be  on  a  very  much  smaller  scale,  *and  on  a  lower 
plane.  If  we  had  competition  as  it  existed  30  years  ago  we  would  have  no 
oil  business  as  it  exists  to-day. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Wasn't  that  in  its  very  infancy?  If 
any  railroad  had  complete  control  of  all  of  this  country  they  could  bring 
disorder  and  ruin  everywhere,  could  they  not  by  stopping?  A.  Well.  I  don't 
know  what  you  call  "infancy"  when  a  business  is  20  years  old;  *20  years 
old  is  not  its  infancy;   it  is  of  legal  age. 

Q.    (By    Vice-Chairman    PHILLIPS.)      The    pipe    line    business    did    not 


♦Black   facod   type  indicates   matter  omitted,  in  the  course  of  editing,  from   the 
official  report. 


580  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

come  into  existence  for  quite  a  number  of  years  after  the  discovery  of  oil, 
as  explained  by  you  yesterday.  A.  The  pipe  line  business  cuts  a  very  small 
figure,  indeed,  in  the  general  success  of  the  Standard  Oil  Company.  It  is 
but  one  of  the  lines  upon  which  it  was  successful. 

Q.  (By  Vice-Chaiiman  PHILLIPS.)  Could  it  exist  without  the  pipe  line 
system  *a  day — if  there  was  nothing  like  that  system?  A.  No;  but  it  is 
only  one  means  of  their  success.  Only  one  end  of  it.  Their  great  success 
is  due  to  their  mercantile  ability;  their  capacity  to  sell  and  find  markets. 

Q.  (By  Vice-Chairman  PHILLIPS.)  But  is  not  transportation  the  prin- 
cipal factor  in  their  great  success?  A.  I  don't  know  that  it  is.  I  am  not 
going  to  split  hairs  and  express  an  opinion  as  to  what  might  be  the  principal 
source;  the  general  result  is  that  we  have  an  oil  business  to-day  greater 
than  any  other  business  in  any  country  in  the  world,  with  large  capital  en- 
gaged, and  it  is  due  to  organization  and  the  aggregation  of  large  capital 
and  the  intergrity  and  industry  of  the  persons  who  manage  it. 

Q.  (By  Mr.  SMYTH.)  Don't  you  think  brains  come  in  there,  too?  A. 
Brains  come  in,  yes,  sir;  and  show  more  than  anything  else.  I  mean  to  say 
that  the  Standard  Oil  Company  was  unknown  when  the  pipe  lines  were  first 
organized;   they  came  as  strangers  into  the  business. 

Vice-Chairman  PHILLIPS.  1  am  authorized  by  the  commission,  Mr. 
Boyle,  to  extend  their  thanks  to  you  for  your  full  presentation  of  the  facts 
connected  with  the  petroleum   industry. 

The  testimony  of  Mr.  Boyle  was  then  concluded. 


CHAPTER  XXII. 

TESTIMONY  OF  MR.  ANDREW  D.  GALL,  OF  MONTREAL, 

CANADA,  PRESIDENT  OF  THE  GALL-SCHNEIDER 

OIL  COMPANY. 

The  testimony  of  Mr.  Andrew  D.  Gall,  of  Montreal,  Canada,  president 
of  the  Gall-Schneider  Oil  Company,  Limited,  was  farcical.  While  Mr.  Gall 
came  to  this  country  to  complain  to  a  commission  empowered  to  recommend 
legislation  to  Congress  and  to  the  several  States,  his  testimony  developed  the 
fact  that  his  complaint  was  against  acts  of  the  Canadian  Parliament,  which 
had  imposed  a  tariff  on  importations  of  oil  from  the  United  States  in  order 
to  protect  the  Canadian  industry;  and  also  against  Canadian  railroads,  the 
tariffs  of  which  he  regarded  as  excessive. 

The  witness  found  himself  in  a  predicament  when  it  was  shown  that 
the  price  of  crude  oil  in  Canada  was  high  when  he  testified,  being  $1.60  a 
bari'el.  It  had  increased  in  price  20  cents  a  barrel  since  the  Standard  had 
entered  that  market.  He  showed  that  $1.60  a  barrel  was  higher  than  oil 
had  been  at  any  time  since  1896,  when  for  a  short  period  it  was  still  higher. 
In  January,  1895,  crude  oil  was  $1.16  per  barrel.  The  complaint  of  the  com- 
petitors of  the  Standard  Oil  Company,  who  testified  before  the  commission, 
was  that  the  price  of  crude  oil  had  been  forced  down  by  the  Standard  Oil  Com- 
pany. So  it  was  that  when  Mr.  Gall  was  asked  by  Vice-Chairman  Phillips 
whether  the  Standard  had  put  up  the  price  of  crude  oil  in  Canada,  he  found 
himself  "between  the  devil  and  the  deep  sea."  It  would  not  have  done  for  him 
to  have  said  "yes,"  for  that  would  not  have  been  in  accord  with  the  theory 
of  critics  of  the  Standard  Oil  Company.  He  could  not  say  "no"  unqualifiedly, 
because  he  was  forced  to  admit  that  the  Standard  Oil  Company  had  extended 
the  market  for  petroleum  in  Canada,  thus  increasing  the  demand.  He  could 
not  consistently  claim  that  the  increase  in  the  price  of  crude  petroleum  was 
altogether  the  result    of  the  tariff  of  five  cents  a  barrel,  for  the  reason  that 


*r?lack    faced   type   indicates   matter   omitted,  in  tiie  course  of  editing,   from   the 
offlcial  report. 


ANDREW  D.  GALL.  581 

previous  to  1896,  before  the  Standard  had  entered  the  refining  business  in 
Canada,  there  was  a  still  higher  tariff  on  crude  oil.  Mr.  Gall  answered 
practically  no  and  yes,  and  he  did  it  in  this  rather  ingenious  way: 

"Well,  no;  I  might  say  that  it  pays  the  Standard  Oil  Company  much 
better  to  refine  Canadian  oil  and  force  it  on  the  Canadian  market  than  it 
does  to  import  the  American  oil,  because  there  is  a  duty  of  five  cents  per 
gallon  on  all  oil  coming  into  Canada,  and  you  can  readily  see  that  it  pays 
them  far  better  to  pay  even  a  little  more  for  crude  and  force  the  people 
to  use  the  Canadian  product;  that,  I  think,  explains  that — as  far  as  I  can 
see  any  way." 

It  will  be  seen  that  I\Ir.  Gall  at  once  disclaims  the  idea  that  the  Standard 
Oil  Com.pany  had  anything  to  do  with  increasing  the  price  of  crude  pe- 
troleum in  Canada,  and  yet  his  answer  clearly  intimates  his  belief  that  the 
increase  of  that  price  was  by  and  for  the  benefit  of  the  Standard,  being,  in 
fact,  to  allow  it  to  enforce  its  dire  purpose  of  making  the  Canadians  use  an 
inferior  oil.  In  other  words,  this  inconsistent  statement  in  effect  is:  In  the 
first  place  the  Standard  did  not  increase  the  price  of  crude  petroleum  in 
Canada;  in  the  second  place  the  Standard  did  increase  it  for  its  selfish  pur- 
poses. Mr.  Gall  admitted  that  Canadian  subsidized  roads  uniformly  maka 
rates  to  the  disadvantage  of  American  products. 

Mr.  Gall  had  really  answered  Vice-Chairman  Phillips'  question  regarding 
the  cause  of  the  increase  of  the  price  of  crude  oil  in  Canada  before  it  was  put 
to  him.  He  did  that  by  saying  the  consumption  "may  have  been  somewhat  in- 
creased as  no  doubt  they  have  been  selling  crude  oil  for  other  purpo?es  than 
those  for  which  it  was  sold  previous  to  that,  etc."  This  answer  was  an  admis- 
sion of  what  has  been  claimed  by  witnesses  not  in  direct  antagonism  to  the 
Standard  Oil  Company.  It  was  an  admission  that  the  Standard  Oil  Company 
had  extended  its  markets,  or,  in  the  words  of  Mr.  Gall,  had  sold  oil  "for 
other  purposes  than  those  for  which  it  was  sold  previous  to  that."  Sen- 
sible men  will  readily  see  that  the  favorable  conditions  in  Canada  enjoyed 
by  the  producers  of  oil  were  brought  about  to  a  large  extent  by  the  fact 
that  the  Standard  Oil  Company  extended  its  markets  by  finding  new  uses 
for  oil,  thus  increasing  the  demand.  The  testimony  taken  before  the  In- 
dustrial Commission  showed  that  the  Standard  had  extended  its  markets 
the  world  over  and  without  that  extension  in  the  use  of  petroleum  the 
natural  result  of  the  law  of  supply  and  demand  would  have  been  that  the 
producers  throughout  the  United  States  as  well  as  in  Canada  would  be  se- 
curing a  smaller  profit  on  their  oil  than  they  are  getting  to-day. 

Mr.  Gall  asserted  in  his  testimony  that  the  Standard  Oil  Company  did 
not  allow  anyone  but  themselves  to  handle  Canadian  oil.  This  assertion 
was  eliminated  from  his  testimony.  This  testimony,  according  to  the 
stenographic  report  and  as  shown  in  the  official  report  follows: 

STENOGRAPHIC  REPORT.  OFFICIAL  REPORT  (p.  677). 
Q.  (By  Mr.  FARQUHAR.)  You  Q.  (By  Mr.  FARQUHAR.)  You 
mean  on  Canadian  oil?  A.  Any  oil;  mean  on  Canadian  oil?  A.  Any  oil; 
there  is  nobody  else  handling  Ca-  there  is  nobody  else  handling  Ca- 
nadian oil  except  themselves,  and  nadian  oil  except  themselves.  You 
they  don't  allow  anybody  else  to  cannot  buy  a  gallon  of  oil  unless  they 
handle  it.  You  cannot  buy  a  gallon  see  fit  to  sell. 
of  oil  unless  they  see  fit  to  sell  it. 

In  order  to  have  been  correct  in  his  statement,  Mr.  Gall  should  have 
said:  "You  cannot  buy  a  gallon  of  oil  handled  by  them  unless  they  see  fit  to 
sell  it."  He  had  already  testified  as  to  the  large  importations  of  oil,  refined 
by  the  "independents,"  from  the  United  States  into  Canada.  He  might 
have  gone  still  further  and  have  said  that  nothing  could  have  been  bought 
in  Canada,  as  in  the  United  States,  from  anybody  unless  they  should  see  fit 
to  sell  it,  with  the  single  exception  of  purchases  under  condemnation  pro- 
ceedings. He  might  have  said  that  "you"  could  not  buy  Pears'  soap  or 
Royal  baking  powder  or  anything  else  except  in  accordance  with  the  willing- 


582  REVIEW  OP  TESTIMONY— INDUSTRIAL  COMMISSION. 

ness  of  the  owner  to  sell  it.  The  fact  that  he  did  buy  oil  from  the  Standard 
Oil  Company  was  simply  because  that  company  offered  him  a  better  bar- 
gain, considering  both  the  price  and  the  quality  than  he  could  secure  else- 
where. Here  again  was  a  grievance  based  on  the  fact  that  the  Standard  Oil 
Company  outbid  its  competitors  in  the  sale  of  oil,  or  sold  oil  so  cheaply  that 
no  capitalist,  apparently,  saw  fit  to  engage  his  capital  in  an  attempt  to  com- 
pete in  the  markets  against  them.  Oil  could  be  transported  into  Canada 
by  anyone  under  conditions  fixed  by  the  Canadian  Parliament,  and  Mr.  Gall 
said  that  he  was  not  yet  ready  to  admit  that  the  Standard  Oil  Company 
owned  the  Canadian  Parliament. 

He  complained  that  he  could  not  get  their  goods  "to  handle,"  or  in 
other  words  that  as  wholesale  dealers  they  declined  to  let  him,  as  a  whole- 
sale dealer,  dispose  of  the  product  they  refined.  His  testimony  could  mean 
nothing  else,  for  of  course  he  would  be  at  liberty  to  buy  oil  from  the 
Standard  Oil  Company,  as  would  any  other  dealer.  His  subsequent  testi- 
mony practically  admitted  that  to  be  the  case.  Mr.  Gall  would  probably 
meet  a  good  deal  of  difficulty  in  finding  any  other  manufacturers  who  would 
be  willing  to  turn  their  product  over  to  him  at  cost  of  production.  He  said 
that  anyone  could  buy  Canadian  crude  petroleum  and  refine  it  for  them- 
selves, but  people  would  hesitate  doing  so,  because  they  feared  the  competi- 
tion of  the  Standard. 

According  to  Mr.  Gall,  the  Standard  Oil  Company  has  certainly  made 
enormous  profits  since  it  has  gone  to  Canada  and  engaged  in  the  oil  refining 
business.  He  stated  that  in  the  last  three  months  that  company  had  made 
ten  times,  if  not  more,  than  they  had  spent  in  the  last  10  years  in  Canada. 
As  practically  their  entire  investment  in  Canada  was  made  in  the  last  10 
years,  this  gives  a  profit  of  1,000  per  cent,  on  their  investment  every  three 
months,  or  4,000  per  cent,  per  annum.  Such  a  result  ought  to  encourage 
enterprising  Americans  to  investigate  the  possibilities  of  business  success 
in  other  lines  of  commerce  in  Canada.  This  success  resulted  in  spite  of  the 
reckless  extravagance  of  the  Standard  Oil  Company,  which  paid,  Mr.  Gall 
said,  $65,000  for  a  refinery  that  was  not  worth  $10,000.  That  was  only  one 
instance  of  unbusinesslike  methods.  For  some  reason  this  valuable  testi- 
mony given  by  Mr.  Gall  in  relation  to  the  4,000  per  cent,  profit  of  the 
Standard  Oil  Company  in  Canada  does  not  appear  in  the  oflRcial  report  of 
the  testimony.  He  showed  that  since  the  Standard  began  a  refining  busi- 
ness in  Canada,  crude  oil,  nearly  all  of  which  he  showed  was  produced  by 
Canadians  or  "independents,"  had  advanced  from  $1.40  per  barrel  to  $1.60 
per  barrel. 

He  said  his  company  was  a  marketing  company  exclusively,  dealing  in 
petroleum  products  imported  into  Canada  from  the  United  States.  He 
regarded  the  Standard  Oil  Company  as  responsible  for  the  disadvantages  he 
labored  under  in  the  importation  of  oil  into  Canada.  He  admitted  that  he 
had  been  told  that  the  policy  of  the  Canadian  railroads  was  to  protect 
Canadian  products  by  discriminating  against  importation  of  American  oil. 
When  asked  by  Mr.  Clarke  whether  he  thought  the  Standard  Oil  Company 
ran  the  Canadian  railroads  and  the  Canadian  government,  he  replied:  "At 
the  present  time  I  would  not  say  that  much  about  the  government,  because 
I  expect  to  have  these  things  regulated  a  little;  but  they  run  the  railways; 
that  is  sure."  While  Mr.  Gall  did  not  charge  the  Standard  Oil  Company  with 
"running"  the  Canadian  government,  his  language  would  indicate  that  he 
was  not  sure  that  it  does  not  do  so. 

Mr.  Gall  said  he  was  engaged  in  marketing  petroleum  products,  gener- 
ally and  principally  in  the  Province  of  Quebec,  Canada,  handling  American 
oil  almost  exclusively.  The  production  of  oil  in  Canada  was  confined  almost 
entirely  to  Western  Ontario  and  was  largely  in  the  hands  of  private  individ- 
uals. The  Standard  Oil  Company  did  not  own  a  great  number  of  oil  wells 
in  Canada  before  it  secured  control  of  the  Imperial  Oil  Company,  of  Canada. 
The  Imperial  Oil  Company  controlled  about  25  per  cent,  of  the  production  of 
crude  oil  in  Canada,  the  total  production  of  oil  there  amounted  to  about 
750,000  or  800,000  barrels,  of  .35  imperial  gallons  each,  per  year.  He  consid- 
ered this  oil  inferior  to  the  Ohio  oil.  Mr.  Gall  gave  the  total  product  of  oil 
refineries  in  Canada,  as  follows:     1896,  21,176,682  gallons,  valued  at  $1,792,- 


ANDREW  D.  GALL.  583 

ii90;   1898,  21,153,192  gallons,  valued  at  $1,723,293.     These  figures  were  con- 
tained in  the  official  report  of  the  Canadian  Department  of  Agriculture. 

The  Standard  Oil  Company,  he  said,  refines  all  of  the  crude  petroleum 
that  is  refined  in  Canada  and  it  had  controlled  the  refining  of  oil  in  Canada 
since  August,  1898.  Before  the  Standard  Oil  Company  got  control  of  the 
Canadian  business,  he  said,  there  were  five  refineries  in  active  operation 
and  four  that  were  not  active,  although  they  were  not  closed  up.  With  the 
exception  of  the  Imperial  Company's  works  at  Petrolea,  all  of  these  refiner- 
ies had  been  dismantled.  Most  of  the  material  from  the  dismantled  re- 
fineries had  been  broken  up,  sold  as  old  scrap  or  removed  to  the  Standard's 
works  at  Sarnia,  Ontario.  He  thought  the  production  of  oil  in  Canada  had 
probably  increased,  as  the  Standard  had  been  selling  oil  for  purposes  other 
than  those  for  which  it  had  formerly  been  used. 

Mr.  Gall  said  that  in  1898  the  percentage  of  oil  refined  in  Canada  was 
61.1  per  cent,  of  the  entire  consumption  of  Canada,  the  American  refined  oil 
being  38.9  per  cent,  of  the  consumption  there.  In  1881  there  was  only  6.9 
per  cent,  of  American  refined,  while  there  was  92.1  per  cent,  of  Canadian 
refined  oil  used  in  Canada.  The  total  consumption  had  greatly  increased 
from  1881  to  1898.  While  the  Canadian  crude  product  had  increased,  the 
percentage  of  importation  from  the  United  States  had  also  increased. 

The  following  testimony  was  in  reference  to  the  statements  by  the  wit- 
ness to  the  effect  that  the  Standard  Oil  Company  had  secured  the  control  of 
the  refining  of  oil  in  Canada: 

Q.  (By  Professor  JENKS.)  So  that  while  this  refining  of  oil  has  been 
concentrated  into  the  hands  of  one  management,  the  total  output  has  not 
been  lessened?  A.  No,  I  don't  think  it  has  been  lessened.  It  may  have  been 
somewhat  increased  as  no  doubt  they  have  been  selling  crude  oil  for  other 
purposes  than  those  for  which  it  was  sold  previous  to  that;  they  have  made 
same  changes  in  that  respect,  which  may  have  increased  it  somewhat,  but 
not  very  much. 

Q.  (By  Mr.  SMYTH.)  I  suppose  there  is  as  much  oil  refined  as  there  is 
demand  for  it  in  Canada?     A.  Oh,  no,  sir. 

Q.  There  is  demand  for  more  refined  oil  than  is  offered  on  the  market? 
A.  Oh,  much  more. 

Q.  (By  Professor  JENKS.)  About  what  proportion  of  the  oil  that  is 
used  in  Canada  is  refined  there,  and  how  much  is  imported  from  the  United 
States?  A.  I  take  both  the  Canadian  and  imported,  for  the  years  ending 
June  30,  from  1881  to  1898.  In  1898  the  percentage  of  Canadian  was  61.1, 
and  the  percentage  of  the  American  or  imported,  which  is  altogether  Amer- 
ican— no  oil  is  brought  in  from  elsewhere — was  38.9  per  cent.;  I  mean  to 
say,  of  the  consumption  in  Canada. 

*Q.  That  much  is  American  oil?  A.  Yes,  sir.  In  1881  there  was  only 
6.9  per  cent,  of  American  oil,  and  92.1  per  cent,  of  Canadian. 

Q.  (By  Mr.  SMYTH.)  How  do  the  total  quantities  compare?  The  per- 
centages vary;  are  the  total  quantities  any  larger?  A.  Oh,  they  are  much 
larger  in  1898;  for  instance,  in  1881  the  number  of  gallons  of  Canadian  oil 
was  6,406.783,  while  in  1898  it  was  10,796.847  gallons. 

Q.  (By  Professor  JENKS.)  The  Canadian  output  then  is  also  largely 
on  the  increase,  but  the  demand  for  it  simply  outruns  the  supply?  A. 
Yes,  sir. 

Q.  So  that  they  are  getting  more  and  more  from  the  United  States  all 
the  time?     A.  Yes.,  sir. 

Q.  Can  you  give  us  some  information  in  reference  to  the  course  of 
prices  for  the  last  three  or  four  years,  so  that  we  can  see  whether  the  pur- 
chase of  these  companies*  by  the  Standard  Oil  Company  has  had  any  effect 
on  prices?  A.  Well,  I  have  invoices  here  dating  all  the  way  back  to  1892. 
of  the  old  Imperial  Oil  Company,  which  is  at  the  present  time  the  Standard 
Oil  Company.  In  September,  1892,  they  were  selling  oil  for  1214  cents,  de- 
livered in  St.  Johns,  Quebec. 

Q.  That  is  the  refined  product,  of  course?  A.  Refined  in  ban-els,  while 
the  cost  af  barreling  and  inspection  is  estimated  to  be  about  2^2  cents,  *and 


*Black  faced  type  indicates  matter   omitted,  in  the  course  of  editing,  from  the 
ofTicial  report. 


584  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

*the  freight  from  Petrolea  to  St.  Johns  is  21/2  cents,  or  say  21/2  cents  addi- 
tional; that  would  mean  that  you  deduct  5  cents  from  the  12V2  cents,  or  TVa 
cents  in  bulk  f.  o.  b.  Petrolea.  In  1894,  it  was  delivered  in  St.  Johns  for  11 
cents,  that  is,  in  barrels,  freight  paid.  I  may  say  that  that  first  one  was 
July.  1894,  and  then  in  September,  1894,  it  was  still  11  cents.  In  April,  1896, 
it  was  14%  cents,  delivered  at  St.  Johns. 

Q.  That  was  before  the  Standard  Oil  Company  had  bought  any?  A. 
Oh,  yes.  sir;  previous  to  that  time.  In  September,  1897,  it  was  13%  cents, 
delivered  at  St.  Johns,  in  barrels.  In  May,  1898,  that  was  a  month  or  two 
previous  to  the  time  they  got  control  of  it,  it  was  121/2  cents.  To-day  it  is 
17  centst  in  barrels,  delivered  at  St.  Johns. 

*Q.  (By  Mr.  CLARKE.)  Is  that  St.  Johns,  P.  Q.,  or  St.  Johns,  Nova 
Scotia?     A.  St.  Johns,  P.  Q. 

Q.  (By  Mr.  FARQUHAR.)  Do  you  know,  then,  Mr.  Gall,  what  the 
prices  of  crude  petroleum  were  at  that  11-cent  time,  and  the  13-cent  and  17- 
cent  time?  A.  Well,  I  will  just  give  you  those  here;  I  have  them  from  a 
large   producer   of  petroleum   under   date  of   October   30   last.     In   January, 

1895,  the  price  was  $1.16  per  barrel;  in  June,  1895,  it  was  $1.53;  in  January, 

1896.  it  was  $1.72;  in  June,  1896,  it  was  $1.70;  in  January,  1897,  it  was  $1.50; 
in  June,  1897,  it  was  $1.40;  January,  1898,  $1.40:  June,  1898.  $1.40;  January, 
1899,  $1.40;  June,  1899.  $1.45;   and  the  present  price  is  $1.60. 

Q.  The  present  price?  A.  Yes.  sir.  I  have  here  the  average  prices  for 
those  years,  if  you  would  like  to  have  them. 

Q.  (By  Professor  JENKS.)  Can  you  give  us  the  price  of  refined  oil,  say 
at  the  beginning  of  this  year,  1899.  *You  did  not  give  it  to  us  there,  and  I 
thought  perhaps  you  had  it  in  memory  well  enough.  You  gave  the  present 
price  at  17  and  a  little  further  on  in  1898,  121/2. 

The  WITNESS.     Let  me  see  if  I   have  that. 

Professor  JENKS.  What  I  want  is  the  price  of  the  refined  that  corre- 
sponds to  the  price  of  the  crude  at  the  beginning  of  this  year. 

The  WITNESS.  Well,  I  have  no  invoices  that  I  can  show  you  covering 
that  time,  but  I  have  a  memorandum  here;  this  is  the  retail  price.  Of 
course  it  is  pretty  hard  to  go  by  that.  In  January  of  this  year  it  is  quoted 
at  14  cents,  and  February,  HVo  cents. 

Q.  (By  Professor  JENKS.)  And  the  present  price,  you  said,  from  your 
invoice,  was  17^/4?  A.  No,  I  have  no  invoice  to  that  effect,  but  17  cents  is 
the  price  of  Canadian  oil  to-day. 

*Q.  That  is  by  the  barrel?     A.   In  barrels;   yes,  sir. 

Q.  So  this  decided  change  in  price  has  been  during  the  latter  part  of 
this  year?    A.  Yes,  sir. 

Q.  And  when  the  price  of  crude  was  about  $1.45,  the  price  was  down  to 
14,  or  possibly  less  than  that,  by  the  barrel?  *A.  Well,  yes,  sir;  according 
to  those. 

Q.  And  when  the  crude  went  up  to  $1.60,  then  the  price  went  up,  you 
say,  to  17  cents?     A.   These  were  recently;   this  crude  at  $1.60  was  recently. 

Q.  And  how  long  is  it  since  the  refined  went  up  to  17  cents?  A.  That 
has  been  recently,  too. 

Q.  Then,  the  facts  seem  to  be  that  the  price  of  the  refined  has  gone  up 
about  the  same  time  as  the  price  of  crude?     A.  Nearly  so. 

Q.  Would  you  say  that  it  has  gone  up  proportionately  or  more  than  pro- 
portionately? A.  I  am  not  familiar  enough  with  the  refining,  and  do  not 
know  enough  about  it,  to  say. 

Q.  They  simply  have  gone  together?     A.  Yes,  sir. 

He  said  it  was  claimed  that  the  increase  in  the  price  of  refined  oil  in 
Canada  is  due  to  the  control  of  the  refining  by  the  Standard  Oil  Company. 

Q.  (By  Vice-Chairman  PHILLIPS.)  And  do  they  make  a  similar  claim 
as  to  the  increase  in  the  price  of  the  crude — that  the  Standard  Oil  Company 
has  put  up  the  price  of  the  crude?  A.  Well,  no;  I  might  say  that  it  pays  the 
Standard  Oil  Company  much  better  to  refine  Canadian  oil  and  force  it  on 
the  Canadian  market  than  it  does  to  import  the  American  oil,  because  there 


i"l~y2  cents"  in  the  official  report. 

♦Black   faced   tjpe  indicates  matter   omitterl,  in  the  course  of  editing,   from   the 
official  report. 


ANDREW  D.  GALL.  585 

is  a  duty  of  five  cents  per  gallon  on  all  oil  coming  into  Canada,  and  you 
can  readily  see  that  it  pays  them  far  better  to  pay  even  a  little  more  for 
crude  and  force  the  people  to  use  the  Canadian  product.  *That,  I  think, 
explains  that — as  far  as   I   can  see,  anyway. 

Q.  (By  Vice-Chairman  PHILLIPS.)  There  have  been  some  charges 
made  in  the  papers  during  the  last  few  months  in  reference  to  freight  dis- 
criminations in  Canada  in  favor  of  the  Standard  Oil  Company.  Can  you 
give  us  any  information  on  that  subject?  A.  Yes,  the  Sun  Oil  Refining 
Company.  Limited,  of  Hamilton,  Ontario,  and  ourselves  laid  a  complaint 
before  the  Railway  Committee  of  the  Privy  Council  regarding  this  matter 
some  time  in  January  last.  The  complaint  was  heard  by  the  Railway  Com- 
mittee in  February,  and  at  that  time  we  were  complaining  principally  of  the 
discrimination  in  freight  rates  on  local  shipments  on  Canadian  oil  as  against 
American.  We  also  complained  on  the  through  freight  rates  from  Black 
Rock,  where  it  enters  Canadian  territory,  to  Montreal  and  other  points.  So 
far  as  that  investigation  was  concerned,  the  railways  raised  the  objection 
that  the  Railway  Committee  had  no  jurisdiction  over  foreign  freight,  or  at 
least  freight  originating  in  foreign  countries,  though  they  decided  after- 
wards that  they  did  have  jurisdiction  over  it.  On  the  local  freight  rate  they 
threw  up  their  hands  and  admitted  that  they  were  in  the  wrong.  It  was  a 
put-up  job  from  the  start,  and  it  was  about  time  that  they  admitted  it.  For 
instance,  I  went  out  and  bought  a  barrel  of  Canadian  oil  and  shipped  it  to 
George  L.  Meikle  Company,  of  La  Shutte.  On  the  Canadian  oil  I  paid  77 
cents  freight.  Taking  the  barrels  at  450  pounds,  that  was  at  the  rate  of  17 
cents  per  100  pounds.  On  a  barrel  of  American  oil  I  paid  $1.08,  at  the  rate- 
of  24  cents  per  100  pounds.  Here  are  the  original  bills  of  lading,  signed  and 
receipted.  I  also  shipped  a  barrel  of  each  kind  to  St.  Johns,  Quebec.  On 
the  American  I  paid  $1.08  for  the  barrel,  or  24  cents  per  100  pounds;  on  the 
Canadian,  I  paid  54  cents  per  barrel,  or  at  the  rate  of  12  cents  per  100 
pounds.     A  more  glaring  injustice  never  existed. 

Q.  (By  Vice-Chairman  PHILLIPS.)  When  you  delivered  this  oil  at  the 
station,  did  you  put  the  brands  on  the  barrel?  A.  We  had  to  say  whether  it 
was  American  or  Canadian  oil. 

Q.  (By  Vice-Chairman  PHILLIPS.)  And  they  simply  made  their  freight 
bills  agree.  A.  They  simply  made  their  freight  bills  agree,  and  you  had  to 
mark  on  your  freight  bills  whether  it  was  Canadian  oil  or  American  oil. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Before  that  time  had  they  been 
shipped  at  the  same  rate?  A.  Yes,  sir;  whether  American  or  Canadian — it 
was  shipped  in  the  usual  way  at  the  same  rate  of  freight. 

Q.  (By  Vice-Chairman  PHILLIPS.)  And  this  is  simply  a  new  rating 
made  by  the  Canadian  roads?  A.  A  new  rating  made  by  the  Canadian 
roads,  and  that  was  simply  at  the  instigation  of  the  Standard  Oil  Trust  to 
prevent  us  from  marketing  our  goods  at  local  points.  Not  satisfied  with 
increasing  the  through  freight  rate,  they  wanted  to  cripple  us  further  by 
charging  for  the  American  oil  double  what  they  were  paid  for  the  Cana- 
dian oil. 

Q.  (By  Vice-chairman  PHILLIPS.)  What  makes  you  think  that  the 
Standard  Oil  Company  was  back  of  that?  *Can  you  see  why  it  was  to  the 
advantage  of  the  Standard  Oil  Company  to  use  the  railroads  to  do  that? 
A.  They  had  gotten  control  of  the  Canadian  business,  and  were  anxious  to 
force  the  people  to  use  Canadian  oil.  They  wanted  to  make  it  compulsory, 
or  fix  it  so  that  they  couldn't  get  American  oil,  *and  make  them  use  the 
Canadian  oil,  because  it  pays  them  so  much  better  to  refine  it. 

Q.  (By  Mr.  CLARKE.)  Were  both  of  these  shipments  over  the  Grand 
Trunk  Railway?     A.  No.  sir;  the  Canadian  Pacific. 

Q.  On  what  roads  were  these  discriminations  made  against  American 
oil?    A.  Both  roads,  the  Grand  Trunk  and  the  Canadian  Pacific. 

Q.  On  any  others?  A.  Well,  we  have  a  number  of  small  railways,  but 
the  Grand  Trunk  and  the  Canadian  Pacific  are  really  the  only  roads  that  we 
ship  by.  In  fact,  they  are  the  only  roads  running  into  Montreal,  excepting 
a   few   that  have   the   privilege   of  entering  there,    such    as   the   New   York 


*Black  faced'  type   indicates   matter   omitteJ,  in  tlic  course  of  editing,  from  the 
official  report. 


586  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

Central,  and  the  Delaware  &  Hudson  River,  and  some  others,  but  they  come 
in  over  the  Grand  Trunk  or  the  Canadian  Pacific  tracks. 

The  witness  said  that  the  Michigan  Central  "did  not  go  in  for  increas- 
ing these  freight  rates,"  and  as  a  result  "they  told  our  people  that  the 
Standard  Oil  Trust  had  taken  all  their  freight  away  from  the  Michigan  Cen- 
tral." This  information  came  to  him  from  one  of  the  railway  officials,  but 
he  was  not  prepared  to  say  who  it  came  from.  Not  being  satisfied  with 
the  freight  rates,  the  Gall-Schneider  Oil  Company  took  the  matter  to  the 
Minister  of  Railways  and  Canals  for  consideration,  and  received  the  follow- 
ing reply: 

OfRce  of  the  Minister  of  Railways  and  Canals. 

Ottawa,  15th  May,  1899. 
Gentlemen — I  have  your  favor  of  the  12th  May  before  me  and  note  its  contents. 
If  you  have  found  any  good  reason  to  believe,  as  1  infer  you  have,  that  the  C.  P.  R. 
and  the  G.  T.  R.  are  carrying-  the  Standard  Oil  Company's  products  at  a  lower  figure 
than  they  are  proposing  to  charge  you,  and  if  you  make  sucli  an  allegation  and  ask 
us  to  investigate  it,  the  Railway  Committee  will  summon  such  witnesses  to  Ottawa 
as  you  may  think,  or  we  conclude,  will  on  oath  be  compelled  to  acknowledge  the 
facts.  We  will  not  permit  the  C.  P.  R.  or  G.  T.  R.,  or  any  other  railway,  to  tell  us 
that  it  is  none  of  the  business  of  the  public  to  ascertain  whether  there  is  discrimina- 
tion or  preference.  It  is  essentially  our  business  to  see  that  it  is  not  permitted.  I 
will  have  the  Deputy  Minister  ascertain,  beyond  this,  whether  there  are  any  facts  in 
his  possession  with  regard  to  the  tariff,  or  which  he  can  procure,  of  which  I  can 
acquaint  you. 

Tours  faithfully, 

ANDW.   G.   BLAIR. 
,  Gall-Schneider  Oil  Company,  Montreal. 

The  joint  complaint  of  the  Sun  Oil  Refining  Company.  Limited,  of  Ham- 
ilton, and  the  Gall-Schneider  Oil  Company,  Limited,  to  the  Raihvay  Com- 
mittee of  the  Privy  Council,  dated  June  7,  1899,  was  read  by  the  witness. 
This  complaint  was  against  the  Grand  Trunk  and  the  Canadian  Pacific  Rail- 
way Companies,  of  Canada,  the  charges  being: 

1.  The  said  railway  companies,  under  like  conditions  and  circumstances  are  mak- 
ing unjust  and  partial  discriminations  between  different  localities. 

2.  The  said  railway  companies  are  giving  secret  special  toll  rates,  rebates  and 
concessions  to  th_>  Standard  Oil  Company  and  persons  and  corporations  affiliating 
witli  them  on  freight  carried  over  their  respective  roads. 

3.  The  said  railway  companies  have  been,  since  October  1  last,  and  are  at  the 
present  time,  discriminating  with  regard  to  freight  rate  charges  in  favor  of  the 
Standard  Oil  Company,  and  others  affiliating  with  thom,  against  independent  ship- 
pers, and  all  oils  shipped  to  tlie  Standard  Oil  Company  and  said  other  persons  and 
companies  from  all  points  in  the  United  States  coming  into  Canada  are  carried  at  a 
less  rate  of  freiglit  than  the  same  class  of  goods  shipped  by  the  independent  refiners 
competing  against  the  Standard  Oil  Company  and  said  other  companies. 

4.  The  said  companies  are  at  present,  and  have  been  since  October  1  last,  charging 
35  cents  per  100  pounds  from  Buffalo  and  Suspension  Bridge  to  Montreal,  as  per  iheir 
tariff  issued  at  Montreal,  while  the\-  charged  only  25  cents  per  100  pounds  from  Sar- 
nia  to  Montreal  on  the  same  class  of  goods,  notwithstanding  the  fact  that  the  dis- 
tance from  Sarnia  to  Montreal  is  77  miles  more  than  that  from  Suspension  Bridge  to 
Montreal. 

5.  On  all  oils  shipped  from  Buffalo  and  Suspension  Bridge  to  Montreal  by  the 
Standard  Oil  Company  and  its  connections  the  said  railway  companies  are  giving  a 
secret  rebate  or  reduction. 

0.  Shippers  not  connected  with  the  Star.dard  Oil  Company  and  its  connections  are 
charged  on  shipments  from  Suspension  Bridge  to  St.  Johns,  New  Brunswick,  on  car- 
load lots,  45  cents  per  100,  while  shippers  from  Sarnia  are  charged  30  cents  per  100, 
although  the  distance  from  Sarnia  is  77  miles  greater  than  from  Suspension  Bridge  to 
St.  Johns,  New  Brunswick. 

7.  On  all  other  points  on  the  international  boundary  to  w^hich  shipments  of  nil  are 
made,  the  same  discrimination  was  made  in  favor  of  and  rebates  given  to  the  Stand- 
ard Oil  Company  and  companies  and  persons  affiliating  with  them,  against  their 
competitors. 

I'y  reason  of  the  facts  herein- complained  of,  your  complainants  have  sustained 
loss  and  are  greatly  impeded  in  the  transaction  of  their  business. 

9.  Your  complainants  therefore  submit  that  an  order  should  be  made  directing 
the  said  railway  companies  to  discontinue  those  illegal  acts,  and  to  refund  all  over- 
charges which   they   have  so   collected   from  jinir  said  complainants. 

Mr.  Gall  said  they  had  not  yet  established  the  fact  that  rebates  had 
been  paid  to  the  Standard  Oil  Company. 


ANDREW  D.  GALL.  587 

After  the  witness  had  charged  that  the  Standard  Oil  Company  was 
receiving  lower  rates  of  freight  in  Canada  than  the  so-called  "independents" 
the  following  testimony  was  given: 

Q.  (By  Mr.  FARQUHAR.)  You  mean  on  Canadian  oil?  A.  Any  oil, 
there  is  nobody  else  handling  Canadian  oil  except  themselves,  *and  they 
don't  allow  anybody  else  to  handle  it.  You  cannot  buy  a  gallon  of  oil  unless 
they  oee  fit  to  sell  it. 

Q.  (By  Professor  JENKS.)  Do  you  know  whether  they  refine  and  sell 
American  oil  to  anyone;  for  instance,  have  you  offered  to  buy?  A.  I  have, 
and  they  have  refused  to  sell  *me  anything,  either  the  Lima  oil  or  any  of 
their  products. 

Q.  As  a  matter  of  fact,  you  cannot  get  their  product?  A.  No,  and  we 
cannot  get  any  of  the  other  oil  to  handle  unless  we  buy  it  from  the  outsider. 

Q.  Does  this  same  fact  in  reference  to  their  refusing  their  products 
apply  to  the  Sun  Oil  Company,  of  Hamilton?  A.  Yes,  sir;  precisely  the 
same. 

Q.  And  to  all  others  except  those  that  are  formally  recognized  as  their 
agents?     A.  Yes.  sir;   or  who  buy  exclusively  from  them. 

Q.  Have  you  any  knowledge  of  the  fact  that  they  insist  upon  dealers 
making  an  agreement  that  they  will  only  buy  from  them?     A.  Yes,  sir. 

Q.  You  have  positive  information  of  that  fact?  A.  Yes,  sir.  They  have 
asked  me  two  or  three  different  times,  or  sent  men  to  ask  us  to  buy  all  our 
stuff  from  them,  and  stop  this  inquiry,  and  all  that  kind  of  thing;  which  of 
course  we  refused  to  do. 

Q.  (By  Representative  LIVINGSTON.)  What  inducement  did  they  offer 
you  to  do  that?  A.  They  wanted  to  charge  us  about  twice  what  the  stuff 
was  worth,  and  to  cripple  us  as  soon  as  they  could.  That  was  about  the 
inducement,  I  think,  but  they  didn't  put  it  in  that  form.  They  offered  us 
no  inducement  whatever. 

Q.  (By  Mr.  FARQUHAR.)  Is  there  evidently  a  policy  on  the  part  of  the 
Canadian  roads  to  build  up  the  Canadian  oil  trade  there,  as  against  the 
American  products  by  making  the  rates  they  do?  A.  I  asked  Mr.  Bostwick, 
the  general  freight  agent  of  the  Canadian  Pacific,  that  same  question  and 
he  replied  that  they  wanted  to  protect  the  Canadian  industries. 

Q.  Has  it  not  been  the  plan  of  the  government  at  Ottawa  all  the  time 
to  discriminate  as  much  as  they  can  against  the  American  product?  A.  In 
past  years  it  has  been,  but  I  cannot  saf  that  it  has  been  under  the  present 
government. 

Q.  Is  it  not  of  advantage  to  the  Grand  Trunk  and  the  Canadian  Pacific 
to  take  a  through  rate  on  a  short  haul  on  the  Canadian  lines,  in  preference 
to  prorating  with  the  American  lines  in  competition  south  of  the  St.  Law- 
rence? A.  I  cannot  see  where  it  comes  in,  because  on  oils  it  is  only  a  dis- 
tance of  75  miles  less. 

Q.  (By  Representative  LIVINGSTON.)  Is  it  not  done  as  a  retaliatory 
measure?     A.  No.  sir;   1  do  not  think  it  is. 

Q.  (By  Mr.  FARQUHAR.)  Has  it  not  been  the  policy,  as  announced  in 
the  Canadian  press  and  declared  by  your  ministers,  to  take  care  of  your 
home  products,  as  against  anything  imported  across  the  line?  A.  It  was 
previous  to  the  present  administration.  I  cannot  say  that  such  is  the  case 
at  the  present  time. 

Q.  Do  not  the  two  roads  there  that  are  backed  up  by  foreign  capital, 
Canadian  capital,  one  subsidized,  uniformly  make  rates  to  the  Canadians  to 
the  disadvantage  of  Americans?  A.  That  is  what  it  is,  if  you  look  at  it  in 
that  way. 

The  witness  said  that  anyone  can  buy  and  refine  crude  petroleum  in 
Canada  and  that  very  little  of  the  crude  product  is  produced  by  the  Stand- 
ard Oil  Company;  men  connected  with  the  Standard  Oil  Company  produce 
oil.  Anyone  familiar  with  the  Standard  Oil  Company's  operations  there 
would  hesitate  starting  a  refinery  because  of  a  fear  of  their  competition. 
He  said  there  was  also  an  uncertainty  about  the  duty  on  refined  petroleum 
being  continued  by  the  government,  and  if  that  duty  should  be  removed,  he 


♦Black  faced  type   indicates   matter  omitted,  in  the  course  of  editing,  from   tlie 
official  report. 


588  REVIEW  OP  TESTIMONY— INDUSTRIAL  COMMISSION. 

said,  a  refinery  in  Canada  would  not  be  worth  mucli.  He  thought  the 
Standard  had  the  railroads  of  Canada  under  their  control.  He  merely  made 
this  statement,  based  on  his  suspicion,  and  offered  no  testimony  to  sustain  it. 

*IVlr.  GALL.  As  I  said,  they  (the  Standard)  have  made  in  the  last  three 
months  ten  times,  if  not  more,  than  they  have  ever  spent  in  the  last  10  years 
in  Canada. 

Q.  (By  Mr.  SMYTH.)  How  do  you  figure  that  out  if  the  price  of  crude 
oil  has  advanced  to  $1.60  as  against  $1.40  and  $1.30.  A.  Of  course,  as  I  said 
before,  I  do  not  know  very  much  about  the  refining  part  of  it,  but  it  strikes 
me  that  a  difference  of  20  cents  a  barrel  does  not  warrant  an  advance  of  five 
or  six  cents  a  ^-allon  on  the  refined  product. 

Q.  But  it  has  only  been  an  advance  from  14i/4  *to  17  cents.  That  is  not 
five  or  six  cents?  A.  But  you  take  in  past  years  when  crude  was  a 
great  deal  higher  than  it  is  to-day,  and  the  price  of  oil  was  never  known  to 
be  as  high.     I  do  not  remember  of  oil  being  as  high  as  it  is  to-day. 

The  witness  said  the  Standard  Oil  Company  had  advanced  the  price  of 
crude  oil  in  order  to  increase  the  production,  as  there  was  a  larger  profit  in 
refining  Canadian  oil  than  there  would  be  in  importing  American  oil.  Pre- 
vious to  1896  the  tariff  on  crude  oil  shipped  into  Canada  was  seven  cents 
and  later  six  cents  a  gallon. 

Q.  (By  Mr.  FARQUHAR.)  So  the  remedy  needed  by  the  Canadians 
and  you,  as  handlers  of  this  petroleum  product,  lies  in  the  assistance  of  the 
government  in  establishing  a  tariff  that  will  admit  American  oil  there,  and 
will  bring  the  Standard  oil  price  down?  A.  The  remedy,  I  think,  lies  in 
that,  and  in  obliging  the  railways  to  carry  the  petroleum  products  *and 
other  things  at  a  reasonable  freight  rate. 

He  said  the  railroads  of  Canada  had  been  compelled  to  make  the  local 
rates  on  American  oil  the  same  as  on  Canadian  oil  and  that  the  only  dis- 
crimination that  now  remains  in  the  Canadian  rates  is  on  oil  that  is  im- 
ported where  there  is  a  through  rate  from  the  United  States.  After  October 
1,  1898.  the  freight  rate  from  Toledo  to  Montreal  was  46%  cents  a  barrel, 
and  previous  to  that  time  it  was  291/^  cents.  The  increase  was  made  by  the 
Canadian  roads  alone.  The  railroad  companies  had  said  that  the  rate  is 
alike  for  the  Standard  and  all  others,  but  those  who  had  brought  the  matter 
to  the  attention  of  the  Railway  Committee  of  the  Privy  Council  did  not  be- 
lieve that,  and  they  hoped  to  prove  that  such  was  not  the  case.  He  said 
that  the  independents  and  the  Standard  were  importing  more  of  the  United 
States  oil  all  the  time.  He  did  not  wish  to  say  that  the  independents  im- 
ported more  oil  into  Canada  than  the  Standard,  but  in  the  15  months  pre- 
vious to  giving  his  testimony  such  importations  had  largely  increased.  His 
company  and  the  Sun  Oil  Refining  Company  were  the  only  independent 
companies  he  knew  of  that  were  importing  oil  at  the  time  he  testified.  His 
company  imported  nearly  all  their  oil  from  the  Cornplanter  Refining  Com- 
pany and  the  Warren  Refining  Company,  both  of  Warren,  Pa.;  the  Craig  Oil 
Company,  of  Toledo;  the  Paragon  Refining  Company,  of  Toledo,  and  from 
Scofield,  Shurmer  &  Teagle,  of  Cleveland,  Ohio.  He  said  the  people  of  Can- 
ada preferred  to  buy  from  his  company  than  from  the  Standard. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Is  this  oil  that  is  imported  by  you 
from  the  independents  considered  of  better  quality  than  that  of  the  Stand- 
ard— equal  or  better?  A.  Well,  from  what  I  can  learn  from  the  consumers, 
the  oil  that  we  have  been  selling  as  American  oil,  which  it  was,  is  consid- 
ered much  better  than  what  the  Standard  was  giving  them  and  was  selling 
them  as  Pennsylvania  oil.  As  a  matter  of  fact.  I  think  they  have  been  giv- 
ing th(>m  for  years  the  Ohio  product  and  putting  it  off  as  Pennsylvania  oil, 
although  I  have  nothing  to  prove  that  except  that  the  people  said  they  con- 
sidered what  we  were  giving  them  was  far  better. 

Q.  (By  Vice-Chairman  PHILLIPS.)  At  the  same  price  the  citizens  of 
Canada  would  buy  from  the  independents  in  preference  to  the  Standard? 
A.  Every  time;  there  is  not  one  instance  in  a  thousand  but  they  will  give  us 
the  preference  over  the  Standard. 


♦Black   faced   type   indicates   matter   omitted,  in  the  course  of  editing,  from   the 
official  report. 


ANDREW  D.  GALL.  589 

Q.  (By  Vice-chairman  PHILLIPS.)  You  speak  of  importing  oil  from 
Toledo,  Ohio?  That  is  what  is  called  the  Ohio  or  Lima  oil,  is  it?  A.  Yes, 
sir;  I  think  so. 

Q.  (By  Vice-chairman  PHILLIPS.)  Do  you  sell  that  as  Ohio  oil?  A. 
Oh,  yes,  sir. 

Q.  (By  Vice-Chairman  PHILLIPS.)  And  you  make  a  difference  in  price 
between  the  Ohio  oil  and  the  Pennsylvania  oil?  A.  Oh,  yes,  sir.  We 
sold 

Q.  (By  Vice-Chairman  PHILLIPS.)  You  sell  them  both  up  there?  A. 
We  sell  them  both  up  there.  We  sold  the  Ohio  oil  last  fall,  this  time  last 
year,  at  precisely  the  same  price  as  they  were  selling  Canadian  oil,  and  we 
were  paying  these  excessive  freight  rates  and  five  cents  duty  and  we  still 
sold  it  at  precisely  the  same  price  as  they  did,  and  we  didn't  lose  anything 
by  it,  although  1  admit  we  did  not  make  much. 

Q.  (By  Mr.  SMYTH.)  The  Canadian  public  would  not  pay  you  more  fo'r 
the  American  oil  than  for  the  Canadian  oil?  A.  They  would  not,  not  always, 
although  they  do  sometimes;  but  we  did  not  want  to  ask  them  any  more  at 
that  time. 

Q.  It  is  not  recognized  in  Canada,  then,  among  the  consumers  that  the 
American  oil  is  better  than  the  Canadian?     A.  It  certainly  is. 

Q.  And  yet  they  will  not  pay  more  for  it?  A.  They  will;  but  at  that 
time  we  were  not  asking  more  for  it. 

The  men  who  were  interested  in  his  company  and  the  Sun  Oil  Refining 
Company,  of  Hamilton,  were  also  interested  in  the  Cornplanter  Refining 
Company,  of  Warren,  Pa.  He  considered  the  duty  on  American  oil  as 
higher  than  the  duties  on  other  products  that  are  imported  into  Canada. 
The  Canadian  duty  on  oil  was  practically  about  100  per  cent.,  although  it 
is  a  straight  duty  of  five  cents  a  gallon  on  all  oil  costing  up  to  25  cents  a 
gallon.  When  asked  whether  the  government  did  not  tax  oil  at  a  high  rate 
because  it  needed  the  revenue,  he  hesitated  and  finally  said  he  did  not  think 
they  needed  it.  He  did  not  see  why  they  needed  it.  In  1898,  6,880,734  gal- 
lons, paying  a  duty  of  five  cents  a  gallon,  were  imported. 

Q.  (By  Mr.  CLARKE.)  What  was  Mr.  Fielding's  reason  for  being  un- 
willing to  propose  a  reduction  of  the  duty  on  coal  oil?  A.  Well,  as  nearly 
as  I  can  remember,  he  merely  said  that  everything  was  good,  that  every- 
body was  prosperous,  or  was  prospering,  and  it  was  not  advisable  at  that 
time  to  disturb  any  of  the  other  industries,  and  hence  he  hadn't  done  any- 
thing with  the  coal  oil  duty,  because  it  was  the  only  one  that  he  wanted  to 
touch  at  that  time. 

Q.  It  is  a  fact,  isn't  it,  that  the  Canadian  government  derives  considera- 
ble revenue  from  the  importation  of  oil?    A.  They  do. 

Q.  And  they  need  that  revenue  and  depend  on  it  largely  for  government 
expenses?    *A.  Well (A  pause.) 

Representative  LIVINGSTON.  *Answer  that  question,  please;  whether 
the  Canadian  government  wants  that  tax  for  revenue  or  what  they  want  it 
for? 

The  WITNESS.     That  particular  tax? 

Representative  LIVINGSTON.     Yes,  sir. 

The  WITNESS.    I  don't  think  they  need  it;  I  don't  see  why  they  need  it. 

Q.  (By  Mr.  CLARKE.)  Don't  you  think  they  consider  that  they  need 
it?  A.  Well,  from  Mr.  Fielding's  own  remarks,  I  would  not  say  that  he 
thought  they  needed  it,  because  he  said  nothing  about  it  at  that  time. 

Q.  (By  Mr.  SMYTH.)  Do  you  know  how  much  it  amounts  to  in  a  year 
to  the  Canadian  government?  A.  No,  sir;  I  can  find  out  from  these  statis- 
tics, I  presume  (producing  book).  Well,  in  1898,  there  was  6,880,734  gallons 
at  five  cents  a  gallon;  just  what  that  would  amount  to  I  haven't  figured  out. 

Q.  *Quite  a  neat  little  sum;  this  oil  that  you  bought  in  Ohio  was  at  five 
cents  a  gallon;  what  is  the  freight  on  it  to  Montreal?  A.  Forty-three  cents 
at  the  present  time. 

*Q.   Forty-three  cents  a    hundred   pounds?     A.   Yes,  sir. 


*Black   faced   type   indicates  matter   omitted,  in  the  course  of  editing,   from  tlie 
official  report. 


590  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

Q.  How  much  would  that  be  a  gallon?  A.  I  figure  that  it  costs  us  three 
and  one-third  cents  for  an  imperial  gallon. 

Q.  That  would  make  the  oil  cost  between  13  and  14  cents?  A.  It  costs  us 
more  than  that  when  we  *add  the  duty  and  cost  of  importing;  of  course  we 
have  the  bari'elling.  They  did  charge  us,  after  the  1st  of  October,  in  1898, 
as  high  as  46%  cents  freight  from  Toledo,  and  previous  to  that  time  the 
rate  from  Toledo  was  291/2  cents,  and  we  pay  43%  cents  from  Warren  to 
Montreal;  before  the  Standard  got  control  of  the  market  we  got  a  rate  as 
low  as  23  cents.  That  was  not  later  than  April,  1898,  23  cents  from  Warren. 
When  you  go  and  ask  the  railway  people  anything  about  it  they  simply 
won't  talk  to  you.  They  don't  throw  a  man  out,  but  they  do  the  next  thing 
to  it;  they  won't  have  anything  to  say  about  it. 

Q.  Then,  you  really  cannot  sell  your  oil  much  below  17  cents  and  make 
a  profit,  paying  that  high  freight  and  paying  ^the  duty  and  costs?  A.  No, 
we  cannot  sell  it  to-day  even  for  that  price. 

Q.  The  freight  is  double  what  it  was  a  few  years  ago?    A.  Well,  almost. 

Q.  Forty-six  against  23,  I  think  you  said?  A.  Well,  43  was  the  freight 
charged  from  Toledo;  *just  think  of  that.  We  have  been  charged  as  high  as 
46%,  and  we  did  get  it  at  29%  from  Toledo.  We  got  it  as  low  as  23  from 
Warren — that  was  in  April,  1898,  and  it  is  very  nearly  double. 

Q.  Then  one  reason  why  the  price  of  oil  is  higher  in  Canada  to-day  is 
the  high  freight?     A.  Yes,  sir;  certainly. 

Q.  And  with  the  duty  and  cost  there  is  not  very  much  profit  in  it  at  17 
cents?     A.  There  is  not  any  profit  at  17  cents;  we  cannot  sell  Ohio  oil  for 

17  cents.     If  I  remember  right,  I  figured   it  out  that  it  cost  us  seventeen 
*and  three-fourths  for  an  imperial  gallon;  so  we  cannot  sell  it  for  less  than 

18  or  over  and  make  anything  on  it. 

Q.  Do  you  blame  the  Standard  Oil  Company  for  that  increase  in  the 
price  of  refined  oil?    A.  I  do,  so  far  as  the  freight  is  concerned. 

Q.  You  think  they  instigate  the  high  freight  from  Toledo  and  from 
Warren?  A.  Yes,  sir.  We  knew  nothing  about  this,  mind  you,  from  the 
railway  companies,  although  they  are  supposed  to  give  due  notice,  to  post 
the  notices  in  the  stations,  and  so  forth,  in  regard  to  advance  in  freight,  or 
any  other  notices  of  that  kind.  We  knew  nothing  about  it.  I  heard  of  it 
first  from  our  people  in  Warren;  they  had  gotten  hold  of  it  in  some  way  or 
other,  I  don't  know  how.  I  went  up  and  for  10  days  I  tried  to  find  out  from 
the  Canadian  Pacific  Railroad  what  the  freight  was,  or  what  the  increase 
was  going  to  be,  and  I  could  get  no  satisfaction  whatever.  It  was  on  the 
afternoon  of  September  30,  1898,  about  half  past  3,  that  they  told  me  what 
the  rate  was  going  to  be,  and  the  Standard  knew  all  about  it,  because  their 
man  ran  around  the  office  there  as  though  he  owned  the  office.  They  would 
tell  anybody  else  coming  in  there  that  they  had  no  time  to  talk  about  it,  and 
we  couldn't  get  any  information  about  it,  although  they  knew  all  about  it. 

Q.  It  is  only  your  suspicion  that  they  knew  all  about  it;  *you  don't 
know  that?  A.  Well,  I  know  it  almost  as  far  as  I  know  anything;  because 
they  got  in  a  large  lot  of  oil  at  that  time  before  these  freight  rates  came  up. 
Just  why  they  brought  that  in  I  could  never  make  out,  but  they  must  have 
known,  *or  the  oil  couldn't  have  got  in;  but  any  amount  of  it  came  in 
shortly  before,  on  or  about  the  30th  of  September,  and  along  the  first  days 
of  October,  which  must  have  been  on  the  way  previous  to  that  time. 

Q.  You  think  the  Standard  Oil  Company  pays  the  same  rates  from 
Pennsylvania  and  Ohio  as  you  do?  A.  No,  I  do  not;  I  certainly  do  not  think 
anything  of  the  kind.     The  railways  say  they  do,  but  I  don't  believe  it. 

Q.  You  think  they  actually  pay  it,  but  there  is  a  rebate?     A.  Yes,  sir. 

Mr.  Gall  said  the  Standard  Oil  Company  was  bringing  refined  oil  into 
Canada  by  water  in  tank  vessels  and  had  been  doing  that  for  three  or  four 
months  previous  to  the  time  he  gave  his  testimony.  His  own  company  had 
shipped  oil  in  barrels  by  water.  The  greater  part  of  the  business  of  the 
witness  was  in  handling  lubricating  oil.  He  said  his  company  could  not 
handle  illuminating  oil  on  account  of  the  freight  rates.  He  bought  most  of 
his  lubricating  oil  from  the  refineries  at  Warren,  Pa.  There  was  less  lubri- 
cating oil  made  in  Canada  in  1898  than  in  1896.   In  1898  there  was  made  in 


"Black  faced   type  indicates  matter   omitted,  in  tiic  course  of  editing,   from  the 
official  report. 


ANDREW  D.  GALL.  591 

Canada  868,957  gallons,  and  in  1896,  1,447,455  gallons  of  lubricating  oil.  The 
decrease,  he  thought,  was  due  to  the  fact  that  the  American  product  is  bet- 
ter than  the  Canadian. 

Q.  (By  Mr.  FARQUHAR.)  Was  there  any  reason  given  at  the  time  for 
raising  those  freight  rates,  on  the  part  of  the  American  roads  that  were 
prorating  with  the  Canadian?  Did  they  give  any  business  reasons  for  it? 
A.  No,  sir.  I  may  say  that  the  American  roads  did  not  increase  their 
freight  rates.    Our  Canadian  roads  did  it. 

Q.  Did  they  add  the  Canadian  tariff  on  the  through  bill?  A.  Yes.  sir; 
or  increased  the  tariff  and  made  it  up  to  what  it  is  at  the  present  time.  The 
rate  from  Warren  to  Suspension  Bridge  is  still  eight  and  a  half  cents.  It 
was  that  before,  and  is  yet,  but  the  rate  from  Suspension  Bridge  to  Mon- 
treal is  35  cents,  making  the  through  rate  43i/4.  The  American  rates  remain 
precisely  the  same  as  they  were  before. 

The  witness  said  that  when  the  tank  cars  of  his  company  arrive  at 
Montreal,  the  Standard  Oil  Company  opens  the  tanks  and  takes  samples 
out  to  see  what  the  tanks  contain.  To  substantiate  this  charge  he  said  he 
had  once  found  a  Standard  Oil  agent  taking  a  sample  from  one  of  his  cars 
and  he  had  a  letter  from  his  foreman  complaining  about  that  fact.  When 
the  attention  of  the  Standard  Oil  Company  officers  was  called  to  this  case 
they  said  it  was  a  mistake,  that  their  man  got  in  the  wrong  tank.  ■  The 
Standard,  he  said,  was  able  to  find  out  what  they  were  importing  and  what 
they  paid  for  their  oil.  He  didn't  know  how  they  found  out  about  these 
things.  In  reply  to  a  question  he  said  they  didn't  open  his  letters.  He 
didn't  know  whether  the  officials  of  the  Standard  he  referred  to  were  Cana- 
dians oi-  Americans. 

Q.  (By  Mr.  CLARKE.)  You  think,  then,  that  they  (the  Standard  Oil 
Company)  practically  run  your  railroads  and  your  government?  A.  At  the 
present  time  I  wouldn't  say  that  much  about  the  government,  because  I 
expect  to  have  these  things  regulated  a  little;  but  they  run  the  railways; 
that  is  sure. 

The  witness  had  offered  to  guarantee  the  Grand  Trunk  Railroad  400 
tank  cars  a  year  to  secure  lower  rates  on  American  oil,  but  he  could  not 
do  so. 

Q.  (By  Mr.  SMYTH.)  You  do  not  think  it  is  altogether  a  political 
action  on  the  part  of  the  Canadian  government  infiuencing  the  railroads 
arbitrarily  to  keep  out  American  products?  A.  No,  sir:  I  don't  think  any- 
thing of  the  kind;  I  haven't  any  such  an  idea  at  all,  and  I  don't  think  any- 
body else  in  Canada  has. 

Q.  You  do  not  believe  that  the  railroads  kept  all  the  freight  that  they 
charged  you?  A.  No,  I  do  not;  I  think  a  part  of  what  we  pay  in  goes  back 
to  the  Standard  Oil  Trust;   that  is  my  opinion. 

Q.  (By  Mr.  FARQUHAR.)  But  you  have  no  proof  of  that?  A.  We  have 
not.  Of  course  there  are  lots  of  things  that  we  know  of  up  there,  and  if 
I  had  been  able  to  come  before  you  later  I  could  have  given  you  some  in- 
formation as  regards  them,  but  we  haven't  proved  these  facts  yet.  We  are 
sure  enough  that  we  have  the  information,  and  it  is  rather  a  serious  thing 
to  do  that  unless  we  have  reasonable  grounds  for  thinking  it  is  right. 

Q.  As  far  as  you  know,  then,  you  pay  the  same  freight  that  the  Stand- 
ard Oil  Company  has  paid?    A.  Well,  the  railways  say  so. 

Mr.  SMYTH.     That  is  as  far  as  you  know? 

Mr.  FARQUHAR.     That  is  as  far  as  you  know,  I  say? 

The  WITNESS.     Yes,  sir;   as  far  as  I  know. 

Q.  (By  Mr.  SMYTH.)  Is  there  any  law  in  Canada  against  rebates  by 
railroads?  A.  Yes,  sir;  I  don't  know  what  it  is,  but  they  have  laws  gov- 
erning these  things,  but  the  trouble  there  is  as  it  is  elsewhere;  it  is  pretty 
hard  to  have  these  things  enforced.  You  can  just  fancy  a  concern  of  not  any 
more  magnitude  than  our  own,  tackling  the  Grand  Trunk  or  the  Canadian 
Pacific  on  questions  of  that  kind;  *it  costs  a  lot  of  time  and  money. 

The  railway  committee,  to  which  he  had  referred,  merely  had  the 
power  to  investigate,  and  their  findings  and  judgments  were  not  final.  If 
they  should  prove  what  the  witness  and  others  had  charged  against  the  rail- 

*Black  faced  type  indicates  matter  omitted,  in  the  course  of  editing,  from  the 
official  report. 


592  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

roads,  Ihey  would  have  to  enforce  the  law  through  the  courts,  by  a  civil  action 
against  the  railways  based  on  the  findings  of  the  railway  committee. 

*Q.  (By  Mr.  CLARKE.)  Are  you  aware  that  the  Canadian  roads  in  a 
case  admitted  that,  so  far  as  traffic  between  Canada  and  the  United  States 
is  concerned  they  are  subject  to  the  jurisdiction  of  the  Interstate  Com- 
merce Commission  in  this  country?     A.  That  the  Canadian  roads  admitted  it? 

Q.   Yes,  sir.     A.   No,  sir.     I   was  not  aware   of  that  fact. 

Q.  Then  you  have  not  appeared  before  our  Interstate  Commerce  Com- 
mission  with   any  complaint?     A.   No,  sir. 

Mr.  CLARKE.     You  can  do  so,  of  course,  if  you  wish  to. 

The  WITNESS.  You  say  that  the  railways  admit  that  they  are  under 
the  jurisdiction   of  the    Interstate   Commerce   Commission? 

IVlr.  CLARKE.  That  is  on  record,  as  far  as  concerns  the  traffic  between 
the   United   Stated   and   Canada. 

The  WITNESS.  That  is  freight  originating  in  the  United  States  going 
into  Canada? 

Mr.  CLARKE.     No  matter  where   it  originates. 

The  WITNESS.     I   did  not  know  that. 

Q.  (By  Mr.  KENNEDY.)  Is  there  any  sentiment  in  Canada  against  these 
large  industrial  combinations?  A.  There  is  and  the  Globe  newspaper,  which 
is  supposed  to  be  the  official  organ  of  the  present  administration,  has  been 
hammering  away  at  industrial  combinations,  particularly  the  Standard  Oil 
Trust. 

Q.  Have  you  industrial  combinations  in  Canada  similar  to  those  in  this 
country  and  in  England?  A.  Oh,  we  haven't  anything  of  that  kind.  The 
oil  trust  is  a  kind  of  a  monopoly,  and  so  is  the  sugar  business,  but  that  is 
due  to  the  duty  and  so  on.  There  are  a  few  of  what  you  might  call  mo- 
nopolies or  trusts,  but  they  are  very  insignificant,  and  simply  they  don't 
amount  to  anything  outside  of  the  oil  business.  It  is  something  new  to  our 
people  there,  that  kind  of  thing;  and  we  have  to  thank  the  Standard  Oil 
Company  for  introducing  it. 

Q.  Do  the  people  of  Canada  propose  to  seek  redress  through  legislation? 
A.  I  think  that  if  the  present  administration  don't  alter  things  in  some  way, 
so  that  we  will  not  be  at  the  mercy  of  these  trusts,  or  the  Oil  Trust  in  par- 
ticular, that  would  be  one  means  of  defeating  them  at  the  next  coming 
election,  because  it  is  about  the  only  thing  that  is  spoken  of — this  freight  dis- 
crimination and  the  duty  on  oil  and  binder  twine  and  a  few  things  like  that. 

Q.  (By  Vice-chairman  PHILLIPS.)  Has  any  gentleman  of  the  commis- 
sion anything  further?  Have  you  anything  further  to  state,  Mr.  Gall,  for 
the  information  of  the  commission?  A,  Well,  I  may  say  that  this  present 
government  said  that  if  it  was  shown  that  there  was  any  combination  or 
trust,  or  anything  of  the  kind,  on  anything  whatsoever,  they  would  imme- 
diately remove  the  duty  on  the  articles  mentioned  or  complained  of.  Well, 
they  committed  themselves  in  that  way,  so  I  made  a  declaration  to  the 
effect  that  there  was  a  combination  in  the  oil  business,  and  it  was  read  be- 
fore the  House  at  its  last  session.  Well,  they  are  going  to  consider  it,  and 
I  suppose  they  are  considering  it  yet;  there  was  nothing  done  about  it; 
that  is  the  declaration  that  I  wrote  to  them, 

Mr.  Gall's  "declaration"  was   read  to  the  commission. 


*Black   faced   type  indicates   matter   omitted,  in  the  course  of  editing,   from   the 
official  report. 


F.  B.  THURBER.  593 

CHAPTER  XXIIL 

EXTRACTS  FROM  THE  TESTIMONY  OF  MR.  F.  B.  THUR- 
BER, MR.  HENRY  O.  HAVEMEYER,  MR.  G.  WALDO 
SMITH,  MR.  MARTIN  R.  COOK,  MR.  CHARLES  C. 
CLARKE,  MR.  GEORGE  J.  KINDEL,  MR.  SAMUEL  SPEN- 
CER, MR.  MARTIN  A.  KNAPP,  MR.  C.  A.  PROUTY 
AND  MR.  P.  E.  DOWE. 


Quite  a  number  of  witnesses  wlio  were  not  called  by  the  Industrial 
Commission  to  testify  specifically  in  relation  to  the  Standard  Oil  Company 
were  interrogated  in  regard  to  the  oil  interests.  This  was  so  in  the  case  of 
Mr.  F.  B.  Thurber,  of  New  York,  president  of  the  United  States  Export  As- 
sociation; Mr.  Henry  O.  Havemeyer,  of  New  York,  president  of  the  American 
Sugar  Refining  Company;  Mr.  G.  Waldo  Smith,  of  New  York,  president  of 
the  Wholesale  Grocers'  Association  of  New  York  and  vicinity;  Mr.  Martin 
R.  Cook,  of  New  York  city,  wholesale  liquor  dealer;  Mr.  Charles  C.  Clarke, 
of  Peoria,  Illinois,  distiller  of  alcohol,  cologne,  spirits  and  rye  whisky;  Mr. 
George  J.  Kindel,  of  Denver,  Colorado,  manufacturer  of  bedding;  Mr.  Samuel 
Spencer,  president  of  the  Southern  Railway  Company;  Commissioners  Martin 
A.  Knapp  and  C.  A.  Prouty.  of  the  Interstate  Commerce  Commission,  and  Mr. 
P.  E.  Dowe.  of  New  York  city,  president  of  the  Commercial  Travelers'  League. 

Mr.  F.  B.  Thurber.  president  of  the  United  States  Export  Association, 
appeared  before  the  commission  on  April  7.  1899.  Mr.  Thurber's  testimony 
regarding  trusts  was  of  especial  interest  because  he  had  been  a  prominent 
witness  before  the  Hepburn  Committee  in  New  York  City  in  1880.  when  he 
regarded  industrial  combinations  and  trusts  as  menaces  to  the  best  interests 
of  the  country.  His  testimony  before  the  Industrial  Commission  showed 
that  20  years  observation  of  tlie  working  of  such  aggregations  of  capital  had 
caused  him  to  change  his  mind  on  that  subject.  In  opening  his  testimony, 
he  said: 

"For  many  years  as  a  merchant  and  more  recently  as  president  of  the 
United  States  Export  Association.  I  have  studied  the  effect  of  aggregations 
of  capital  commonly  known  as  'trusts'  upon  our  commercial,  industrial  and 
political  system.  I  may  say  that  when  I  began  it  was  with  a  strong  preju- 
dice against  them.  I  believed  that  they  would  tend  to  oppress  the  public 
with  high  prices  and  also  that  their  political  infiuence  was  to  be  feared.  I 
had  no  conception  that  they  were  a  natural  economic  development,  conse- 
quent on  the  development  of  the  great  forces  which  now  control  the  world — 
steam,  electricity  and  machinery — or  that  there  was  any  rational  basis  for 
their  existence.  But  a  careful  study  of  their  effect,  ranging  over  a  period 
of  years,   has   materially   modified   my   opinion. 

"The  best  horse  will  shy  at  an  umbrella  if  it  is  opened  in  his  face 
too  suddenly,  and  the  economic  results  of  these  great  forces  have  been  so 
sudden  and  startling  that  it  is  perhaps  natural  that  even  intelligent  men 
should  'shy'  at  them  until,  like  the  horse,  they  can  smell  of  them  and  see 
that  they  are  not  dangerous.     The  'trust'  is  a  result  of  these  forces.     *     *     * 

"The  next  most  prominent  aggregation  of  capital  in  the  commercial 
world  is  known  as  the  Standard  Oil  Company,  and  the  effect  upon  the  price 
of  oil  is  illustrated  by  the  following  statistics,  compiled  by  the  TTnited 
States  government,  showing  the  wholesale  export  price  for  refined  petroleum 
for  the  period  extending  from   1871  to  1898: 

38 


594  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

"Prices  of  refined  illuminating  oils  per  gallon  exported  from  the  United 
States,  1871  to  1898.  (.The  prices  represent  the  market  value  of  article  at 
time  of  exportation) : 

Year.  Cents.  Year.  Cents. 


1871 

25.7 

1872 

24.9 

1873 

23.5 

1874 

17.3 

1875 

14.1 

1876 

14.0 

1877 

21.1 

1878 

14.4 

1879 

10.8 

1880    

8.6 

1881 

10.2 

1882 

9.1 

18S3 

8.8 

1884 

9.2 

1SS5 

8.7 

1886 

8.7 

1887 , 

8.7 

18&S 

7.9 

1889 -  .. 

7.8 

1890 

7.4 

1891 

7.0 

isy2 

5.9 

1893 

4.9 

1894 

4.2 

1895 , 

4.9 

1896 

6.8 

1897 

6.3 

1898 

5.7 

"This  great  decline  in  the  price  of  oil  is  attributable  partly  to  the  in- 
crease in  production,  but  more  largely  to  improvements  in  manufacture  and 
transportation,  which  were  only  attainable  through  the  aggregation  of  capital 
in  this  industry." 

In  reply  to  a  question  by  Vice-Chairman  Phillips,  Mr.  Thurber  said:  "My 
impression  is  that  the  Standard  Oil  Company  as  a  whole  has  been  liberal  with 
producers,  and  paid  them  as  good  prices,  perhaps,  as  they  could  have  ob- 
tained from  a  larger  number  of  refiners.  Certainly  in  the  organization  of 
that  industry,  the  result  has  been  beneficial  to  consumers  and  to  producers 
alike." 

Q.  (By  Vice-Chairman  PHILLIPS.)  Take  for  instance,  the  pipe  line 
system  through  which  the  oil  is  chiefly  conveyed  from  the  wells  to  certain 
stations.  The  price  of  pipe  was  50  or  60  cents  a  foot  when  the  lines  were 
built,  and  they  charged  20  cents  a  barrel  for  piping  the  oil.  The  same 
sized  pipe  is  now  bought  for  from  12  to  15  cents,  and  still  they  are  charging 
the  same  price  per  barrel  as  formerly.  As  a  matter  of  fact,  the  oil  can 
be  piped  for  five  cents  a  barrel.*  Now,  do  you  consider  that  a  cheapening  to 
the  producer  or  the  consumer?  A.  I  should  say  that  it  was  a  question  of 
the  value  of  the  service  that  they  are  rendering.  Now,  as  compared  with 
the  freight  by  rail,  the  construction  of  pipe  lines  has  effected  an  enormous 
saving;  and  they  could  not  have  been  constructed  by  individuals,  but  only 
by  some  large  aggregation  of  capital.  I  do  not  know  whether  20  cents  is  a 
fair  price  or  not;  I  have  no  idea  about  it;  but  I  do  know  that  the  railroads 
felt  that  they  were  greatly  in.iured  by  the  construction  of  pipe  lines,  because 
it  reduced  their  receipts  so  much. 

Q.  (By  Mr.  RATCHFORD.)  I  wish  to  ask  if  you  have  any  instance 
in  mind  in  which  a  certain  trade  has  paid  its  employes  a  certain  price  for 
their  labor  under  the  system  of  open  competition  and  then,  when  the  trade 
was  organized  as  a  trust,  advanced  the  prices  of  its  product  enormously  and 
at  the  same  time  reduced  the  wages  of  its  employes?  A.  I  have  no  recol- 
lection of  an  instance  where  a  trust  has  advanced  the  prices  of  its  products 
and  decreased  the  wages  of  labor.  There  may  be  such  instances,  but  I  have 
none  in  mind.  I  do  know  that  the  Standard  Oil  Company,  the  American 
Sugar  Refining  Company  and  others  have  never  had  trouble  with  their 
labor.  They  pay  good  wages  and  get  good  service  and  everybody  makes 
money;  and  at  the  same  time  the  consumer  gets  the  product  at  a  reasonable 
price. 


*Mr.  J.  W.  Lee  stated  that  on  a  charge  of  15  cents  a  barrel  by  the  United  State.s 
Pipe  Line  Company  (the  transportation  company  allied  with  the  Pure  Oil  Trust,  of 
which  Mr.  Lee  was  president)  that  company  has  a  profit  "if  there  is  anything 
left."  lie  also  said  that  the  cost  of  pipage  was  seven  and  eight  cents  a  barrel, 
which  he  said  did  not  include  interest  on  the  capital  invested.  His  testimony  to 
the  effect  that  "seven  and  eight  cents"  did  not  include  interest  on  the  capital  In- 
vested   does    not    appear    in    the   official    report. 


HENRY  O.  HAVEMEYER.  595 

MR.  HENRY  O.  HAVEMEYER,  President  of  the  American  Sugar  Re- 
fining Company,  117  Wall  street.  New  York,  testified  on  June  14,  1899. 

In  beginning  his  testimony  Mr.  Havemeyer  declared  that  '"the  mother 
of  all  trusts  is  the  customs  tariff  bill."  He  said:  "There  is  no  such  thing  as 
monopoly  in  these  days  except  that  which  results  from  patents  and  copy- 
rights." 

Q.  (By  Vice-Chairman  PHILLIPS.)  Mr.  Havemeyer,  speaking  in  re- 
gard to  monopoly,  if  I  understood  your  paper  you  attributed  monopolies  or 
trusts  to  two  causes,  first,  patents,  and  second,  to  the  tariff.  Did  I  under- 
stand you  correctly?     A.  Yes,  sir. 

Q.  (By  Vice-chairman  PHILLIPS.)  That  they  were  the  outgrowth  of 
patent  rights?     A.  Patents,  yes,  sir. 

Q.  (By  Vice-Chairman  PHILLIPS.)  And  the  tariff  levied  by  the  govern- 
ment?    A.  Yes,  sir;    practical  monopoly. 

Q.  (By  Vice-chairman  PHILLIPS.)  Well?  A.  Not  legal  monopoly,  but 
practical  monopoly. 

Q.  (By  Vice-chairman  PHILLIPS.)  Well,  now,  the  Standard  Oil  Trust 
is  admitted,  is  it  not,  to  be  one  of  the  largest  that  has  ever  existed?  A.  I 
said  with  few  exceptions.  Of  course  anything  that  depends  upon  the  tariff; 
it  hasn't  anything  to  do  with  the  tariff.  The  Standard  Oil  Company  hasn't 
anything  to  do  with  the  tariff.  You  read  the  tariff  bill  and  you  will  find  that 
there  is  no  tariff  on  oil. 

Q.  (By  Vice-Chairman  PHILLIPS.)  That  is  what  I  was  coming  to,  sir. 
A.  I  said  the  tariff. 

Q.  (By  Vice-Chairman  PHILLIPS.)  You  said  due  to  two  causes,  patents 
and  the  tariff.     A.  Yes,  sir. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Now,  do  you  understand  that  the 
Standard  Oil  Company  has  never  been  affected  in  any  degree  by  the  tariff, 
and  yet  it  is  one  of  the  greatest  monopolies  of  this  country  or  of  any  other 
country;  *and  yet  the  tariff  hss  not  entered  into  it  in  any  manner,  shape  or 
fo"'.-n,  nor  have  patent  rights.  A.  ]\Iy  dear  sir,  you  are  entirely  off  on  the 
subject  of  monopoly.  A  monopoly  is  something  which  is  carried  on  or  may 
be  carried  on  and  against  which  there  could  be  no  competition.  The  oil  busi- 
ness is  open  to  the  public.  It  is  open  to  every  citizen  of  the  United  States. 
The  reason  that  we  cannot  go  into  it  is  because  the  Standard  Oil  Company 
makes  the  price  so  low  that  we  cannot  compete  with  it,  and  give  the  con- 
sumer the  benefit.  You  have  got  to  take  either  one  position  or  the  other. 
The  consumer  is  the  man  to  be  considered  because  he  gets  the  benefit  of 
the  cheap  goods,  and  every  man  that  interferes  with  these  monopolists,  as 
you  say,  is  wiped  out  and  very  properly  wiped  out. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Then  you  understand  the  reason 
for  the  Standard  oil  Company  becoming  so  prominent  in  monopolizing  the 
oil  trade  is  because  it  is  able  to  manufacture  cheaper  than  others?  If  that 
be  the  case  why  have  they  bought  out  or  crushed  out  all  refiners,  all  pipe 
lines  thus  far  except  the  few  that  are  just  now  starting  out  to  do  business; 
and  if  you  take  their  own  business  as  a  basis,  will  you  not  find  that  they 
are  making  an  exorbitant  profit.  For  instance,  oil  is  selling  *at  $1,  a  little 
over  $1  a  barrel  now,  and  very  frequently  less  than  $1,  and  is  it  not  shown  by 
the  Standard  Oil  Company's  own  figures  that  they  have  been  making  in  the 
last  10  or  12  years  more  profit  on  each  barrel  of  oil  than  they  have  been 
paying  for  the  crude?  A.  Well,  you  are  confounding  profit  with  monopoly. 
What  is  the  reason  I  can  not  own  a  gold  mine  with  a  million  dollars  in  it? 
It  is  all  mine. 

Q.  (By  Vice-Chairman  PHILLIPS.)  I  am  undertaking  to  meet  the 
proposition  that  you  made  that  the  Standard  Oil  Company  made  refined  oil 


♦Black   faced   type  indicates  matter  omitted,  In  the  course  of  editing',   from  the 
official  report. 


596  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

cheaper  and  that  was  the  reason  why  they  dominated  the  trade. t  *A.  Yes, 
sir;  they  knocked  them  out,  they  smashed  them  as  you  put  it,  and  that 
leaves  them  still  a  margin. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Not  becavise  they  make  it  cheaper, 
but  because  they  purchase  them,  circumscribe  them  or  circumvent  them  In 
some  way.  A.  Well,  it  is  all  business;  that  is  all  business.  Havemeyer 
and  Elder  might  start  a  refinery  which  cost  them  $10,000,000  at  the  start  that 
they  own;  somebody  who  has  made  a  million  may  start  and  Havemeyer 
and  Elder,  to  protect  themselves,  put  down  the  price  of  sugar  and  practi- 
cally say  to  them:  "You  can't  market  a  barrel  of  your  sugar  while  this 
sugar  is  being  sold." 

Q.  (By  Vice-Chairman  PHILLIPS.)  Do  you  understand  *now,  as  we 
are  illustrating  about  the  tariff  and  about  these  large  monopolies,  that  the 
Standard  Oil  Company,  if  the  markets  had  been  open  to  the  people  and  if 
they  hadn't  monopolized  the  pipe  line  business  and  dominated  legislation, 
got  a  reduction  in  freights,  got  discriminating  rates;  *what  I  want  to  say 
is  that  if  another  company  could  have  been  put  on  an  equality  with  them 
before  the  law  20  years  ago  and  had  the  privilege  of  piping,  refining  and 
handling  one-quarter  of  this  great  commodity,  that  they  could  have  afforded 
to  pay  the  Standard  Oil  Company  for  that  privilege  $50,000,000,  and  have 
made  a  vast  sum?  That  would  be  my  judgment  now  in  regard  to  it.  A.  I 
think  before  the  interstate  law  went  into  effect,  the  Standard  Oil  Company 
had  advantages  which  it  should  not  have  had,  but  that  is  ancient  history. 
They  are  here  to-day  and  they  go  right  from  the  fields  to  the  consumer. 
They  furnish  oil  cheaper  than  it  can  be  furnished  by  anybody  else.  That  is 
for  the  benefit  of  the  consumer  and  is  to  the  absolute  annihilation  of  the 
middle  man  or  anybody  else  in  the  oil  business,  in  my  judgment.  If  it  goes 
into  the  pockets  of  a  few  people  it  is  so  much  perhaps  to  be  regretted,  but 
there  is  where  it  goes,  and  legally;  it  would  be  very  nice  to  have  that  divided 
up,  but  until  you  can  find  out  what  Carnegie  is  going  to  do  with  his  millions 
I  don't  think  you  are  going  to  get  the  Rockefellers  to  publish  what  they  are 
going  to  do  with  what  they  have  got. 

Q.  (By  Vice-chairman  PHILLIPS.)  You  stated  that  the  Standard  Oil 
Company  are  here,  and  the  reason  that  they  are  here  is  because  they  can 
do   things   cheaper.     A.  Yes.   sir. 

Q.  (By  Vice-Chairman  PHILLIPS.)  I  understand  you  to  say  that.  I 
know  people  who  are  piping  and  refining  oil  at  home  and  shipping  it  abroad 
and  are  making  some  profit,  and  could  make  more  profit  if  the 
markets  were  open  to  them  as  they  are  to  the  Standard.  A.  Oh,  I 
dare  say  there  is  a  field  at  present  for  competition  with  the  Standard  Oil 
Company,  but  if  it  ever  got  momentous  I  think  that  the  prestige  and  the 
ability  and  the  great  wealth  of  the  Standard  Oil  Company  would  knock 
them  out;  I  may  be  wrong;  I  am  talking  about  something  that  I  don't  know 
much  about. 

Q.  (By  Mr.  C.  J.  HARRIS.)  Do  I  gather  from  that  remark  that  you 
think  it  is  a  pretty  good  idea  for  all  competitors  to  be  knocked  out  but  one, 
and  for  him  to  control  the  business?  A.  I  say  that  is  true  and  you  cannot 
alter  it,  or  the  Federal  government  cannot  alter  it,  or  anybody  else  cannot 
alter  it;  and  the  sooner  you  realize  it  and  stop  the  talk  about  it  the  better 
off  the  country  will  be  on  the  subject. 

Q.  What  we  are  trying  to  get  at  is  what  is  better  for  the  country.  We 
want  to  knew  whether  it  is  a  good  state  of  affairs.  A.  Well,  take  the  price 
of  oil.  Do  you  suppose  it  is  better  for  the  country  to  have  oil  two  cents 
cheaper  or  to  establish  half  a  dozen  competitors  who  are  in  it  for  the  same 
amount  of  gore  that  the  Standard  Oil  Company  is — every  bit — and  who  in- 
crease tho  price.  It  is  like  we  had  it  in  sugar;  you  stop  here  the  work  by 
giving  $24,000,000  in  tariff  on  sugar  to  have  a  few  people  in  Louisiana  and  a 
few  people  in  the  Hawaiian  Islands  employed  and  see  where  you  are. 


Mil  tlie  ofTicial  report  this  question  appears  as  a  part  of  Mr.  Havemeyer's  an- 
swer in  tlie  following  form:  "T  am  undertaking  to  meet  the  proposition  that  \ou 
in,^i<io  by  saying  that  the  Standard  Oil  (ompan.v  mak«>  rciinod  oil  cheaper.  That 
is   the  reason   wliy   they   dominate   trade." 

*Rlaek  faced  type  indicates  matter  omitted,  in  the  course  of  editing,  from  the 
cifTu  ial   report. 


G.  WALDO   SMITH  AND  MARTIN   R.   COOK.  597 

MR.  G.  WALDO  SMITH,  President  of  the  Wholesale  Grocers'  Associa- 
tion, of  New  York  and  vicinity,  College  Point,  Long  Island,  New  York,  tes- 
tified June  12,  1899. 

Q.  (By  Senator  MALLORY.)  *1  would  like  to  ask  a  general  question, 
as  a  summary  of  my  understanding  of  what  Mr.  Smith  has  said  on  a  certain 
point.  I  understand,  Mr.  Smith,  that  it  is  your  opinion  that  combinations 
of  people  or  corporations  for  the  purpose  of  controlling  the  production  of 
any  particular  article,  do  not  destroy  competition  *in  the  long  run?  A.  They 
may  temporarily.  It  may  until  the  fact  is  developed  that  there  is  a  margin 
of  profit  to  be  got  by  somebody,  and  then  immediately  somebody  makes 
the  investment  and  cuts  the  price. 

Q.  That  is,  it  v/ill  not  destroy  it  effectually,  but  only  temporarily?  A. 
Yes,  sir.  The  only  exception  would  be  som.e  article  like  a  patent  medicine; 
some  highly  advertised  article  like  some  of  the  patent  medicines. 

Q.  Do  you  know  anything  about  the  workings  of  the  Standard  Oil  Com- 
pany?    A.  No,   sir. 

Q.  Nothing  except  what  is  generally  known?  A.  No  knowledge  of  any 
name  or  nature.  I  know  this,  that  I  used  to  buy  oil  at  $1.2.5  and  sell  it  for 
$1.50.  and  could  not  get  as  much  as  I  could  sell.  Now,  I  know  you  can  buy 
four  gallons  for  what  you  used  to  make  on  one.  Who  has  done  that  I  don't 
know. 

Q.  I  understand  that  so  far  as  the  refined  oils  are  concerned  they  are 
much  cheaper  now  than  they  were  before  the  Standard  Oil  Company  was 
organized.  But  the  point  I  want  to  get  at  is  whether  a  combination  of  cor- 
porations— I  won't  use  the  Standard  Oil  Company  as  an  illustration,  be- 
cause I  might  be  doing  them  an  injustice — whether  a  combination  of  corpo- 
rations for  the  purpose  of  controlling  a  specific  product  can  be  so  powerful 
as  to  ultimately  crush  out  all  possible  effort  to  compete  with  it.  Can  it 
not.  by  its  methods,  undersell  those  who  go  into  the  business  and  drive 
them  out  of  the  business — a  powerful  combination  consisting  of  millions  of 
dollars?  (A  pause.)  What  I  want  to  get  at  is  this:  Your  general  position 
is  that  no  matter  how  large  the  combination  is,  it  will  not  prevent  competi- 
tion as  long  as  competition  will  pay.  Is  it  not  possible  for  a  combination 
to  be  so  strong  as  to  crush  out  all  possible  effort  to  compete  with  it?  A. 
That  may  be  true,  and  it  is  certainly  true  that  great  aggregations  of  capital 
that  can  command  the  best  brain  power  in  the  world  can  undersell  lesser 
aggregations  of  capital  and  inferior  brain  power.  That  of  course  can  be 
done  and  should  be.  It  is  legitimate  and  right  and  the  interests  of  the  people 
are  subserved  by  it.  For  instance,  the  Standard  Oil  combination  has  saved 
the  people  millions  of  dollars  in  the  reduction  in  the  cost  of  oil. 

Q.  (By  Vice-Chairman  PHILLIPS.)  You  do  not  attribute  that  reduction 
to  the  fact  that  it  is  monopolized?     A.  No. 

Q.  (By  Vice-chairman  PHILLIPS.)  But  to  new  discoveries?  A.  Yes, 
and  new  methods.  And  the  brain  has  been  brought  to  bear  upon  it,  and 
wonderful  ability  has  been  brought  to  bear  upon  it. 


MR.  MARTIN  R.  COOK,  wholesale  liquor  dealer.  New  York  City,  tes- 
tified May  19,  1899. 

Q.  (By  Mr.  KENNEDY.)  You  state  that  you  believe  the  trusts  would 
be  a  very  good  thing  if  they  were  properly  conducted.  Will  you  state  the 
particulars  in  which  you  think  they  should  be  conducted  dilTerently  from 
the  way  in  which  they  are  conducted?  A.  In  a  word,  I  should  answer  that 
by  saying  that  if  we  should  adopt  the  same  principles  that  the  Standard  Oil 
Company  have,  and  on  which  they  have  made  their  success,  that  would  be 
all  that  we  would  have  to  do.  It  is  a  very  simple  one;  to  charge  as  small 
a  profit  as  possible,  and  pay  a  reasonable  dividend  and  profit. 

*BIack   faced   type   indicates   matter  omitted,  in  the  course  of  editing:,   from   the 
official  report. 


598  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

*Q.  (By  Mr.  C.  J.  HARRIS.)  If  they  paid  as  small  a  profit  as  possible, 
how  is  it  that  the  members  of  the  Standard  Oil  Company  have  become  so 
immensely  wealthy?  A.  They  have  been  able  to  lessen  expenses  very  much 
below  what  the  small  oil  refiner  used  to  have,  and  by  controlling  the  whole 
product  and  economizing,  and  with  the  immense  business  which  they  do, 
they  have  been  enabled  to  make  a  great  deal  of  money. 

Q.  What  can  refined  oil  be  sold  for  at  a  profit?  A.  I  don't  know,  I  am 
not  familiar  with  that.  I  know  more  about  the  Standard  Oil  Company  in 
this  way:  Where  I  live  we  have  a  small  bank,  and  the  vice-president  of  the 
largest  plant  of  the  Standard  Oil  Company  is  one  of  our  directors,  and,  in 
the  course  of  many  years  association,  I  have  learned  something  of  their 
methods  of  doing  things.  There  is  a  rivalry  between  the  different  plants 
to  see  which  can  produce  the  best  results.  That  is  to  say,  produce  oil  of 
equal  quality  at  the  lowest  cost,  and  he  told  me  that  the  moment  any  one 
of  them  did  make  an  improvement,  or  a  marked  difference  in  the  price, 
or  even  a  slight  difference,  and  reported  it  to  Mr.  Rockefeller,  instead  of  the 
extra  profit  going  to  the  stockholders,  Mr.  Rockefeller's  policy  had  been 
and  always  was  to  reduce  the  price  of  the  oil.  The  idea  is  that  their  small 
profit  shall  be  on  practically  the  whole  product  of  oil  of  the  country,  and 
on  their  methods  of  handling  it.  They  have  a  vast  number  of  tank  ships, 
and  they  dump  the  oil  right  into  the  ships  and  carry  it  to  the  different  parts 
of  the  world.  They  have  their  plants  all  over  the  world,  and,  as  I  say,  a 
small  percentage  has  made  the  great  wealth  which  they  have  accumulated. 
So  it  might  be  the  same  with  the  distilling  business.  I  have  said  that  we 
have  a  plant,  the  product  of  which  is  practically  10  per  cent,  of  the  con- 
sumption of  spirits  and  alcohol  of  the  country;  now,  10  such  plants  as  that 
would  supply  the  whole  consumption  of  the  country,  and  that  would  be, 
say,  60,000,000  gallons.  If  they  should  get  two  cents  a  gallon  on  that  product 
even  with  their  present  capitalization,  it  would  pay  them  very  largely, 
and  yet  there  is  none  in  the  trade  that  would  not  be  willing  to  pay  that 
price.  In  fact,  I  said  a  year  ago  if  they  would  give  us  a  fixed  profit  of  two 
cents  a  gallon,  not  upon  their  inflated  capitalization  or  fixed  charges,  but 
based  upon  corn,  we  would  be  very  willing  to  take  it,  and  not  undertake  to 
have  any  competition. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Would  you  consider  it  an  unrea- 
sonable profit,  if  you  should  make  more  profit  on  each  bushel  of  corn  you 
bought  than  you  paid  for  the  corn  itself;  would  you  consider  that  an  un- 
reasonable profit ; 

The  WITNESS.     How  was  that? 

"Vice-Chairman  PHILLIPS.  Would  you  consider  it  an  unreasonable 
profit  if  you  made  more  profit  on  each  bushel  of  corn  you  bought  than  you 
paid  for  the  corn  itself? 

The  WITNESS.  Well,  if  it  went  into  my  own  pocket  and  I  could  control 
it,  I  would  think  it  would  be  all  right;  but  when  it  comes  to  business,  then 
it  is  another  thing,  you  know. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Do  you  know  or  do  you  believe  the 
Standard,  for  instance,  makes  more  on  each  barrel  of  oil  than  they  pay  the 
producer  for  that  barrel?    A.  No,  I  do  not. 

*Q.  (By  Vice-Chairman  PHILLIPS.)  You  do  not  think  so?  A.  No,  sir; 
oh,  no,  sir. 

Q.  (By  Vice-Chairman  PHILLIPS.)  You  do  not  think  their  profits  show 
that  in  the  last  10  or  15  years?  A.  No,  sir;  I  don't  know  anything  about 
that. 

"Mr.  A.  L.  HARRIS.  I  rise  to  a  point  of  order,  Mr.  President.  In  regard 
to  this  Standard  Oil  matter,  I  do  not  think  we  ought  to  examine  Mr.  Cook 
about  that;  we  had  better  drop  that  part  of  the  subject;  we  have  gotten  that 
evidence  from  other  men,  you  understand. 

Vice-Chairman    PHILLIPS.      But    the    question    had    been    entered    upon. 

Mr.  FARQUHAR.     I   move  that  that  be  struck  out. 

Mr.  C.  J.   HARRIS.     I   object  to  that,  most  assuredly. 


*niark   faced    type  indicates  matter  omitted,  in  tiic  course  of  editing,   from   tlie 
oftieial  report. 


CHARLES   C.   CLARKE.  599 

*Mr.  KENNEDY.  I  object  to  that.  Mr.  Cook  has  said  if'all  trusts  were 
conducted  as  the  Standard  Oil  Company  is  conducted,  he  would  be  in  favor 
of  them;    now  we  cannot  have  that  stricken   out. 

Mr.  FARQUHAR.  But  he  cannot  explain  the  Standard  Oil  Company's 
mode  of  doing  business,  and  the  Standard  Oil  Company  is  not  on  examina- 
tion, either,  as  a  matter  of  fact. 

Vice-Chairman  PHILLIPS.  The  chair  would  rule  that  anything  pertain- 
ing to  trusts  is  competent  by  any  witness  before  the  commission,  whether 
it  is  on   his  own  subject  or  not. 

Representative  OTJEN.  Whatever  the  man  knows,  it  should  make  no 
difference  what  the  subject  is. 

Vice-Chairman  PHILLIPS.  And  the  witnesses  have  all  been  examined 
on   that   line. 

Mr.  A.  L.  HARRIS.     Well,  I  withdraw  my  objection,  Mr.  Chairman. 

Vice-Chairman  PHILLIPS.  Have  any  gentlemen  of  the  commission  any 
further  questions  to  ask? 

Representative  OT.IEN.  *l  would  like  to  ask  just  one  additional  ques- 
tion, although  I  think  this  investigation  of  the  oil  matter  is  a  little  out  of 
place.  Do  you  think  that  the  profit  made  by  the  Standard  Oil  Company  from 
the  oil  industry  of  Ohio,  of  $50,000,000  a  year,  is  a  moderate  profit?  A.  I 
don't  know  anything  about  ii. 

Q.  (By  Mr.  C.  J.  HARRIS.)  I  would  like  to  ask  one  question  more  and 
that  is  this:  What  percentage  of  the  total  consumptive  demand  of  the 
country  must  be  reached  in  order  to  control  the  price?  A.  Oh,  I  don't  know 
that  there  is  any  fixed  percentage;  I  know  if  you  are  going  to  have  a  close 
control  of  it,  you  would  need  it  all. 

Q.  Every  bit  of  it?  A.  Every  distillery,  if  it  is  a  close  control  of  it;  of 
course,  that  you  probably  never  would  have.  It  is  practically  impossible. 
I  suppose  fhat  the  competition  of  the  Standard  Companyf  to-day  is  limited 
to  one  or  two  very  small  concerns,  outside  of  our  own  company,  which  I 
have  named. 

Q.  (By  Professor  JENKS.)  You  think  they  control  probably  say  85  per 
cent,  of  the  output?     A.  I  should  say  so. 


MR.  CHARLES  C.  CLARKE,  of  Peoria,  Illinois,  distiller  of  alcohol, 
cologne,  spirits  and  rye  whisky,  testified  May  13,  1899. 

In  reply  to  a  question  by  Vice-Chairman  Phillips,  Mr.  Clarke  said: 

"I  believe  that  these  great  accumulations  have  been  a  direct  benefit  to 
the  industries  of  the  country,  for  the  reason  that  they  have  made  possible 
industries,  commercial  enterprises,  that  would  not  have  been  undertaken 
except  for  the  accumulation,  and  they  accomplish  results  that  no  single  indi- 
vidual or  small  company  could  accomplish.  For  instance,  the  Standard  Oil 
Trust  has  solved  the  question  of  pumping  oil  from  Pennsylvania  to  Chicago. 
No  single  individual  could  have  accomplished  that  with  the  small  sums  that 
were  ordinarily  invested  in  oil  companies." 

Q.  (By  Vice-Chairman  PHILLIPS.)  Could  not  that  have  been  done  by 
what  we  call  the  regular  corporation  as  well  as  through  a  great  trust,  worth 
nearly  $100,000,000?     A.  Perhaps  so  in  time. 

Q.  (By  Vice-Chairman  PHILLIPS.)  They  are  comparatively  inexpen- 
sive to  build;  a  pipe  line  costs  much  less  than  a  railroad.  A.  I  would  not 
be  surprised  but  that  it  would  come  about,  but  at  the  same  time  I  have 
noticed  in  all  trusts,  and  especially  in  our  own  trust,  that  they  are  all  the 
time  employing  men  to  experiment  in  new  directions,  both  for  trade  and  in 
lessening  the  cost  of  production  and  demonstrating  that  they  can  have 
trade  in  foreign  countries  and  in  different  directions  where  it  had  never 
been  before.  They  have  taken  up  new  patents  and  tried  them  and  have 
made  every  effort  possible  to  increase  the  volume  of  business. 


tThe    Standard   Distilling:   and    Distributing  Company. 

*Black   f:iced   type  indicates   mattef   omitted,  in  the  course  of  editing,   from   the 
official  report. 


600  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

MR.  GEORGE  J.  KINDEL,  of  Denver,  Col.,  who  came  before  the  com- 
mission on  October  10,  to  complain  of  railroad  rates,  which  he  claimed 
resulted  in  discriminations  against  him.  took  occasion  to  incidentally  bring 
in  a  grievance  against  the  Standard  Oil  Company.  He  protested  against  the 
price  of  refined  oil  at  Denver,  which  he  thought  was  higher  than  it  should 
have  been,  and  paid  his  compliments  to  the  Standard  Oil  Company  in  the 
usual  manner  of  a  number  of  other  witnesses  who  referred  to  that  company. 
He  said  that  the  Standard  Oil  Company  had  knocked  out  other  refiners  by 
selling  oil  at  a  very  cheap  rate  until  it  had  driven  its  competitors  from  the 
field,  after  which,  he  said,  it  raised  the  price  100  per  cent. 

This  was  very  good  testimony  until  it  was  shown  that  Mr.  Kindel  had 
got  his  facts  backward  and  that  the  Standard  Oil  Company  was  not  a  refiner 
of  oil  at  Denver,  that  industry  being  carried  on  by  another  firm,  the  Stand- 
ard doing  a  limited  business  there  in  handling  the  crude  oil.  This  fact  hap- 
pened to  be  known  to  Commissioner  Kennedy,  who  had  lately  visited  Den- 
ver as  a  member  of  a  sub-commission  on  transportation  which  went  there  to 
investigate  charges  concerning  discriminating  railroad  rates.  When  it  was 
learned  that  Mr.  Kindel's  criticism  concerning  the  price  of  refined  oil  did 
not  bear  upon  the  Standard  Oil  Company  the  matter  was  dropped  and  the 
witness  confessed  that  he  had  been  misinformed  and  that  what  he  had  said 
had  been  based  on  mere  hearsay. 

Under  the  rules  of  the  commission,  Mr.  Kennedy's  correction  of  the 
witness  was  stricken  from  the  official  report,  while  the  erroneous  statement 
of  the  latter  was  allowed  to  stand,  without  even  his  final  admission  and 
excuse  that  his  testimony  was  based  only  on  hearsay.  In  that  way  the  mis- 
information contained  in  Mr.  Kindel's  testimony  was  allowed  to  remain  in 
the  official  report  without  any  adulteration  of  fact.  It  was  very  proper  that 
this  should  be  so.  because  the  testimony  looked  worse  for  the  Standard  Oil 
Company  when  shorn  of  the  statement  of  a  member  of  the  commission  con- 
tradicting the  loose  and  erroneous  comment  of  the  witness.  In  this  connec- 
tion it  is  interesting  to  note  that  at  the  close  of  the  testimony  given  by  Mr. 
Howard  Page,  a  member  of  the  commission  took  occasion  to  endeavor  to 
answer  a  question  about  which  the  witness  said  he  knew  nothing,  and  that 
was  allowed  to  remain  in  the  official  record.  Of  course,  the  result  of  this 
India  rubber  rule  that  seemed  to  be  applied  to  the  final  preparation  of  this 
testimony  for  publication  is  of  consequence  only  as  the  remarks  deliber- 
ately cut  out  or  any  testimony  added  might  tend  to  cause  the  reader  to  be 
misled  in  regard  to  the  information  that  was  actually  elicited  by  the  inves- 
tigation. Mr.  Kindel's  bit  of  interesting  testimony,  with  parts  eliminated 
from  the  official  report  indicated  by  black  faced  type,  follows: 

Mr.  KINDEL.  You  take  oil.  for  instance;  we  have  oil  fields  in  Colorado, 
and  yet  our  coal  oil  costs  100  per  cent,  higher  to-day  in  Denver  than  in  Chi- 
cago. Gasoline — I  got  fooled  on  that  this  spring.  I  bought  a  gasoline 
engine  and  figured  the  cost  on  it  of  seven  to  nine  cents  a  gallon.  I  bought 
the  engine  and  put  it  up  at  my  works.  I  expected  to  pay  5  or  10  per  cent, 
more,  but  I  was  not  prepared  to  pay  100  per  cent.  more.  Our  freight  rates 
to  the  Standard  Oil  Company  on  oil,  from  coal  oil  points  to  the  Pacific 
coast  points  are  96  cents,  while  from  Chicago,  right  through  our  oil  fields 
up  there,  it  is  781/2  cents;  and  the  oil  wells  are  controlled  by  the  Standard 
Oil  people. 

Q.  (By  Mr.  C.  J.  HARRIS.)  Do  they  control  in  Colorado?  A.  Yes.  sir; 
they  buy  the  oil.  For  instance,  there  are  the  several  owners  of  the  wells, 
and  they  pay  them  so  much,  and  they  refine  it. 

******  * 

Q.  (By  Vice-chairman  PHILLIPS.)  Referring  again  to  the  oil.  are 
there  any  individuals  or  companies  refining  oil  near  Denver,  where  you  have 
a  considerable  oil  field?  A.  Not  that  I  know  of;  they  have  all  been  knocked 
out  by  the  Standard  Oil  Company. 

Q.  (By  Vice-Chairman  PHILLIPS.)  How  did  they  knock  them  out?  A. 
By  reducing  the  price  to  such  a  point  that  they  had  to  sell  oil  there  for  five 
cents  and  less;  and  after  they  are  out,  then  they  raise  the  price  until  it  is 
al)OUt  100  per  cent,  higher. 


GEORGE   J.   KINDEL   AND   SAMUEL   SPENCER.  601 

*Q.  (By  Vice-chairman  PHILLIPS.)  A  hundred  per  cent,  higher?  A. 
Yes,  sir;   it  was  the  last  time  I  investigated  it. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Is  there  any  competition  there  in 
the  petroleum  business?    A.  No,  sir;  not  that  I  know  of. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Any  competition  there  amongst 
themselves?     A.  No.  sir. 

Q.  (By  Vice-chairman  PHILLIPS.)  Nor  from  abroad?  A.  No.  sir;  the 
prohibitive  freight  rates  bar  anybody  from  going  in;  you  can't  ship  in. 

Q.  (By  Vice-chairman  PHILLIPS.)  Does  the  Standard  Oil  Company 
ship  oil  from  a  distance  or  does  it  refine  the  oil  which  is  produced  in  those 
fields?     A.  They  produce  the  most  of  it  right  there  and  refine  it. 

Q.  (By  Vice-chairman  PHILLIPS.)  Do  they  own  the  wells  themselves? 
A.  No,  sir;  some  of  our  wealthy  men  own  the  wells,  and  they  sell  their 
supply  to  them.  They  may  own  some  of  the  wells,  but  I  know  Senator  Hill 
is  one  who  is  reputed  as  being  a  large  owner  of  oil  wells  in  Florence,  and 
he  does  not  refine  any.  He  produces  oil  and  they  refine  it.  They  control 
the  market  price  as  the  seller  of  this  product. 

*Q.  (By  Mr.  KENNEDY.)  On  the  contrary,  Senator  HIM,  who  was 
before  our  sub-commission  in  Denver  last  summer,  testified  that  he  owned 
none  of  the  producing  wells,  but  owns  a  refinery.  A.  Is  that  the  way  of  it? 
Well,  if  that  is  it,   I   am   misinformed;    it  is  only  hearsay. 

Q.  All  the  testimony  we  took  was  to  that  effect.  He  is  not  a  producer 
at  all,  but  a  refiner.  A.  Well,  I  complained  of  the  excessive  price  of  the  oil 
to  Standard  Oil  Company  managers,  and  they  told  me  what  I  have  just 
stated,  that  they  had  to  buy  the  oil  from  Senator  Hill  and  refine  it,  and 
said:     "Why  don't  you  kick  about  them  as  well  as  about  us." 

*Mr.  KENNEDY.  Mr.  Bell  had  the  commission  investigate  that  matter 
particularly  this  summer,  and  we  found  that  the  Standard  Oil  Company  con- 
trolled the  output  of  the  oil,  but  did  not  produce  or  refine  it.  They  came  in 
there  and  bought  practically  the  control  of  the  product  and  distributed  it 
throughout  the  State. 


MR.  SAMUEL  SPENCER,  of  New  York,  president  of  the  Southern  Rail- 
way Company,  testified  on  October  11,  1899. 

He  said  that  on  the  Southern  Railroad  there  was  no  discrimination  of 
rates  and  that  that  statement  applied  to  the  petroleum  industry,  as  well  as 
to  any  other. 

Q.  (By  Mr.  CLARKE.)  As  a  matter  of  fact,  has  any  company,  like  the 
Standard  Oil  Company  for  instance,  any  advantage  in  getting  the  business 
of  the  people  along  the  line  of  your  road  over  any  other  company?  A.  No, 
sir;  unless  they  have  superior  advantages  within  their  own  business;  none, 
so  far  as  the  railroad  company  furnishes  them. 

Q.  (By  Senator  MALLORY.)  Are  the  rates  charged  for  hauling  these 
tank  cars  the  same  as  is  charged  for  hauling  similar  cars  for  anybody  else? 
A.  The  only  difference  is  that  if  a  man  owns  his  own  car,  under  the  present 
car  mileage  system,  we  pay  him  a  special  rate  for  mileage  upon  his  car,  but 
we  would  do  that  for  any  man  who  furnishes  them,  and  I  would  like  to  see 
that  done  away  with,  but  we  cannot  do  it.  The  cars  are  there  and  every- 
body has  to  take  them  at  the  established  rate,  and  we  have  to  do  the  same 
thing  or  go  without  the  business. 


*Black   faced    type   indicutrs   matter   omitted,   in  the  cour.=p  of  Pditins,   from   ih'- 
official  report. 


602  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

COMMISSIONER  MARTIN  A.  KNAPP.  of  the  Interstate  Commerce 
Commission,  testified  on  October  5,  1899. 

Q.  (By  Senator  MALLORY.)  There  is  a  species  of  discrimination,  to 
which  my  attention  has  been  called,  that  you  have  not  mentioned  exactly — 
at  least  I  do  not  think  that  it  falls  under  any  of  these  charges.  That  is  the 
charging  of  different  rates  over  the  same  road  in  different  directions — over 
the  same  lines  of  road.  For  instance,  from  my  State,  Florida,  vegetables 
are  sent  up  to  New  York,  and  on  the  same  cars  coming  back  there  is  a  dif- 
ferent rate  per  hundred  charged.    A.  Oh,  yes,  sir. 

Q.  Now,  the  excuse  that  is  offered  for  that,  the  reason,  as  I  understand 
it,  is  that  they  have  to  bring  the  cars  back  anyhow,  that  they  have  got  to  go 
down  South  again,  and  it  is  better  to  get  something  than  nothing  for  it. 
Have  you  had  occasion  to  consider  the  validity  of  that  excuse  and  the 
reason?  A.  Oh,  yes,  sir;  in  numerous  cases — that  is  to  consider  the  general 
question  which  that  situation  raises.  I  recollect,  without  being  able  to  give 
exact  figures,  an  investigation  in  which  it  appeared  that  a  certain  railroad 
system  charged  a  good  deal  more  for  carrying  petroleum  products  south- 
bound in  tank  cars  to  certain  interior  destinations,  than  it  charged  for 
carrying  cottonseed  oil,  a  much  more  valuable  product,  in  the  other  direc- 
tion on  the  same  cars. 

Q.  Now,  the  reason,  I  suppose,  in  that  case  is  the  same  as  the  one  I 
refer  to.  Is  that,  in  your  judgment,  a  sufficiently  strong  reason  to  justify 
the  discriminations  which  are  practiced  in  consequence?  A.  I  do  not  hesi- 
tate to  say  that  I  do  not  think  it  is  sufficient.  Of  course,  you  gentlemen  all 
understand  this.  I  assume  it  depends  on  the  point  of  \ie^y.  If  you  accept 
railroad  transportation  as  a  purely  private  enterprise,  to  be  conducted  like 
a  farm  or  a  factory,  then  its  financial  interests  might  justly  lead  it  to  many 
and  obvious  discriminations,  but  if  you  say,  as  I  think  we  are  all  now  dis- 
posed to  say,  and  presently  everybody  will  say,  that  railroad  transportation 
is  not  a  private  commodity,  not  a  private  enterprise,  but  purely  for  the 
public  service,  and  that  public  rights  are  to  be  considered  at  least  equally 
with  the  rights  of  the  carriers,  then  of  course  the  asserted  justifications 
often  entirely  fail,  and  discriminations  which  might  be  excused,  on  the 
theory  of  private  enterprise,  become  palpably  insufficient  and  inadequate, 
when  you  contemplate  the  railroad  system  as  the  agency  of  the  State. 


COMMISSIONER  C.  A.  PROUTY,  of  the  Interstate  Commerce  Commis- 
sion, testified  on  October  5,  1899. 

Mr.  Prouty  seemed  to  think  that  the  location  of  the  refineries  of  the 
Standard  Oil  Company  at  seaboard  points,  where  oil  could  be  shipped  by 
tank  boats  to  Boston  and  from  Boston  distributed  through  the  New  Haven 
territory,  gave  that  company  an  unfair  advantage,  because  of  the  railroad 
rates,  over  competitors  who  were  obliged  to  ship  by  rail  from  interior 
points.  He  thought  that  it  was  significant  that,  w^hile  general  freight  rates 
from  Cleveland  to  Boston  had  declined  since  1887,  there  had  been  no 
decrease  in  the  rate  on  oil.  He  said  that  the  territory  embracing  practically 
all  of  Connecticut  and  parts  of  Rhode  Island  and  IVTassachusetts  was  con- 
trolled, when  he  testified,  by  the  New  York,  New  Haven  &  Hartford  Rail- 
road Company.  The  rate  on  gr'ain  and  grain  products,  on  iron  and  iron 
articles  and  on  petroleum,  from  Cleveland  to  Boston  in  1887  was  22  cents  a 
hundred  pound.s.  To-day,  he  said,  the  rate  on  grain  was  probably  l.i  cents 
a  hundred  pounds  and  on  iron  articles  20  cents  a  hundred  pounds,  the  rate 
on  petroleum  from  Cleveland  to  Boston  being  24  cents  a  hundred  pounds. 

Nearly  every  commodity  shipped  from  the  West  into  New  Haven  terri- 
tory secured  a  throu,gh  rate  from  Chicago  or  Cleveland  or  elsewhere,  but  on 
petroleum  and  its  products,  almost  alone,  there  was  no  through  rate.  When 
the  New  Haven  territory  is  reached,  the  local  rate  over  the  New^  Haven 
Road  must  be  paid.  The  high  rates  met  by  independent  refiners  of  Cleve- 
land and  Titusville  in  all  that  territory,  he  had  been  told,  prevented  them 
from  sending  their  .goods  there. 


C.  A.  PROUTY.  603 

"Here  is  another  significant  fact,"  he  said.  "The  New  Haven  Road  says 
that  petroleum  and  its  products  shall  be  second  class,  unless  the  party  to 
whom  it  is  shipped  has  a  private  siding  and  tank  facilities  beside  the  rails, 
into  which  he  can  pump  that  petroleum,  and  in  that  case  it  is  fifth  class. 
The  Standard  Oil  Company  people  have  these  tanks  and  all  these  private 
sidings,  all  over  the  New  Haven  territory.  A  person  without  these  facilities 
must  pay  second  class,  and  the  person  with  these  facilities  pays  fifth  class. 
The  fifth-class  rate  from  Boston  to  New  Haven  is  probably  10  *or  12  cents 
per  hundred  pounds;  the  second-class  rate  is  probably  20  cents.  There  is  a 
difference  of  10  cents  a  hundred  pounds;  so,  I  say,  that  while  the  Standard 
Oil  Company  does  pay  the  published  price — they  have  gotten  above  the 
point  of  taking  a  rebate — they  have  got  to  the  point  where  they  can  make 
the  rate  and  the  manipulation  of  these  rates  is  just  as  effective  to  keep  inde- 
pendent people  out  of  that  territory  as  the  payment  of  the  rebate  would  be, 
and  more  so.f 

"Now,  I  will  give  you  another  illustration.  Of  course.  I  haven't  the 
time  to  go  through  this  whole  business;  but  this  is  the  rate  from  Cleveland 
down  to  New  Orleans.  You  know  the  Standard  Oil  people  have  some 
refineiies  in  Cleveland,  and  there  are  a  great  many  independent  refineries 
at  Cleveland.  The  Standard  Oil  Company  has  large  refineries  at  Whiting, 
Ind.,  just  south  of  Chicago,  and  that  is  the  only  company  that  has  any 
refinery  at  that  point.  There  is  a  general  relation  of  rates  from  Cleveland 
and  Chicago  to  New  Orleans.  I  had  the  opportunity  to  get  the  rates  on 
about  20  articles,  which  take  substantially  the  same  rate  that  petroleum  and 
its  products  ordinarily  take,  and  I  find  that  the  Cleveland  rate  is  just  about 
two  cents  higher  than  the  Chicago  rate  on  an  iron  article,  as  it  is  on  almost 
everything  that  you  can  think  of.  It  costs  about  two  cents  more  to  send 
from  Cleveland  to  New  Orleans  than  it  does  from  Chicago.  Linseed  oil  takes 
the  rate  of  26  cents  from  Chicago  and  28  cents  from  Cleveland.  But  when 
you  come  to  petroleum,  you  find  this  to  be  true,  that  whereas  the  rate  from 
Cleveland  is  31  cents  to  New  Orleans,  the  rate  from  Chicago  is  23  cents  to 
New  Orleans.  The  independent  refiner  pays  the  31-cent  rate,  and  the  only 
person  in  the  world  who  gets  the  benefit  of  the  23-cent  rate  is  the  Standard 
Oil  Company,  of  Whiting.  Now,  that  is  the  way  I  think — and  I  ought  very 
probably  to  say — that  the  Standard  Oil  Company  manipulates  rates  to-day. i 

"Now,  I  do  not  think,  gentlemen,  that  the  property  of  the  Standard  Oil 
Company  is  not  just  as  much  entitled  to  respect,  *as  long  as  they  use  it 
properly,  as  that  of  everybody  else.  I  do  not  believe  any  legislation  against 
that  company  would  be  wise.§  But  I  do  think  that  the  avenues  of  com- 
merce, that  the  arteries  through  which  the  life  blood  of  this  country  circu- 
lates, ought  to  be  unimpeded;  I  think  that  the  humblest  shipper  should 
have  the  same  rights  as  the  mightiest  monopoly,  and  I  think  there  ought  to 
be  somewhere  some  power  which  can  see  that  this  is  so." 

Q.  (By  Senator  MALLORY.)  Have  you  any  idea  what  influence  it  is 
that  enables  the  Standard  Oil  Company  to  get  such  concessions  as  it  evi- 
dently does  get?  A.  My  dear  Senator,  the  influence  is  exactly  the  same 
influence  which  produces  every  discrimination;  the  interest  of  the  party 
which  grants  the  discrimination,  somewhere.  I  suppose,  in  the  case  of  the 
New  Haven  Road,  it  is  perfectly  apparent  what  the  reason  for  it  is.  The 
New  Haven  Road  can  make  more  money  by  transporting  that  petroleum 
upon  a  local  rate  than  it  can  by  joining  in  the  through  rate.  You  asked  me 
why  the  New  Haven  Road  does  not  adopt  the  same  policy  in  reference  to 


*Black  faced  type  Indicates  matter  omitted,  in  the  course  of  editing,  from  tiie 
official  report. 

tThis  and  other  severe  accusations  by  Mr.  Prouty  against  the  Standard  Oil  Com- 
pany seem  entirely  unwarranted  and  inconsistent,  in  view  of  his  later  statement  that 
it  was  peri^ectly  clear  that  the  New  Haven  Road  made  the  local  rate  because  it 
could  make  more  money  on  it  than  by  .ioining'  in  a  through  rate. 

Jin  the  official  report  this  sentence  is  given  in  the  follovting  form:  "That  is  the 
way  in  which  the  independent  refiners  claim  tlie  Standard  Oil  people  manipulate 
rates  to-day." 

Sin  the  official  report  the  following  appears  n  the  place  of  the  above  sentence: 
"I  do  not  believe  any  legislation  against  that  company,  which  is  in  any  sense  unjust, 
would  be  wise  or  redound  to  the  benefit  of  the  country,  etc." 


604  REVIEW  OF  TESTIMONY— INDUSTRIAL   COMMISSION. 

all  commodities,  and  I  simply  say  to  you,  because,  if  the  people  of  Connecti- 
cut had  to  pay  the  local  rate  on  everything  they  burn  up  and  wear  and  eat 
down  there,  they  would  soon  send  up  here  to  the  Capitol  some  Senators  and 
Representatives  who  would  speedily  endeavor  to  enact  a  law  which  would 
stop  it;  but  they  let  it  go  along  in  reference  to  one  or  two  commodities 
where  they  would  not  in  reference  to  all. 

Q.  Have  you  any  suggestion  as  to  a  practical,  expeditious  and  certain 
remedy  for  such  an  evil  as  that,  conceding  that  it  exists?  A.  Of  course,  I 
do  not  say  that  it  is  an  evil.  I  do  not  say  that  it  is  an  unjust  discrimination. 
I  simply  state  the  facts  as  they  appear,  as  it  seems  to  me,  on  the  surface. 

Mr.  Prouty  said,  assuming  that  through  rates  should  be  given  into  the 
New  Haven  territory,  some  one  should  be  empowered  to  compel  the  making 
of  such  rates.  He  said  it  was  undoubtedly  in  the  power  of  Congress  to 
invest  the  power  to  make  such  a  through  rate  in  somebody. 


MR.  P.  E.  DOWE,  of  New  York  City,  president  of  the  Commercial  Trav- 
elers' National  League,  went  before  the  commission  on  June  15,  1899.  His 
testimony  could  ordinarily  have  little  or  no  bearing  on  the  Standard  Oil 
Company,  for  the  reason  that  commercial  agents  could  be  employed  only  to 
a  moderate  extent  by  that  company.  Although  the  witness  gave  no  evidence 
of  having  special  information  on  the  subject  of  the  oil  industry,  Vice-Chair- 
man  Phillips  questioned  him  in  regard  to  that  subject.  Mr.  Dowe  gave  some 
testmony  that  would  not  be  likely  to  please  Vice-Chairman  Phillips,  and 
curiously  enough  it  does  not  appear  in  the  official  report.  This  portion  of 
the  testimony,  which  was  eliminated,  follows: 

Q.  (By  Vice-Chairman  PHILLIPS.)  Then  it  is  quite  certain  that  they 
cannot  produce  as  cheaply  as  an  individual  who  is  capable  of  managing  his 
own  affairs?  A.  I  don't  quite  agree  with  you  in  that,  Mr.  Chairman;  I 
would  like  to  agree  with  you  entirely,  but  it  seems  to  me  that  they  do  cer- 
tainly cheapen  the  cost  of  production. 

The  following  is  a  portion  of  Mr.  Dowe's  testimony: 

Q.  (By  Vice-Chairman  PHILLIPS.)  If  the  chair  understood  you  cor- 
rectly, you  stated  the  trusts  really  cheapen  things,  that  manufacturing  is 
cheaper  than  without  trusts.  Now,  do  you  limit  that  to  a  large  number 
under  one  control  in  various  parts  of  the  country  where  they  have  gone 
into  a  combine  or  a  trust;  do  you  believe,  in  other  words,  that  one  central 
organization  can  run  40  different  manufacturing  establishments  in  10  or  1.5 
States  as  cheaply  as  owners  can  in  each  of  these  States,  provided  their 
works  were  large  enough  to  manufacture  a  reasonable  amount  of  goods? 
A.  Why  certainly  they  can  produce  for  less  money  with  the  syndicate  by 
cutting  off  the  expenses  of  salaries  of  traveling  men  first,  and  second  the 
cutting  off  of  salaries  of  officials.  *l  find  in  tlie  record  of  trust  organiza- 
tions, that  there  is  combining  and  re-combining;  for  instance,  Jones,  Brown 
&  Robinson  have  a  concern  which  sells  out  to  the  American  Wind  Bag  Com- 
pany, and  the  American  Wind  Bag  Company  will  ultimately  sell  out  to  the 
American  Wind  Syndicate,  and  so  on;  it  is  a  wheel  within  a  wheel.  Some 
salesmen  were  disposed  of  by  Jones,  Brown  &  Robinson;  and  then  there 
were  some  salesmen  who  represented  the  American  Wind  Bag  Company, 
and  they  were  dispensed  with  when  they  went  into  the  American  Wind 
Company.  At  the  same  time  there  was  a  dropping  of  officials  of  Jones, 
Brown  &  Robinson;  they  receive  a  great  deal  of  money  for  their  plant, 
probably  it  is  three  times  what  it  is  worth,  and  it  may  be  a  possibility  that 
Jones  was  president  of  the  Wind  Bag  Company  and  he  drops  his  position 
when  it  sells  out — when  it  goes  to  the  American  Wind  Company. 

Q.  (By  Vice-Chairman  PHILLIPS.)  *That  is,  under  certain  circum- 
stances; I  admit  the  truth  of  that;  but  there  are  certain  industries  where 
they  are  not  subject  to  such  (>xpenscs  as  traveling  salesmen,  and  so  on.  that 
certainly  cannot  be  run  as  cheaply  as  by  individuals  who  look  specifically 
after  their  own  plants.     *l  am  thoroughly  convinced — I  have  it  here  stated, 

*BIack  faced  typr>  indicates  matter  umittod,  in  tiie  rourfe  nf  editing,  fnmi  the 
cfficial   report. 


p.  E.  DOWE.  605 

that  the  largest  trust  in  this  country  is  not  producing  as  cheaply  as  those 
of  much  smaller  capacity  can  produce;  their  whole  plants  are  run  by  em- 
ployes. Their  production  and  their  manufacturing  is  all  run  from  one 
central  office,  and  all  who  manage  their  affairs  are  employes.  A.  I  can 
understand  very  readily  how  trusts  would  be  less  profitable  than  the  indi- 
vidual concerns  on  the  ground  that  much  of  the  capital  is  watered.  If  I 
had  a  plant  and  business  which  was  worth  intrinsically  $100,000,  and  the 
agent  of  a  trust  would  come  along  and  say:  "Mr.  Dowe,  we  will  give  you 
1200,000  for  your  plant;  we  will  give  you  $100,000  in  common  stock  and 
$100,000  in  preferred  stock."  If  I  think  I  am  strong  enough  to  buck  against 
the  trust,  and  I  decline,  they  finally  think  that  I  am  a  pretty  good  judge  of 
my  business,  and  I  am  quite  well  fixed  and  I  will  interfere  with  the  imme- 
diate business  of  the  trust,  and  they  will  agree  finally. to  give  me  $200,000 
in  cash.  Now,  I  have  made,  besides  the  salaries  of  those  who  are  identified 
with  me  in  this  $100,000  plant  that  they  have  bought,  a  margin  of  10  per 
cent.  They  will  expect  to  make  10  per  cent,  on  $200,000,  and  somebody  is 
going  to  be  defrauded;  and  I  can  readily  understand  how  it  would  be  diffi- 
cult, unless  the  prices  were  advancing,  to  make  10  per  cent,  on  $200,000 
where  we  used  to  make  it  on  $100,000. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Do  you  believe  that  any  great  trust 
could  exist  for  any  length  of  time,  provided  other  people  could  organize  and 
pursue  that  same  line  of  industry  at  the  same  terms  and  conditions  as  they 
had  as  to  terms  of  transportation?  A.  No,  it  would  result  in  breaking 
them  up. 

*Q.  (By  Vice-Chairman  PHILLIPS.)  Then  it  is  quite  certain  that  they 
cannot  produce  as  cheaply  as  an  individual  who  is  capable  of  managing  his 
own  affairs?  A.  I  don't  quite  agree  with  you  in  that,  Mr.  Chairman;  I  would 
like  to  dgree  with  you  entirely,  but  it  seems  to  me  that  they  do  certainly 
cheapen  the  cost  of  production. 

Q.  (By  Vice-Chairman  PHILLIPS.)  There  may  be  a  few,  when  they 
have  a  large  expense  for  traveling  salesmen,  etc.,  but  there  is  no  great  com- 
bine that  would  exist  five  years  if  any  other  persons  or  corporations  could 
go  into  the  same  business  on  the  same  terms,  as  to  the  transportation  of 
manufactures.  A.  Who  will  go  into  the  business?  The  salesmen  would  be 
willing  to  if  they  could  get  the  capital  back  of  them,  and  they  would  have  a 
knowledge  of  the  business,  but  since  I  have  made  a  personal  argument  pre- 
viously, I  would  make  one  again.  I  sell  printing  presses;  supposing  the 
manufacturers  of  printing  presses  would  go  into  a  combination,  and  they 
would  say:  "Mr.  Dowe,  you  know  the  technical  points  of  the  business;  we 
cannot  pay  you  $5,000  a  year;  we  can  give  you  $2,500  and  a  house  position." 
Well,  I  might  be  egotistical  enough  to  believe  that  I  could  organize  a  com- 
pany of  my  own  and  I  would  get  some  friends  to  put  up  some  money  and  I 
would  go  to  New  .lersey  and  I  would  capitalize  a  million  dollar  company, 
with  a  few  thousand  dollars  to  begin  with,  and  ultimately  sell  some  stock. 
I  would  get  my  friends  and  others  interested,  and  they  might  approach  their 
friends.  The  instructions  then  to  the  representatives  and  agents  of  the 
printing  press  syndicate  would  be  to  outsell  me  under  any  circumstances 
that  no  matter  what  prices  I  might  quote,  to  go  under,  and  I  would  soon  be 
wiped  out. 

Q.  (By  Vice-Chairman  PHILLIPS.)  Well,  the  proposition  was  that  they 
should  be  on  terms  of  equality  with  the  others;  if  there  was  a  law  to  pre- 
vent your  company  from  underselling  at  any  given  point  where  you  had  a 
market  for  your  goods,  and  keeping  the  price  up  at  other  points;  if  there 
was  a  law  to  prevent  that,  to  prevent,  if  you  please,  what  might  be  called 
destructive  competition,  I  think  any  company  would  be  willing  to  take  the 
stock  if  they  could  get  in  on  terms  of  equality;  that  was  the  proposition. 
A.  Yes,  sir;  that  is  a  pretty  hard  proposition.  I  appreciate  the  fact  that 
some  of  the  officials  that  are  thrown  out  or  that  have  sold  out  their  intere.st 
in  concerns  which  were  bought  up  by  the  trust,  will  remain  idle  a  certain 
length  of  time;  but  some  of  them  are  somewhat  energetic  and  progressive, 

*Black  faced  t.vpe  indicates  matter  omitted,  in  the  course  of  editing-,  from  the 
official   report. 


606  REVIEW  OF  TESTIMONY— INDUSTRIAL  COMMISSION. 

aud  probably  would  get  into  manufacturing.  I  presume  they  will,  but 
whether  it  could  be  on  the  basis  of  equality  or  not,  is  a  question. 

Q.  (By  Vice-Chairman  PHILLIPS.)  The  opinion  very  largely  prevails 
among  business  men  that  the  trusts  will  go  down  of  their  own  weight.  They 
cannot  be  managed  as  economically  as  men  or  smaller  companies  could 
manage  their  own  affairs.  A.  It  is  the  belief  of  the  traveling  men  that 
trusts  are  largely  watered,  and  are  organized  for  speculative  reasons,  and 
that  they  will  go  down  of  their  own  weight;  that  they  cannot  be  handled  as 
economically  as  ordinary  business  would  be  handled  by  the  individual 
owners. 

Q.  (By  Representative  BELL.)  Well,  hasn't  the  Standard  Oil  Trust 
lasted  now  for  over  30  years? 

The  WITNESS.  The  Standard  Oil  Company  or  the  South  Improvement 
Company? 

*Representative  BELL.  It  is  all  one  under  different  heads,  for  the  pur- 
pose of  doing  the  same  things,  evading  the  law,  and  it  bids  fair  to  live  for 
several   generations  yet. 

Q.  (By  Vice-chairman  PHILLIPS.)  Do  you  believe  that  the  Standard 
Oil  Company  is  producing  oil  as  cheaply,  refining  oil  as  cheaply,  and  mar- 
keting as  cheaply,  as  others  could  do  and  would  do,  if  they  had  the  same 
opportunity?  A.  With  the  same  opportunity  others  could  produce  as 
cheaply;  but  they  control  such  a  large  proportion  of  the  product  that  they 
virtually  make  the  price  for  crude  oil. 


*Black   faced   type  indicates   matter   omitted,  in  tlie  course  of  editing-,   from   tlif 
official  report. 


APPENDIX. 


Supplementary  affidavits  of  Henry  Demarest  Lloyd,  Charles  B.  Mathews, 
M.  L.  Lockwood,  F.  S.  Monnett,  James  W.  Lee  and  John  D.  Archbold. 

After  the  Industrial  Commission  had  concluded  the  taking  of  testimony 
on  the  subject  of  the  Standard  Oil  Company,  Messrs.  Henry  Demarest  Lloyd, 
M.  L.  Lockwood,  F.  S.  Monnett  and  James  W.  Lee,  whose  testimony  had 
been  referred  to  by  Mr.  John  D.  Archbold,  together  with  Charles  B.  Mathews, 
prepared  affidavits  which  were,  by  their  request,  embodied  in  the  report  of 
the  commission.  These  affidavits,  in  the  cases  of  those  who  had  appeared 
as  witnesses,  were  largely  devoted  to  a  reiteration  and  elaboration  of  state- 
ments they  had  previously  made  when  on  the  stand  and  in  contradiction  to 
the  testimony  given  by  Mr.  Archbold.  Mr.  Mathews  sought  to  justify  his 
acts  when  connected  with  the  Buffalo  Lubricating  Oil  Company  and  during 
his  contention  with  the  Vacuum  Oil  Company,  his  competitor  in  business. 
Mr.  Archbold,  also  by  affidavit,  replied  to  these  supplementary  statements, 
and  by  so  doing  added  much  of  interest  to  throw  light  on  the  contentions 
under  consideration. 

It  will  be  seen  by  Mr.  Lloyd's  voluminous  defense  of  "Wealth  Against 
Commonwealth"  that  he  assumeo  fairness  in  his  work,  because  he  claims  to 
have  quoted  at  great  length  from  a  great  number  of  official  documents  and 
from  the  testimony  of  Standard  Oil  witnesses  who  have  appeared  before 
various  investigating  committees.  No  important  attempt  to  misrepresent 
any  great  cause  has  ever  been  made  without  quoting  the  words  of  men  who 
are  connected  with  the  cause  being  attacked.  The  art  of  falsification  is 
never  more  powerfully  applied  than  by  making  selected  quotations  from 
"authorities,"  from  "official"  publications  and  from  the  language  of  the  very 
men  it  is  desired  to  misrepresent,  in  order  to  produce  an  erroneous  impres- 
sion in  the  minds  of  readers  who  do  not  suspect  that  quotations  from  un- 
questionable sources  may  be  ingeniously  arranged  to  form  a  falsehood. 
They  do  not  know  that  a  partial  truth  is  the  most  vicious  form  of  a  lie.  In 
view  of  these  well-known  facts  Mr.  Lloyd's  protestations  in  relation  to  the 
respectability  and  reliability  of  his  "authorities"  are  in  themselves  of  little 
consequence. 

Mr.  Mathews'  statement  of  the  circumstances  surrounding  his  contro- 
versy with  the  Vacuum  Oil  Company  should  only  be  read  in  connection  with 
the  record  in  that  case  to  which  Mr.  Archbold  refers  as  the  most  complete 
and  reliable  statement  of  the  facts  involved  and  which  appears  on  pages 
801  to  951,  inclusive,  of  the  report  of  the  Committee  on  Manufactures  of  the 
House   of   Representatives.   1888.*      Not  only   does   this   record    show    there 


♦Furnished  by   tlie  Standard   Oil   Company: 

The  CHAIRMAN.  Now,  there  is  some  other  testimony  which  you  have  hus- 
gested  htre,  which  you  offer  in  the  nature  of  records,   which  will  be  marked. 

Mr.  DODD.    It  is  the  indictment,  etc.,  in  that  Buffalo  case 

Tiie  CHAIRMAN.  That  will  be  admitted  for  the  reason  that  upon  examination 
of  Mr.  Mathews  here  before  the  committee  he  agreed  to  furnish  us  with  this  copy 
f'f  the  record,  and  as  he  has  not  done  so,  I  will  put  It  in  the  case  to  complete  his 
testimony. 

Mr.  DODD.    I  also  have  a  copy  of  the  affidavit  of  the  jirors  in  that  case. 

The  CHAIRMAN.  This  portion  we  will  have  to  dispose  of  in  executive  session. 
I  understand  that  this  affidavit  was  an  affidavit  forming  part  of  the  record.  (Report 
Committee  on  Manufactures,  House  of  Represcntatixes.  Standard  Oil  Trust.  18SS, 
p.  801.) 


ii  AFFIDAVIT   OF  HENRY   DEMAREST   LLOYD. 

was  not  a  particle  of  evidence  by  which  any  member  of  the  Standard  Oil 
Company  could  have  been  held  in  that  case,  but  it  shows  that  the  Everests 
were  only  convicted  of  enticing  away  a  workman  under  contract,  this  work- 
man, with  a  knowledge  of  their  trade  secrets,  having  been  previously  enticed 
away  from  them  to  a  rival  refinery.  Very  aptly  Mr.  Mathews  quotes  the  old 
saw : 

"No  man  e'er  felt  tha  halter  draw, 

"With  good  opinion  of  the  law." 

His  quotation  is  perhaps  the  best  explanation  of  his  criticisms,  as  well 
as  those  of  his  friend  Lockwood,  of  the  legal  proceedings  in  connection 
with  this  case. 

It  will  be  seen  that  Mr.  Lockwood,  in  his  affidavit,  takes  great  pains  to 
prove  that  the  net  profit  on  oil  at  wholesale  at  the  point  of  manufacture  is 
considerably  less  than  the  gross  retail  price  of  oil  sold  in  cans  at  retail  in 
some  parts  of  Texas  and  Florida.  This  might  be  an  herculean  task  for  a 
pigmy,  and  it  is  performed  fairly  well  by  Mr.  Lockwood.  He  might  also 
have  proven  that  crude  oil  at  the  well  is  less  valuable  than  the  highest  grade 
of  lubricating  oil  retailed  in  small  bottles,  and  thus  have  added  still  further 
to  his  national  reputation  as  a  debater  of  moot  questions.  Mr.  Lockwood 
also  juggles  statistics  in  relation  to  oil  production  with  great  facility. 

Mr.  Monnett  in  his  affidavit  attempts  to  set  himself  straight  in  his  now 
much  advertised  "bribery  case,"  and  by  so  doing  gave  Mr.  Archbold  an  op- 
portunity to  tell  the  commission  the  whole  story  in  connection  with  that 
matter. 

Mr.  Lee,  "being  duly  sworn,  deposes  and  says"  several  things  to  show 
that  the  Pure  Oil  Trust  is  a  good  trust,  and,  while  in  outward  form  and 
feature  quite  like  some  bad  trusts,  its  spirit  is  very  different. 

As  a  non-dividend  paying  combination  the  Pure  Oil  Trust  is  peculiar 
and  admittedly  different  from  combines  conducted  on  business  principles. 

In  order  that  the  reader  may  judge  of  the  contentions  contained  in  these 
affidavits  they  are  given  here  in  full: 

AFFIDAVIT  OF  HENRY  DEMAREST  LLOYD, 

Author  of  Wealth  Against  Commonwealth. 

Henry  Demarest  Lloyd  being  sworn  and  shown  the  following  statement* 
made  by  Mr.  John  D.  Archbold  before  the  Industrial  Commission: 

"I  desire  to  say  a  word  regarding  the  effort  at  pathetic  reference  of  Mr. 
Lockwood  to  the  Rice  case  in  Mr.  Lloyd's  book.  I  desire  to  characterize  this 
statement  in  Mr.  Lloyd's  book,  as  well,  indeed,  as  all  the  other  statements 
with  reference  to  our  business,  as  cunning  fiction,  made  up  entirely  on  one- 
sided testimony  and  dressed  for  sale.  Whether  Mr.  Lloyd  expected  to  share, 
as  a  result  of  his  advocacy  of  Rice,  in  what  Mr.  Rice  might  be  able  to  get 
from  us,  I  am  unable  to  say,  but  he  certainly  lays  himself  open  to  that  sus- 
picion. 

"I  desire  to  say  further  with  reference  to  this  book  of  Mr.  Lloyd's,  that 
if  you  are  disposed  to  waste  your  time  reading  it  you  will  find  it,  with  refer- 
ence to  its  statements  regarding  the  business  of  the  Standard  Oil  Company, 
one  of  the  most  untruthful,  distorted  compilations  that  was  ever  inflicted 
upon  a  suffering  public." 

"Q.  (By  Mr.  FARQUHAR.)  Will  you  state  the  title  of  the  book?  A. 
Wealth  vs.  Commonwealth"— 

Makes  deposition  as  follows: 

That  he  is  the  author  of  Wealth  Against  Commonwealth. 

That  the  main  and  central  statements  of  Wealth  Against  Common- 
wealth are: 

First — That  certain  men,  now  commonly  known  as  the  Standard  Oil 
Company,  entering  the  oil  business  before  and  after  1872,  with  no  more 
capital  and  business  experience  than  men  already  successfully  established 
in  the  business,  were  declared  by  judicial  and  legislative  investigations  by 
the  State  and  National  governments  to  have  obtained  in  a  few  years  after 
1872  a  controlling  and  monopolistic  position  in  the  great  oil  industry. 

*See  Vol.  I.  Rcpcrt  of  tlip  Tndti.^trir.i  Cr  rnmis:-ion.  Part  TT.  i>a,t;p  7.7,9. 


AFFIDAVIT  OF  HENRY  DEMAREST  LLOYD.  iii 

Second — That  judicial  decisions  and  formal  reports  of  legislative  in- 
vestigations declare  them  to  have  done  this  largely  by  making  with  the  rail- 
ways secret  and  unlawful  contracts,  by  which  their  competitors  and  the 
people  at  large  were  denied  the  protection  of  competitive  markets  for  buying 
and  selling  and  deprived  of  their  right  to  work  at  the  occupation  of  their 
choice,  and  were  forced  to  abandon  their  efforts  in  the  oil  industry  to  pro- 
vide a  livelihood  for  themselves  and  their  families.  After  taking  3,700  pages 
of  evidence  and  sitting  for  months,  the  railroad  investigating  committee  of 
1879  of  the  New  York  Legislature  said  in  their  report:  "The  history  of  this 
corporation  is  a  unique  illustration  of  the  possible  outgrowth  of  the  present 
system  of  railroad  management  in  giving  preferential  rates,  and  also  show- 
ing the  colossal  proportions  to  which  monopoly  can  grow  under  the  laws  of 
this  country.  *  *  *  fj^g  parties  whom  they  have  driven  to  the  wall 
have  had  ample  capital  and  equal  ability  in  the  prosecution  of  their  business 
in  all  things  save  their  ability  to  acquire  facilities  for  transportation." 

Third — That  this  success  of  the  oil  monopoly  has  encouraged  the  forma- 
tion of  other  monopolies  by  similar  means,  filling  the  minds  of  the  people 
with  alarm  and  threatening  not  only  the  prosperity,  but  the  peace  of  the 
country. 

Deponent  further  swears  that  his  account  of  these  matters  in  Wealth 
Against  Commonwealth  makes  no  claim  to  be  the  result  of  original  investi- 
gation, nor  personal  knowledge,  but  is  in  all  things  essential  and  contro- 
versial a  transcription  fiom  the  documentary  records  of  State  and  Federal 
courts,  civil  and  criminal,  of  Legislatures,  of  Congress,  of  the  Interstate  Com- 
merce Commission,  and  of  sworn  testimony  given  in  legal  proceedings  and 
official  inquiries,  corrected  by  rebuttal  of  testimony  and  cross-examination, 
with  no  changes  in  substance  and  no  changes  in  form  other  than  those  neces- 
sary for  such  condensation  and  simplification  as  make  the  transcription  in- 
telligible to  the  common  people. 

He  further  swears  that  in  giving  the  public  the  particulars  on  which  the 
official  verdicts  have  been  found  his  account  is  so  far  from  being  "one-sided" 
that  in  less  than  500  pages  it  contains  more  than  200  quotations,  some  of 
them  nearly  a  page  in  length,  from  the  testimony  and  statements  in  behalf 
of  the  members  of  the  oil  monopoly,  and  that  in  all  cases  he  has  indicated 
the  nature  of  their  defense,  so  much  so  that  what  is  pertinent  in  the  replies 
to  him  which  have  been  made  for  them  will  be  found  to  have  already  iDeen 
given  by  him  in  Wealth  Against  Commonwealth. 

Deponent  further  says  that  every  controversial  statement  made  by  him 
is  supported  by  exact  references,  by  page  and  volume,  to  the  official  sources 
of  information  on  which  it  is  based;  that  in  the  five  years  which  have  elapsed 
since  the  appearance  of  the  book  it  has  not  been  shown  that  his  conclusions 
have  gone  beyond  the  decisions  or  the  testimony  on  which  they  are  based, 
nor  has  the  accuracy  of  his  quotations  and  condensations  been  disproved. 

Deponent  further  points  out,  in  answer  to  the  charge  of  "one-sided  testi- 
mony," that  the  selection  of  the  testimony  was  not  his  work,  but  that  of 
courts  and  legislative  committees  which,  after  hearing  both  sides  on  direct 
and  cross-examination,  choose  the  "one  side"  which  was  to  be  believed.  De- 
ponent believes  he  would  have  been  entirely  within  his  legal  and  literary 
rights  in  accepting  this  "one-sided  testimony"  as  the  testimony  officially  and 
judicially  attested  and  approved.  But  the  deponent  points  out  that,  though 
he  would  have  been  justified  in  disregarding  the  testimony  of  the  other  side, 
as  these  public  authorities  disregarded  it  after  hearing  it,  he  has  not  done 
so,  but  in  all  cases  has  made  sufficient  reference  to  and  frequent  quotations 
from  this  testimony  on  the  other  side. 

The  deponent,  in  answer  to  the  characterization  of  "all"  of  the  state- 
ments of  Wealth  Against  Commonwealth  as  "cunning  fiction,  made  up  en- 
tirely on  one-sided  testimony  and  dressed  for  sale,"  refers  to  his  verbatim 
quotations  from  the  many  decisions  of  the  Supreme  court  of  Ohio  and  Su- 
preme court  of  New  York,  the  Federal  court  of  the  Southern  district  of 
Ohio,  decisions  of  the  Interstate  Commerce  Commission,  of  the  Criminal 
court  of  oyer  and  terminer  of  Erie  county,  of  New^  York,  in  the  Buffalo 
cases;  of  the  court  of  Cuyahoga  county.  Ohio,  in  the  case  of  the  Standard 
Oil  Company  against  W.  C.  Schofield  &  Co.,  in  the  "contract  in  restraint  of 
39 


iv  AFFIDAVIT  OF  HENRY  DEMAREST  LLOYD. 

trade"  case,  the  decision  of  the  Supreme  court  of  New  Yorli  in  the  case  of 
Samuel  Van  Sickle  against  the  Acme  Oil  Company  for  the  suppression  of 
inventions  and  inventor,  the  decisions  of  the  Interstate  Commerce  Commis- 
sion in  the  cases  of  other  refiners  than  Rice  attacked  by  the  same  methods, 
the  formal  declarations  of  the  New  York  Assembly  Railroad  Investigating 
committee  of  1879,  and  of  the  Senate  select  committee  of  the  Forty-ninth 
Congress;  and,  adding  to  these  the  many  quotations  made  by  him  from  the 
testimony  of  the  members  of  the  oil  monopoly  or  men  favorable  to  them, 
respectfully  submits  that  these  decisions  and  findings  and  friendly  testimony 
can  not  be  properly  described  as  "cunning  fiction  made  up  entirely  on  one- 
sided testimony  and  dressed  for  sale." 

Further,  as  to  the  complaint  that  the  statements  "regarding  the  business 
of  the  Standard  Oil  Company"  are  "distorted,"  deponent  states  that  he  would 
have  been  able  to  add  largely  to  his  quotations  from  the  defense  of  the 
Standard  Oil  Company  but  for  the  fact,  stated  by  the  New  York  Assembly 
Legislative  Committee  of  1879,  that  they  were  "unable  to  ascertain  the  exact 
relations  of  these  different  organizations,  owing  to  the  refusal  of  several 
members  *  *  *  subpoenaed  as  witnesses  to  obey  the  subpoena,  and  the 
refusal  of  those  who  did  attend  to  answer  our  questions."  The  committee 
refers  to  the  combination  as  "this  mysterious  organization,  whose  business 
and  transactions  are  of  such  a  character  that  its  members  declined  giving 
a  history  or  description  of  it  lest  their  testimony  be  used  to  convict  them 
of  a  crime." 

The  deponent  further  points  out  that  Wealth  Against  Commonwealth 
quotes  from  official  sources  the  fact,  which  is  not  now  denied  by  anyone, 
though  denied  at  first,  that  the  men  seeking  to  obtain  a  monopoly  of  the  oil 
business  organized  a  company  called  the  South  Improvement  Company,  and 
that  this  company  in  1872  made  secret  and  unlawful  contracts  with  the  prin- 
cipal railroads  by  which  their  competitors  could  move. 

And  deponent  further  states  that  Wealth  Against  Commonwealth  cites 
other  decisions  and  findings  to  the  effect  that,  although  the  charter  of  this 
company  was  almost  immediately  forfeited  by  the  State  of  Pennsylvania  and 
the  contracts  with  the  railroad  canceled,  substantially  similar  relations  with 
various  railroads  were  thereafter  re-established  by  the  Standard  Oil  men,  as 
is  shown  in  many  cases. 

To  show  the  part  taken  by  the  president  of  the  Standard  Oil  Company 
in  this  South  Improvement  Company,  Wealth  Against  Commonwealth  quotes 
the  testimony  of  one  of  his  principal  associates  before  Congress  in  1888  and 
quotes  said  president  at  about  the  same  time  in  his  testimony  before  the 
New  York  Senate  Committee  of  1888,  when  asked  under  oath  if  he  had  not 
been  in  the  "South  Improvement  Company,"  as  saying,  "I  was  not." 

Wealth  Against  Commonwealth  reproduces  from  the  official  publications 
of  Congress  and  the  State  of  New  York  the  details  of  the  contract  made 
by  the  South  Improvement  Company  with  the  railroads  of  the  oil  regions 
as  showing  that  this  bound  the  railroads  in  substance:  First,  to  increase  the 
oil  freight  rates,  sometimes  to  double;  second,  not  to  charge  it  the  increase; 
third,  to  collect  the  increase  from  its  competitors;  fourth,  to  put  the  rates 
of  freight  up  or  down  as  might  be  necessary  to  overcome  its  competitors; 
fifth,  to  spy  out  the  details  of  the  business  of  these  competitors  and  make 
reports  to  Ihe  South  Improvement  Company  of  all  shipments  made  by  these 
competitors,  with  full  particulars  as  to  how  much  was  shipped  and  to  whom, 
and  so  on. 

The  purpose  of  this  contract  was  stated  by  the  vice-president  of  the  Erie 
Railroad,  a  witness  friendly  to  the  South  Improvement  Company  and  the 
Standard  Oil  Company,  to  be  to  give  it  "a  complete  monopoly." 

The  Hon.  S.  C.  T.  Dodd,  now  and  for  many  years  counsel  for  the  oil 
monopoly,  when  still  an  anti-monopolist,  a  member  of  the  constitutional  con- 
vention of  Pennsylvania  in  1873.  said: 

"The  South  Improvement  Company's  scheme  would  give  that  corporation 
the  monopoly  of  the  entire  oil  business  of  this  State,  amounting  to  $20,000,000 
a  year." 


AFFIDAVIT  OF  HENRY  DEMAREST  LLOYD.  v 

The  causes  of  the  forfeiture  of  the  company's  charter  and  the  cancella- 
tion of  the  contracts  are  declared  in  Wealth  Against  Commonwealth  to  have 
been  publicly  stated  by  Mr.  Dodd  in  the  proceedings  of  the  Pennsylvania 
constitutional  convention  of  1873,  as  follows:  "Their  scheme  was  contrary 
to  law,  but  before  the  legal  remedy  could  have  been  applied  the  oil  business 
would  have  lain  prostrate  at  their  feet,  had  it  not  been  prevented  by  an 
uprising  of  the  people,  by  the  threatenings  of  a  mob,  if  you  please,  by 
threatening  to  destroy  property,  and  by  actually  commencing  to  destroy 
property  of  the  railroad  company,  and  had  the  companies  not  canceled  the 
contract  which  Scott  and  Vanderbilt  and  others  had  entered  into,  I  venture 
to  say  there  would  not  have  been  one  mile  of  railroad  track  left  in  the 
county  of  Venango,  the  people  had  come  to  that  pitch  of  desperation." 

The  identity  of  the  South  Improvement  Company  and  the  Standard  Oil 
Company  is  shown  by  the  fact  that  10  of  the  13  members  of  the  South  Im- 
provement Company  were  active  members  of  the  Oil  Trust,  among  them  the 
president  and  the  majority  of  its  directors.  The  New  York  Assembly  Com- 
mittee of  1879  officially  confirmed  this,  saying:  "The  controlling  spirit  of 
both  organizations  being  the  same." 

The  denial  and  explaining  away  of  this  affair  by  the  president  of  the 
Standard  Oil  Company  are  fully  credited  to  him  in  Wealth  Against  Com- 
monwealth, on  pages  53  and  59,  one  quotation  from  him  occupying  three- 
quarters  of  a  page. 

Deponent  further  states  that  nowhere  in  Wealth  Against  Commonwealth 
does  he  allege  that  business  was  continued  under  this  contract,  but  does 
allege  that  the  fact  that  these  men  were  willing  to  make  and  did  make  such 
a  contract  and  withdrew  only  when  threatened  with  popular  revolution  is 
a  headlight  illuminating  their  whole  track  then  and  since. 

Deponent  further  states  that  Wealth  Against  Commonwealth  cites  offi- 
cial records,  like  the  decision  in  1885  of  the  Supreme  court  of  Ohio,  to  show 
that  the  Standard  Oil  men,  after  the  abrogation  of  this  South  Improvement 
Company  contract  and  the  nominal  abandonment  of  the  scheme,  proceeded 
to  make  other  contracts  with  various  railroads  practically  similar  in  import- 
ant particulars  to  the  contract  of  the  South  Improvement  Company,  and  that 
he  cites  the  adjudications  and  testimony  in  the  Rice  case  and  in  other  cases 
before  the  Interstate  Commerce  Commission  which  are  to  the  effect  that 
these  relations  continued  even  after  the  passage  of  the  interstate  commerce 
law  had  made  unlawful  railroad  discriminations  criminal. 

Deponent  further  says  that  his  statement  in  Wealth  Against  Common- 
wealth that  this  South  Improvement  Company  no  longer  exists  in  name,  only 
"in  reality,"  and  that  the  decease  of  the  name  was  no  obstacle  to  the  continu- 
ance of  the  scheme  is  supported  in  Wealth  Against  Commonwealth  by  offi- 
cial findings  in  others  than  the  Rice  cases. 

Wealth  Against  Commonwealth  quotes  from  the  exhibits,  affidavits,  and 
decisions  in  the  case  of  Standard  Oil  Company  vs.  W.  C.  Schofield  et  al., 
Cleveland,  1880,  to  the  following  effect:  "In  1876,  four  years  after  the  for- 
feiture of  the  South  Improvement  Company  charter  and  the  cancellation  of 
the  contracts,  the  president  of  the  Standard  Oil  Company  conducted  a  nego- 
tiation with  a  firm  of  Cleveland  competitors  by  which  they  were  put  under 
bond  to  refine  only  about  half  their  capacity  for  the  ensuing  10  years." 

An  Ohio  court  set  aside  the  contract  as  unlawful  and  "in  restraint  of 
trade."  Wealth  Against  Commonwealth  cites,  as  indicating  the  source  of 
the  power  which  had  enabled  this  bond  to  be  forced  on  unwilling  competitors, 
a  decision  of  the  Supreme  court  of  Ohio  in  1885,  13  years  after  the  apparent 
abandonment  of  the  South  Improvement  Company  scheme.  This  decision 
revealed  that  in  1875,  a  year  before  making  this  contract  "in  restraint  of 
trade,"  the  Standard  Oil  Company  had  secured  a  contract  from  the  Lake 
Shore  Railroad  which,  like  the  South  Improvement  Company  contract,  was 
meant,  as  the  Supreme  court  of  Ohio  said,  "to  keep  the  price"  of  transporta- 
tion "down  for  the  favored  customers,  but  up  for  all  of  the  others  and  the 
inevitable  tendency  and  effect  of  this  contract  was  to  enable  the  Standard 
Oil  Company  to  establish  and  maintain  an  overshadowing  monopoly,  to  ruin 
all  other  or.erators  and  drive  them  out  of  business." 


vi  AFFIDAVIT  OF  HENRY  DEMAREST  LLOYD. 

The  purposes  of  the  oil  company  in  this  contract  with  the  railroad  the 
court  declared  to  be  "unlawful,"  and  the  court  in  the  same  case  declared  a 
contract  between  two  railroads  which  was  related  to  the  business  of  the  oil 
company  and  in  its  interest  to  be  "not  only  contrary  to  a  sound  policy,  but 
to  the  lax  demands  of  the  commercial  honesty  and  ordinary  methods  of 
business." 

Deponent  further  refers  the  Industrial  Commission  to  the  fact  that 
Wealth  Against  Commonwealth  quotes  official  findings  showing  that  the 
monopoly  of  pipe  linos  now  held  by  the  Standard  Oil  men  and  constituting 
the  most  valuable  part  of  their  property  was  obtained  by  them  by  the  help 
of  railroad  discriminations  closely  resembling  those  they  sought  to  procure 
from  the  South  Improvement  Company. 

The  report  of  the  New  York  Assembly  Committee  of  1879  is  quoted  to 
show  that  the  rates  made  by  the  railroads  to  the  pipe  lines  of  the  Standard 
Oil  Company  were  such  that  the  company  "could  over-bid  in  the  producing 
regions  and  under-sell  in  the  markets  of  the  world." 

The  relations  of  the  oil  monopoly  with  the  railroads  in  this  case  were 
regarded  by  the  committee  as  in  "flagrant  violation  of  every  principle  of 
railroad  economy  and  natural  justice." 

This  discrimination  was  followed  by  the  absorption  of  the  pipe  lines 
belonging  to  the  men  who  could  not  get  the  rates  that  were  "flagrant"  by 
those  who  could  get  them  and  by  the  creation  of  the  present  pipe  line  mo- 
nopoly. 

The  last  great  act  in  the  completion  of  this  monopoly  was  the  conquest 
of  the  Tidewater  Pipe  Line,  also  along  the  lines  of  the  South  Improvement 
Company  scheme.  The  Tidewater  was  the  first  trunk  pipe  line  built  to  the 
seaboard,  one  of  the  most  important  developments  ever  made  in  the  oil 
business,  and  due  not  to  the  oil  trust  but  its  competitors,  as  has  been  all  the 
improvements  except  the  "Improvement"  Company.  It  was  built  by  the  sur- 
viving independent  oil  producers  and  refiners  of  Pennsylvania  in  their  des- 
perate struggle  to  escape  the  discriminations  of  the  railroads  against  them 
and  in  behalf  of  the  monopoly. 

The  railroads,  in  the  interest  of  monopoly,  made  war  on  the  Tidewater, 
reducing  rates,  as  was  stated  by  a  witness  friendly  to  the  monopoly,  to  "not 
enough  to  pay  for  the  wheel  grease,"  with  the  ultimate  result  that  the  Tide- 
water Pipe  Line  passed,  in  1883,  into  the  control  of  the  National  Transit 
Company,  which  is  the  pipe  line  branch  of  the  oil  monopoly. 

Wealth  Against  Commonwealth  quotes  the  president  of  the  Standard 
Oil  Company  under  oath  in  1888,  before  the  New  York  Senate  Committee  on 
Trusts,  as  swearing  that  the  Tidewater  was  a  "competing  company,"  in  op- 
position to  his  company,  and  quotes  him  in  the  same  investigation,  when 
asked  if  he  had  any  connection  with  the  National  Transit  Company,  which 
is  the  most  valuable  part  of  his  oil  trust's  property,  as  saying,  under  oath, 
"I  have  not."  Wealth  Against  Commonwealth  then  quotes  the  attorney  and 
the  treasurer  of  the  Tidewater  as  both  testifying  that  a  contract  to  settle 
their  rivalry  in  business  had  been  made  in  1883,  and  quotes  the  Interstate 
Commerce  Commission  in  1892  as  judicially  finding  the  same  fact,  saying: 
"About  December,  1883,  the  pipe  lines,  with  the  view  of  getting  better  rates 
adjusted  their  differences,  and  the  competition  between  them  ceased.  The 
pipe  line  business  appears  then  to  have  passed  into  the  control  of  the  Na- 
tional Transit  Company." 

Wealth  Against  Commonwealth  reproduces  the  oflicial  finding  of  the 
New  York  Assembly  Committee  of  1879,  that,  in  1877,  the  railroads  of  the 
East,  largely  the  same  that  took  part  in  the  South  Improvement  Company, 
united  in  a  railroad  way  against  the  Pennsylvania  Railroad,  and  "joined 
hands  with  the  Standard  Oil  Company  and  proceeded  to  enforce  by  a  war 
of  rates,  which  terminated  successfully  in  October  of  that  year."  a  sale  by 
the  Pennsylvania  Railroad  to  the  oil  monopoly  of  its  entire  outfit,  pipe  lines, 
cars  and  refineries  in  New  York  and  Pennsylvania.  This  again  was  like  the 
South  Improvement  Company  scheme  of  1872,  in  which  the  railroads  had 
bound  themselves  to  "maintain  the  business  against  loss  or  injury  by  com- 
petition," and  to  put  the  rates  of  freight  up  or  down  as  might  be  "necessary 
to  overcome     *     *     *     competition."      Wealth  Against  Commonwealth   also 


AFFIDAVIT  OF  HENRY  DEMAREST  LLOYD.  vii 

quotes  the  testimony  shortly  after  in  a  Pennsylvania  court  of  the  present 
president  of  the  Pennsylvania  Railroad,  Mr.  A.  J.  Cassatt,  always  friendly 
to  the  oil  trust,  to  the  effect  that  after  this  forced  sale  by  the  Pennsylvania 
Railroad  of  its  oil  business  and  oil  outfit,  all  the  remaining  competitors  of 
the  oil  monopoly  who  were  doing  business  over  the  lines  of  the  Pennsyl- 
vania Railroad  were  notified,  according  to  the  South  Improvement  Company 
precedent,  that  the  Pennsylvania  Railroad  would  thereafter  give  lower  rates 
to  the  members  of  the  oil  monopoly  than  to  them,  though  they  had  been 
during  the  preceding  year  the  largest  shippers  of  oil  over  the  road,  and  that 
they  would  not  be  allowed  to  put  cars  of  their  own  on  the  road,  though  the 
Standard  Oil  Company  were  allpwed  to  do  so. 

In  referring  to  Mr.  John  D.  Archbold  in  these  proceedings.  Wealth 
Against  Commonwealth  confines  itself  to  the  records.  It  quotes  him  when 
put  on  the  witness  stand,  in  the  proceedings  brought  by  the  State  of  Penn- 
sylvania against  the  Pennsylvania  Railroad  in  consequence  of  this  discrimi- 
nation, as  stating,  under  oath,  that  he  was  not  allowed  a  rebate  amounting 
to  $0,641/2  per  barrel,  but  immediately  afterwards  compelled  to  produce  his 
books,  admitting  "there  was  a  total  allowance  of  $0,641^  a  barrel." 

Deponent  further  states  that  judicial  inquiry  in  Pennsylvania  and  legisla- 
tive inquiry  in  New  York  are  used  by  him  in  Wealth  Against  Commonwealth 
as  showing  that  the  Pennsylvania  and  other  railroads,  acting  as  if  in  pursu- 
ance of  the  South  Improvement  Company  plan,  paid  to  some  of  the  mem- 
bers of  the  Standard  Oil  Company,  under  the  name  of  the  American  Transfer 
Company  in  1878,  an  allowance  of  22%  cents  a  barrel  on  all  the  oil  these 
railroads  carried  from  the  oil  regions.  This  payment  was  defended  as  made 
for  the  service  of  the  American  Transfer  Company  in  collecting  and  de- 
livering the  oil  to  the  railroads,  but  Wealth  Against  Commonwealth  quotes 
the  present  president  of  the  Pennsylvania  Railroad,  then  third  vice-presi- 
dent, Mr.  A.  J.  Cassatt,  as  swearing  that  this  allowance  was  paid  to  the 
American  Transfer  Company  on  oil  which  it  (the  American  Transfer  Com- 
pany) never  handled.  "It  is  paid  on  all  oil  received  and  transported  by 
us."  (Commonwealth  of  Pennsylvania  v.  Pennsylvania  Railroad  et  al.,  187ft. 
p.  691.) 

Deponent  further  points  out  that  official,  judicial,  and  legislative  sources 
of  information  are  quoted  in  Wealth  Against  Commonwealth  to  the  effect 
that  the  plans  contemplated  in  the  South  Improvement  Company  contract 
with  regard  to  a  monopoly  of  oil  terminal  facilities  had  been  substantially 
carried  out  since  the  cancellation  of  that  contract.  The  South  Improvement 
Company's  bargain  of  1872  had  provided  substantially  that  the  railroads 
should  turn  over  to  it  such  oil  terminal  facilities  as  they  possessed  at  the 
seaboard. 

Seven  years  later,  in  1879,  the  New  York  Assembly  Committee  found 
that  the  oil  combination  was  in  control  of  the  oil  terminal  facilities  of  the 
four  great  trunk  lines  at  New  York,  Philadelphia  and  Baltimore,  and  the 
committee  stated  in  their  report  that  "they  can  use  the  power  here  given, 
and  have  used  it,  to  crush  out  opposition;"  and  20  years  later,  in  1892,  the 
western  traffic  manager  of  the  Erie  testified  before  the  Interstate  Commerce 
Commission  that  he  would  not  receive  at  the  Weehawken  oil  docks  of  the 
Erie  road  a  shipment  of  oil  in  competition  with  the  oil  of  the  monopoly,  and 
in  1892  the  Interstate  Commerce  Commission  found  that  the  oil  combination 
"have  a  monopoly  of  those  facilities  to  the  exclusion  of  complainants." 

As  to  the  Rice  case,  which  Mr.  Archbold  emphasizes.  Wealth  Against 
Commonwealth  quotes  the  decisions  of  a  Federal  court,  of  the  Interstate 
Commerce  Commission,  of  the  Supreme  courts  of  New  York  and  Ohio,  and 
the  tcftimony  of  friendly  railroad  men  and  of  men  connected  with  the  Stand- 
ard Oil  Company  to  the  effect  that  the  important  features  of  the  South 
Improvement  Company  scheme  were  substantially  reproduced  in  the  treat- 
ment given  Rice  by  many  railroads. 

Freight  rates  were  doubled  to  Rice  and  more,  but  not  only  were  not 
increased  to  the  monopoly,  but  actually  lowered  to  it.  and  freight  rates  col- 
lected from  Rice  were  paid  over  to  it.  The  railroads  in  1879  and  later,  which 
in  1872,  in  the  language  of  the  South  Improvement  Company  contract,  under- 
took to  "maintain  the  business  against  loss  or  injury  by  competition."  and  to 


viii  AFFIDAVIT  OF  HENRY  DEMAREST  LLOYD. 

make  the  freight  rates  such  as  might  be  "necessary  to  overcome  such  compe- 
tition," again  refused  Rice,  after  the  passage  of  the  interstate  commerce  act, 
as  the  Pennsylvania  Railroad  did  to  the  other  independents  mentioned  above, 
the  right  to  put  on  his  own  cars,  and  in  repeated  cases,  refused  him  informa- 
tion even  as  to  what  would  be  the  freight  rates  charged  him  if  he  undertook 
to  ship  anything. 

Wealth  Against  Commonwealth  quotes  from  the  testimony  of  one  of  the 
men  of  the  oil  monopoly  given  before  the  Interstate  Commerce  Commission, 
to  the  effect  that  the  feature  of  the  South  Improvement  Company  arrange- 
ment, by  which  the  business  done  by  its  competitors  was  to  be  spied  out  for 
the  oil  monopoly,  was  reproduced  in  the  treatment  given  Rice. 

In  the  first  South  Improvement  Company  only  half  a  dozen  of  the  eastern 
trunk  lines  took  part,  but  in  this  later  application  of  its  methods  to  Rice 
nearly  all  the  railroads  in  the  Mississippi  Valley  and  on  the  Pacific  coast 
took  part.  A  deliberate  and  successful  attempt  was  made  to  prevent  Rice 
from  doing  business,  except  by  accident  and  at  a  loss,  in  any  town,  county 
or  State  in  which  these  roads  could,  by  their  power  of  manipulating  rates, 
determine  the  question  of  business  existence. 

Wealth  Against  Commonwealth  quotes  from  the  records  to  show  that  the 
things  done  for  this  purpose  by  the  railroads  and  inuring  to  the  interest  of 
the  oil  monopoly  were  so  relentless  and  destructive  and  so  outside  the  law 
that'  the  judges  and  other  public  representatives  in  their  decisions  and 
reports  were  startled  out  of  their  formal  phraseology  usual  in  such  deliver- 
ances into  expressions  of  unaffected  indignation. 

Referring  to  one  of  the  arrangements  by  which  the  railroads  doubled 
Rice's  freights,  and  out  of  every  35  cents  he  paid  them  handed  over  25  cents 
to  the  Standard  Oil  Company — in  reproduction  of  the  South  Improvement 
Company  and  the  American  Transfer  Company  schemes — Wealth  Against 
Commonwealth  quotes  Judge  Baxter,  of  the  Federal  Circuit  Court  of  Ohio,  as 
calling  it  "abhorrent,"  "dangerous,"  "gross,"  "illegal,"  "an  inexcusable  abuse 
by  a  public  trust,"  "unparalleled  wrong,"  "discrimination  so  wanton  and 
oppressive  it  could  hardly  have  been  accepted  by  an  honest  man.  and  a  judge 
who  would  tolerate  such  a  wrong  or  retain  a  receiver  capable  of  perpetrating 
it  ought  to  be  impeached  and  degraded  from  his  position." 

A  Senate  select  committee  on  interstate  commerce,  of  the  Forty-ninth 
Congress,  is  quoted  as,  after  investigating  the  matter,  characterizing  the 
transaction  as  follows:  "No  comment  is  needed  upon  this  most  impudent 
and  outrageous  proposition" — by  the  oil  company  to  the  railroad. 

Wealth  Against  Commonwealth  shows  that  the  Ohio  Supreme  Court,  in 
deciding  a  case  brought  by  the  State  of  Ohio  against  certain  railroads  to  for- 
feit their  charters  for  their  treatment  of  Rice,  decided  that  these  railroads 
had  charged  "discriminating  rates,"  "strikinglj^  excessive,"  which  "tended  to 
foster  a  monopoly,"  "actually  excluded  these  competitors,"  "giving  to  the 
favored  shippers  absolute  control." 

It  shows  also  that  the  Supreme  Court  of  New  York,  in  deciding  another 
case  in  which  Rice  was  a  litigant  with  the  oil  trust,  for  his  rights  as  a  stock- 
holder, said  that  the  oil  trust  was  "for  the  purpose  of  forming  a  combination 
whose  object  was  to  restrict  production,  control  prices,  and  suppress  compe- 
tition," and  the  "trust  agreement  was  therefore  opposed  to  public  policy 
and  void." 

Wealth  Against  Commonwealth  calls  public  attention  to  the  fact  that  a 
large  part  of  the  time  and  attention  of  the  Interstate  Commerce  Commission 
was  taken  up  for  several  years  in  hearing  the  complaints  of  Rice  to  it  for 
redress,  and  that  in  a  large  proportion  of  the  cases  brought  by  him  before 
the  commission,  it  found  his  complaints  justified,  and  ordere.d  the  roads  to 
give  him  relief.  The  discriminations  made  by  the  railroads  against  Rice  to 
the  benefit  of  the  oil  monopoly  were  so  great  that  even  the  self-contained 
Interstate  Commerce  Commission  had  to  call  them  "vast  discrepancies." 

Wealth  Against  Commonwealth  quotes  the  commission  as  stating  in  1893 
that  these  discriminations  were  made  "on  no  principle.  *  *  *  Neither 
greater  risks,  greater  expense,  competition  by  water  transportation,  nor  any 
fact  or  circumstance  brought  forward  in  defense,  nor  all  combined,  can 
account  for  these  differences." 


AFFIDAVIT  OF  HENRY  DEMAREST  LLOYD.  ix 

Again,  speaking  of  the  refusal  of  rates  to  Rice,  the  commission  said: 
"Complainant  did  not  succeed  in  obtaining  rates.  The  denial  of  his  right 
was  plain  and  stands  unexcused.  *  *  *  What  reason  there  may  have 
been  for  it" — the  refusal  of  rates — "we  do  not  know,  but  find  they  were  not 
just  or  legal  reasons." 

The  refusal  to  give  Rice  these  rates  was  an  "illegal  refusal,"  the  commis- 
sion decided;  "the  obligation  to  give  the  rates  *  *  *  was  plain  and  un- 
questionable." 

The  treatment  of  Rice  by  the  railroads  in  another  particular  the  commis- 
sion adjudicated  to  have  been  "specially  oppressive,"  and  it  "would  have  put 
success  in  the  traffic  out  of  the  question." 

Rice  was  misled  and  misinformed  by  the  railroad  officials,  and  Wealth 
Against  Commonwealth  quotes  the  Interstate  Commerce  Commission  as 
noting  this  fact  and  pointing  out  the  "remarkable  thing"  that  so  many  of 
these  "defendants,"  the  railroads,  "should  make  the  same  mistake,  a  mistake, 
too,  that  it  was  antecedently  so  improbable  any  of  them  would  make.  The 
Louisville  &  Nashville,  the  Cincinnati,  New  Orleans  &  Texas  Pacific,  the 
Newport  News  &  Mississippi  Valley,  and  the  Illinois  Central  Companies  are 
all  found  giving  out  the  same  erroneous  information,  and  no  one  of  them 
can  tell  how  or  why  it  happened  to  be  done,  much  less  how  so  many  could 
contemporaneously,  in  dealing  with  the  same  subject,  fall  into  so  strange  an 
error.  It  is  to  be  noted,  too,  that  it  is  not  a  subordinate  agent  or  servant 
who  makes  the  mistake  in  any  instance,  but  it  is  the  man  at  the  head  of  the 
traffic  department,  and  whose  knowledge  on  the  subject  any  inquirer  would 
have  a  right  to  assume  must  be  accurate.     In  no  case  is  the  error  excused." 

Wealth  Against  Commonwealth  quotes  some  of  the  expressions  used  by 
the  Interstate  Commerce  Commission  with  regard  to  the  complaints  before  it 
of  discriminations  by  the  railroads,  as  follows: 

"Great  differences  in  rates,"  "unjiist  discrimination."  "international  dis- 
regard of  rights,"  "unexcused,"  "a  vast  discrepancy,"  "enormous,"  "illegal," 
"excessive,"  "extraordinary,"  "forbidden  by  the  act  to  regulate  commerce," 
"so  obvious  and  palpable  a  discrimination  that  no  discussion  of  it  is  neces- 
sary," "wholly  indefensible,"  "patent  and  provoking  discriminations  for 
which  no  rational  excuse  is  suggested,"  "obnoxious,"  "disparity  *  *  * 
absurd  and  inexcusable,"  "gross  disproportions  and  inequalities,"  "long  prac- 
ticed," "the  most  unjust  and  injurious  discrimination  *  *  *  amj  ^jjig  (jjg. 
crimination  inured  mostly  to  the  benefit  of  one  powerful  combination." 

The  deponent  further  states  that  in  Wealth  Against  Commonwealth  he 
has  taken  the  verdicts,  decisions  and  findings  of  the  courts  and  legislatures 
as  the  authoritative  version  of  the  facts,  and  that  it  has  not  been  shown  that 
he  has  either  inaccurately  quoted  or  omitted  any  important  fact  on  the 
record,  nor  that  he  in  any  case  has  failed  to  give  the  reader  information  as  to 
the  nature  of  the  defense,  nor  have  his  statements  in  any  case  gone  beyond 
the  record. 

Deponent  further^ says  that  his  statement  in  Wealth  Against  Common- 
wealth that  Mr.  Archbold,  when  asked  what  was  his  part  in  the  business  of 
the  Standard  Oil  Company,  replied,  "I  am  a  clamorer  for  dividends;  that  is 
the  only  function  I  have,"  is  a  quotation  from  the  testimony  of  Mr.  Archbold 
before  the  New  York  Assembly  Commission  of  1879  investigating  the  rail- 
roads and  their  relations  to  the  oil  monopoly  and  other  favored  shippers. 

Wealth  Against  Commonwealth  quotes  from  the  reports,  decisions  and 
testimony  of  the  Interstate  Commerce  Commission  to  show  that  the  principal 
matters  litigated  before  the  commission  have  been  discriminations  made  by 
the  railroads  to  the  profit  of  the  oil  monopoly;  that  the  cases  referred  to 
cover  the  oil  business  on  practically  every  road  of  any  importance  in  the 
United  States— in  New  England,  the  Middle  States,  the  West,  the  South,  the 
Pacific  coast;  on  the  great  east  and  west  trunk  roads — the  Pennsylvania,  the 
Erie,  the  Baltimore  &  Ohio,  the  New  York  Central,  and  all  their  allied  lines; 
on  the  transcontinental  lines — the  Union  Pacific,  the  Central  Pacific,  the 
Southern  Pacific;  on  the  steamship  and  railroad  association  controlling  the 
South  and  Southwest;  and  that  from  ocean  to  ocean,  and  from  the  Gulf  of  St. 
Lawrence  to  the  Gulf  of  Mexico,  wherever  the  American  citizen  seeks  an 
opening  in  this  industry,  he  finds  it  a  "privilege"  of  a  few  and  shut  against 
the  common  people. 


X  AFFIDAVIT  OF  HENRY  DEMAREST  LLOYD. 

The  witnesses  on  whose  testimony  are  founded  the  decisions  of  the 
courts,  legislative  committees,  and  other  findings  which  make  the  substance 
of  Wealth  Against  Commonwealth  have  come  forward  all  through  the  period 
between  1872  and  1894,  and  the  date  of  Wealth  Against  Commonwealth,  and 
from  every  point  of  importance  in  the  industry — New  York,  Pittsburg,  Cleve- 
land, Oil  City,  San  Francisco,  Titusville,  Philadelphia,  Marietta,  New  Orleans, 
Buffalo,  Boston,  Cincinnati,  Louisville,  Memphis;  they  have  come  from  every 
province  of  the  industry — the  refineries,  the  oil  fields,  the  pipe  lines,  the  rail- 
roads, the  wholesale  and  retail  markets;  bound  together  by  no  common  tie 
of  organization  or  partnership,  they  have,  each  and  all,  exactly  the  same 
story  to  tell.  Wealth  Against  Commonwealth  gives  as  the  substance  of  their 
complaint  that  one  selected  knot  of  men,  members  of  one  organization,  were 
given  unlawfully,  the  control  of  the  railroad  highways  to  the  exclusion  and 
ruin  of  the  people,  and  quotes  to  sustain  it  the  evidence  taken  by  many 
official  investigations  and  the  decisions  of  substantially  every  court  to  which 
the  facts  have  been  submitted. 

Deponent  furthpr  points  out  that  the  testimony  taken  by  the  Interstate 
Commerce  Commission  in  Boston,  March  12,  1898,  seems  to  show  that  one  of 
the  most  important  railroads  in  New  England,  the  Boston  &  Albany.  26  years 
after  the  South  Improvement  Company  scheme  dies  "in  name."  was  "under- 
billing"*  cars  of  the  oil  trust  to  such  an  extent  that  in  some  cases  half  of 
such  shipments  within  Massachusetts  went  free.f 

Lastly,  the  evidence  taken  in  the  investigation  in  the  early  part  of  1900 
by  the  Canadian  parliamentary  committee,  if  correctly  reported,  seems  to 
indicate  that  the  same  South  Improvement  Company  system,  substantially, 
has  been  extended  by  the  Canadian  railroads  to  the  oil  trust,  and  that  these 
railroads  have  been  putting  the  "price" — of  transportation — "down  for  the 
favored  customers  and  up  for  the  others."  just  as  the  Supreme  Court  of  Ohio 
found  the  railroads  of  that  State  doing  for  the  same  organization  in  1885. 


*Mr.  Howard  Page  has  informed  the  revitwer  that:  He  is  vice-president  of  the 
Union  Tank  Line  Company,  which  company  furnishes  all  tank  cars  us<ed  by  the  Stand- 
ard Oil  Company  for  its  sliipments  witliin  the  I'nited  States,  and  has  been  in  charge 
of  all  railroad  and  freight  matters  in  connection  with  such  shipments  for  the  past  12 
jears.  He  was  present  at  the  testimony  taken  in  Boston  before  Interstate  Commis- 
sioner Prouty,  in  Boston,  March  12,  1S98;  testified  at  that  time  and  is  familiar  with 
all  tlie  facts  in  connection  with  that  case.  On  December  1-3,  1899,  he  testified  before 
the  Industrial  Commission  in  Washhigton  and  at  that  lime  left  with  the  Industrial 
Commission  a  copy  of  the  testimony  taken  at  Boston,  March  12,  1898,  which  testi- 
mony was  taken  by  the  official  stenographer  and  duly  sworn  to  by  the  official  ste- 
nographer as  correct.  This  testimony,  so  far  as  it  related  to  the  Boston  &  Albany 
Railroad  and  the  shipments  of  petroleum  in  tank  cars  over  that  road,  did  not  indicate 
in  any  way  that  shipments  of  oil,  over  the  Boston  &  Albany  Railroad,  witliin  the 
State  of  Massacliusetts,  were  eitlier  "underbilled"  or  were  carried  at  one-half  of  the 
actual  weight,  as  alleged  by  Henry  D.  Lloyd.  It  did  show  that  the  Boston  &  Albany 
Railroad  had  rates  "per  tank  car."  Such  rates  were  for  very  short  hauls,  such  as 
from  East  Boston  to  Boston  and  to  other  nearby  points.  These  rates  were  "per  tank 
car,"  regardless  of  the  weight  or  capacity  of  the  cars;  and  deponent  further  says 
and  believes  tliat  sucli  "per  car"  rates  by  the  Boston  &  Albany  Railroad  were  not 
confmed  to  petroleum,  but  were  in  effect  on  other  commodities  from  East  Boston  to 
nearby  points;  and  furthermore  that  it  is  not  unusual  for  railroads  throughout  the 
I'nited  States  to  make  switching  and  other  short  haul  rates  "per  car"  on  various 
commodities  the  same  as  tlie  Boston  &  Albany  Railroad  were  doing  from  East  Bos- 
ton to  nearby  points  in  Massachusetts. 

tAs  confiiming  the  above,  the  following  is  an  extiact  from  the  testimony  taken 
at  Boston.  March  12,  1898,  of  W.  M.  Kidder,  agent  of  the  Boston  &  Albany  Railroad 
at  East  Boston,  and  the  witness  of  that  railroad,  in  reference  to  rates,  weights,  etc.: 

"Q.  What  do  you  charge  the  Standard  Oil  Company  for  transporting  these  tank 
cars  to  Boston  for  reshipmcnt? 

"A.  Six  dollars  per  tank. 

"Q.  Have  the  Standard  Oil  jjeople  ever  furnished  .\iiu  with  weights  of  cars  fin- 
shipment  outside  of  the  State? 

"A.   I  don't  remember  their  ever  doing  such  things. 

"Q.  The  reasnn  why  weight  doesn't  concern  you  particularly  there  is  becau.'-e 
there  's  a  charge  i)er  car  from  East  Boston? 

"A.  Yes. 

"Q.  Regardless  of  weight? 

"A.  Regardless  of  weight." 


AFFIDAVIT   OF  CHARLES   B.   MATHEWS.  xi 

The  deponent  further  says,  in  answer  to  the  insinuation  as  to  his  share 
in  the  alleged  blackmailing  operations  of  Rice,  that  he  feels  it  to  be  unnec- 
cessary  to  notice  anything  of  which  the  insinuator  himself  is  compelled  to 
state,  "I  am  unable  to  say."  And  he  challenges  the  production  of  an  iota  of 
fact  justifying  even  the  utterance  of  the  insinuation. 

The  deponent  further  points  out  that  the  method  by  which  the  members 
of  the  oil  monopoly  meet  the  decisions,  verdicts  and  findings  on  which 
Wealth  Against  Commonwealth  is  based  is  to  treat  all  those  utterances  of 
the  constituted  authorities,  judicial  and  legislative,  as  nullities,  and  insist 
that  the  public  shall  receive  from  themselves,  now  and  out  of  court,  years 
after  the  events  in  question,  without  any  of  the  protective  procedure  of  trial 
and  investigation,  entirely  new  versions  of  the  matters  concerned,  altogether 
in  conflict  with  the  findings  reached  by  these  tribunals  at  great  expense  of 
the  people's  time  and  money.  Though  in  every  case  they  had  a  full  and  fair 
hearing,  they  refuse  to  accept  like  ordinary  citizens  the  findings  of  the  courts 
and  legislatures  and  deny  the  right  of  the  people  to  accept  as  authentic  any 
official  records  which  contain  truths  disagreeable  to  themselves. 

HENRY  DEMAREST  LLOYD. 

State  of  Rhode  Island,  County  of  Newport: 

Subscribed  and  sworn  to  before  me  this  4th  day  of  August,  1900. 
(Seal.)  F.  R.  BROWNELL, 

Notary  Public  for  Rhode  Island. 


AFFIDAVIT  OF  CHARLES  B.  MATHEWS. 

Producer  and  Refiner  of  Petroleum,  Buffalo,  N.  Y. 

State  of  New  York,  County  of  Erie,  City  of  Buffalo,  ss: 

Charles  B.  Mathews,  being  duly  sworn,  says  that  he  is  55  years  of  age 
and  a  resident  of  the  city  of  Buffalo,  N.  Y.,  and  that  he  has  been  for  nearly 
30  years  engaged  in  the  production,  refining  and  dealing  in  crude  petroleum 
and  its  products;  and  deponent  further  saith: 

In  reading  the  testimony  of  J.  D.  Archbold,  on  page  554  of  your  commit- 
tee's printed  record*  of  testimony  relative  to  the  Standard  Oil  combination, 
I  find  such  errors  and  misstatements  regarding  myself  and  associates,  "lay 
and  professional,"  that  I  beg  leave  to  submit  the  "simple  facts"  in  their  true 
light.  In  the  year  1880  J.  S.  Wilson,  A.  A.  Miller  and  myself  were  employed 
by  the  Vacuum  Oil  Company.  None  of  us  being  engaged  for  any  specified 
time,  we  were  at  liberty  to  engage  in  any  occupation  we  saw  fit.  I  had  much 
to  do  in  the  management  of  their  salt  property  and  their  few  oil  leases. 
These  properties  were  sold  soon  after  the  Standard  Oil  Company  bought 
three-fourths  of  the  stock  of  the  Vacuum  Oil  Company  and  began  to  conduct 
its  business.  J.  D.  Archbold,  H.  H.  Rogers  and  A.  M.  McGregor,  being  its 
ruling  force,  directed  its  business  from  the  Standard  Oil  offices  in  New  York. 
In  the  testimony  of  F.  N.  Beach,  on  page  900  of  the  report  of  the  Manufac- 
turers' Congressional  Committee,  1888,  we  find  that  the  District  Attorney,  in 
the  prosecution  of  the  cause  of  the  people,  subpoenaed  certain  books  of 
record,  and  Mr.  Beach,  secretary  of  the  Vacuum  Oil  Company,  said:  "I  was 
also  subpoenaed  to  produce  here  the  record  books  containing  the  proceed- 
ings of  the  board  of  directors  of  the  company,  and  I  now  produce  the  same. 
I  know  John  D.  Archbold,  and  I  know  his  handwriting."  The  District  Attor- 
ney then  calls  the  attention  of  the  witnesses  to  the  meeting  of  the  board  of 
directors  of  the  Vacuum  Oil  Company  held  .lanuary  18,  1881. 

Witness  says  these  meetings  are  in  the  handwriting  of  John  D.  Archbold. 

The  District  Attorney  then  read  from  the  meeting  of  January  18.  1881: 

"Meeting  of  the  directors  of  the  Vacuum  Oil  Company,  held  January  18, 
1881. 

"Meeting  called  to  order  by  Charles  M.  Everest,  vice-president.  Present: 
Henry  H.  Rogers.  Charles  M.  Everest  and  John  D.  Archbold. 


*See  Vol.  I,  Report  of  the  Industrial  Commission,  Part  IT,  page  554. 


xii  AFFIDAVIT   OF  CHARLES  B.   MATHEWS. 

"On  motion  John  D.  Archbold  was  appointed  secretary. 

"Waiver  of  notice  by  A.  M.  McGregor  and  H.  B.  Everest  presented  to 
the  secretary. 

"H.  H.  Rogers  moved  that  a  dividend  of  40  per  cent.,  payable  as  of  Jan- 
uary 1,  and  10  per  cent.,  payable  as  of  January  1,  be  paid  at  once  from  the 
earnings  of  the  company. 

"Carried. 

"On  motion,  adjourned. 

"(Signed)  JOHN  D.  ARCHBOLD,  Secretary  pro  tern." 

I'he  Everests,  father  and  son,  who  had  built  up  the  business  of  the 
Vacuum  Oil  Company  as  an  independent  anti-monopoly  company,  now  held 
the  offices  of  president  and  vice-president  simply  as  figureheads  to  maintain, 
for  trade  purposes,  the  pretense  that  they  were  not  a  Standard  company. 
Published  statements  in  the  Rochester  papers  appeared  denying  that  they 
had  sold  to  the  Standard  Oil  Company,  and  seemed  to  satisfy  their  con- 
sciences by  saying  to  those  who  knew  the  truth  that  it  was  the  Acme  Oil 
Company  they  had  made  the  deal  with,  whereas  all  the  Acme  Oil  Company 
stock  belonged  to  the  Standard.  The  Standard  management  of  the  Vacuum 
Oil  Company  was  distasteful  to  those  accustomed  to  the  service  of  the  inde- 
pendent original  Vacuum  Oil  Company,  and  they  expected  things  might  soon 
occur,  which  have  since  taken  place — that  their  principal  refining  and  manu- 
facturing would  be  transferred  from  the  Vacuum  to  other  Standard  plants 
and  their  selling  agents  dismissed.  The  Standard  people,  under  various 
names,  corporations  and  contracts,  controlled  the  manufacture  and  sale  of 
nearly  all  the  petroleum  lubricating  oils  of  the  country.  Their  monopoly 
was  so  complete  that  cylinder  stocks  then  sold  for  20  to  25  cents  per  gallon, 
when  crude  oil  was  80  cents  per  barrel,  that  now  sell  under  competition  for 
8  cents  per  gallon.  With  crude  oil  worth  $1.25  per  barrel,  the  best  refined 
oil  sold  at  Buffalo  and  other  large  eastern  cities  at  14  cents  per  gallon,  that 
now  sells  at  8  cents  per  gallon.  We  also  knew  very  well  that  to  use  the 
Vacuum  and  other  processes  we  desired  to  employ  was  no  infringement  on 
any  valid  patent,  and  subsequent  litigation  in  the  Federal  courts  fully  proved 
the  groundless  nature  of  their  patent  claims,  and  the  evident  object  of  the 
Standard  people  in  bringing  suits  was  for  the  purpose  of  involving  us  in 
expensive  and  harassing  litigation,  eventually  resulting  in  court  decrees  in 
our  favor.  The  claim  that  we  used  some  of  their  tools  in  preparing  our 
machinery  is  not  a  serious  one.  If  anyone  in  my  employ  used  their  chalk 
line  or  pocket  rule  or  other  tool,  I  was  not  aware  of  it,  and  trust  the  Stand- 
ard Trust  will  outlive  its  grief  and  loss  on  that  score.  From  1880  to  1885  the 
Standard  people  brought  many  suits  against  independent  manufacturers  of 
oils,  petrolatum  and  greases.  These  suits  were  brought  in  the  name  of  the 
Chesseborough  Manufacturing  Company,  or  Vacuum  Oil  Company,  or  some 
company  recently  acquired  by  the  Standard,  and  I  believe  none  of  these 
suits  was  ever  successful,  except  in  compelling  the  defendants  to  incur 
large  expense  in  gathering  evidence  to  defeat  plaintiff's  claims.  The  Buffalo 
Lubricating  Oil  Company  was  the  name  of  my  company,  and  the  stock  was 
soon  subscribed  for  by  those  who  had  faith  in  the  business  of  refining  and 
selling  oil.  No  business  undertaking  could  be  more  legitimate,  and  the  mar- 
gin of  profit  between  the  cost  of  the  crude  and  the  selling  price  of  the  manu- 
factured product  was  reason  enough  to  enlist  necessary  capital.  Mr.  Arch- 
bold,  in  his  statement  before  your  commission,  denies  that  the  Standard  Oil 
Companies  enjoyed  discriminations  and  freight  rebates  not  given  to  their 
competitors.  If  the  Vacuum  Oil  Company,  under  the  management  of  Messrs. 
Archbold.  Rogers  and  McGregor,  could  pay  the  dividend  of  40  per  cent,  in  a 
few  months  in  1881,  as  shown  by  the  above  record  of  their  directors'  meet- 
ing, and  the  Standard  combine  stock  now  sells  for  $800  per  share,  I  must 
insist  my  company  had  a  perfect  right  to  expect  good  profits  from  manufac- 
turing, transporting  and  selling  oil,  or  the  Standard  profits  were  and  are 
Illegitimate  and  fraudulent.  We  fully  established  our  rights  in  the  courts  to 
engage  in  the  business  as  we  did  and  when  we  did.  Where  should  we  begin? 
Buffalo  was  decided  upon  as  the  best  location.  Here  the  Atlas  Oil  Company 
was  constructing  a  large  oil  refinery  and  endeavoring  to  lay  a  pipe  line  from 


AFFIDAVIT   OF  CHARLES   B.   MATHEWS.  xiii 

the  Bradford  oil  field  to  Buffalo.    The  Atlas  people  assured  us  of  their  ability 
and   determination   to   pipe   oil   to   Buffalo   and   refine  it   there   without   the 
consent  of  the  Standard  Oil  Trust.     The  Atlas  Oil  Company  promised  me 
that  they  would  give  my  company  a  five-year  contract  to  furnish  crude  oil 
at   our   works,    charging   us    10    cents   per   barrel   for   piping   it   to   us,    and 
they    would    give    us    a    contract    as    soon    as    the    line    was    completed, 
and    the    "Green    Line,"    running    tank    cars    on    Buffalo,    New    York    & 
Philadelphia  Railroad,  offered  to  bring  us  oil  at  the  same  price.     In  a  few 
months  the  Standard  Trust  got  control  of  the  Atlas  pipe  line  and  refinery, 
and  advanced  at  once  with  the  railroads  carrying  charges  on  oil  from  10  to 
25  cents  per  barrel,  and  subsequently  to  35  cents  per  barrel.     The  railroads 
also  advanced  all  rates  on  oil  going  out  of  Buffalo,  while  rates  on  grain,  coal, 
lumber  and  other  commodities  were  generally  reduced.     The  first  still  of  oil 
run  at  our   works   was   run  under   such   extraordinary  heat  pressure,   with 
safety   valve    fastened    down,    that   the   gases   were    blown   off   at   explosive 
pressure  and  the  oil  ruined  and  considerable  property  was  destroyed,  and  we 
narrowly  escaped  the  destruction  of  the  entire  works,  with  many  fatalities. 
Our  superintendent  fled  under  the  most  suspicious  circumstances  and  was 
secreted  by  and  placed  on  the  pay  roll  of  the  Vacuum  Oil  Company,  they 
maintaining  him  mostly  in  idleness;   secretly  sent  him  to  California,  where 
he  remained  nearly  a  year.     After  abundance  of  evidence  of  the  power  and 
cruelty   of   the    Standard-Vacuum    conspiracy    came    to    hand,    my    company 
orought     suit     against     the     Vacuum      Oil     Company     and     its     officers, 
asking  damages  in  $100,000.     This  suit  was  brought  in  1883.     The  defendants 
exhausted  all  their  resources  for  delays,  and   finally  came  to  trial   March, 
1885.      The    rulings   of   the   trial   justice   were   so   narrow   and   so   evidently 
against  the  plaintiff  that  the  judge  preferred  to  grant  a  new  trial  to  having 
the  case  go  up  on  appeal,  and  a  new  trial  was  granted  nearly  a  year  after 
our  verdict  of  $20,000  was  given  by  the  jury.     Thereupon  we  brought  a  new 
conspiracy  action,  with  broader  allegations,  and  asking  damages  in  $250,000. 
Our  various   suits  with  the   Standard   parties   had   taught  us  the  great 
power  of  the  Standard  attorneys  in  securing  long  delays  in  forcing  a  case  in 
which  they  were  interested  to  trial  on  its  merits,  and  as  the  five-year  limita- 
tion had  almost  run,  the  District  Attorney  felt  it  his  duty  to  indict  them  in 
the  criminal  court.    About  this  time,  however,  my  company  brought  an  action 
against  the  Atlas  Oil  Company,  alleging  damages  and  fraud  to  the  amount 
of  $20,000.     We  alleged  that  this  company,  having  passed  into  the  hands  of 
the  Standard,  supplied  us  with  inferior  crude  oil  mixed  with  distillate  and 
slops  from  the  Atlas  works,  and  that  the  same  was  sold  us  as  pure  crude  oil. 
At  a  term  of  Erie  County  Court  of  sessions  in  February,  1886,  an  indictment 
was  found  by  the  grand  jury,  charging  Hiram  B.  Everest,  Charles  M.  Everest, 
John  D.  Archbold,  Henry  H.  Rogers  and  Ambrose  McGregor  of  the  crime  of 
conspiracy  and  committed  as  follows:  Copy  of  this  indictment  is  found  in  the 
Manufacturers'  Congressional  Committee's  report  of  1888,  beginning  on  page 
801.     The  defendants  are  accused  of  conspiracy  to  destroy  the  business  of 
my  company  by  corrupting  its  servants,  by  bringing  vexatious  suits  at  law 
for  the  purpose  of  harassing  the  company,  by  blowing  up  our  works,  and 
destroying  a  quantity  of  oil.     The  Standard   suspects  fought  off  the  day  of 
their  criminal  trial   with  the  same  success  as  they  had   done  in  the  civil 
courts.     Meanwhile  their  attorneys  and  detectives  were  busy  with  plans  to 
hire  the  State's  most  material  witnesses  to  go  to  a  foreign  country.     Bur- 
dened with  the  expenses  of  the  civil  action  and  weary  with  delays,  I  made 
a  final  appeal  to  the  District  Attorney  urging  immediate  trial  of  the  people's 
cause,  and  was  told  no  judge  could  be  got  to  hear  the  criminal  case  in  the 
spring  of  1887.    I  told  him  I  should  appeal  to  the  Governor  to  assign  a  judge 
for  that  purpose  if  there  was  no  judge  in  our  district  willing  to  take  it  who 
was  not  disqualified.     It  was   soon  arranged   for  Judge  Daniels   to  try  the 
action.      But   Judge   Daniels   had   tried    and   sentenced   Jarvis   Lord,    of   the 
famous  canal  ring,  and   so  the   Standard   defendants  were  taken  unawares 
and  were  not  to  be  tried  just  then  or  by  Judge  Daniels.     Affidavits  of  physi- 
cal disability  of  Mr.  Archbold  and  others  put  the  trial  off  to  a  time  Justice 
Daniels   must  hold   court  in   New   York,   and   it  was  then   ascertained   that 
Judge  Haight  would  try  the  suspects.    The  District  Attorney  was  not  pleased 


xiv  AFFIDAVIT   OF  CHARLES   B.   MATHEWS. 

with  the  substitution  of  Judge  Haight  for  Judge  Daniels.  I  urged  the  District 
Attorney  to  go  on  with  the  trial,  as  we  could  at  least  prove  the  allegations 
of  the  indictment  and  make  a  record  of  the  testimony,  whatever  judge  tried 
the  case,  and  the  State's  witnesses  would  be  relieved  from  the  pressure  of 
the  Standard's  spies  and  detectives.  It  was  shown  at  the  criminal  con- 
spiracy trial  that  one  Lane  Borell,  an  employe  of  my  company,  was  in  the 
secret  service  of  the  Standard  interests  and  that  they  paid  him  a  higher 
daily  wage  for  making  daily  reports  of  our  sales  and  customers  and  business 
than  we  paid  him  for  work  at  the  refinery.  These  reports  were  mailed  from 
Borell  direct  to  S.  C.  T.  Dodd,  Standard  attorney.  Borell  received  his  pay 
indirectly  through  Mr.  Dodd,  and  it  was  shown  by  the  books  of  account  kept 
by  the  Vacuum  Oil  Company  that  Miller  received  some  $4,000  for  a  year  of 
running  and  hiding  from  my  company  while  he  was  under  contract  from  us 
for  the  same  period  at  $100  per  month  for  service  as  superintendent  at  our 
works.  The  District  Attorney  also  put  in  evidence  the  testimony  of  J.  D. 
Archbold,  given  in  the  civil  action  tried  in  1885,  as  follows 

"Q.  During  the  year  1881  and  the  year  1882,  were  you  connected  in  any 
way  with  the  Standard  Oil  Company;  and  if  so,  what?    A.  I  was. 

"Q.  In  what  capacity  or  way?  A.  I  was  one  of  the  executive  board  of 
the  Standard  Oil  Company. 

"Q.  Mr.  Archbold,  you  made  the  contract,  did  you  not,  with  reference 
to  the  transfer  of  the  75  shares  of  the  Vacuum  Oil  Company's  stock  by  the 
Messrs.  Everest?    A.  I  bought  the  75  shares;  yes,  sir. 

"Q.  Was  that  transaction  a  verbal  transaction  or  a  transaction  reduced 
to  writing?  A.  There  was  a  written  contract  following  the  transaction  as 
agreed. 

"Q.  Can  you  tell  to  whom  the  contract  was  delivered  when  it  was  com- 
pleted? A.  It  was  delivered  to  the  counsel  of  the  purchasers  whom  I  repre- 
sented. 

"Q.  May  I  inquire  who  the  counsel  of  the  purchasers  to  whom  it  was 
delivered  was?  A.  It  was  George  F.  Chester;  my  impression  is  that  the  con- 
tract is  on  file  at  the  office  of  the  Standard  Oil  Company  in  Cleveland;  I  am 
not  sure  about  that. 

"Q.  Let  me  inquire  who  George  F.  Chester  was  and  where  he  lives?  A. 
He  was  at  that  time  the  counsel  for  the  Standard  Oil  Company  and  the 
Everest  interests  that  were  aflfiliated  with  it. 

"Q.  How  long  is  it  since  you  have  seen  the  contract?  A.  I  don't  think  I 
have  seen  it  since  the  time  of  its  execution. 

"Q.  You  never  had  it  in  your  possession  since?     A.  No,  sir. 

"Q.  Where  would  such  papers  be  kept  in  the  usual  course  of  your  busi- 
ness? A.  We  had  a  record  of  the  contract  in  our  office  in  New  York,  it  was 
in  a  large  contract  book  which  we  kept  for  the  purpose  of  recording  con- 
tracts, but  the  paper  itself  I  am  not  sure  about;  it  may  have  been  kept  in 
New  York,  and  it  may  have  gone  to  Cleveland;  I  am  not  sure  about  that. 

"Q.  Mr.  Archbold,  whom  did  you  represent  in  that  transaction?  A.  I 
represented  the  shareholders  of  the  Standard  Oil  Company. 

"Q.  After  this  purchase  was  made,  did  you  continue  to  represent  the 
purchasers  in  the  management  of  the  affairs  of  the  Vacuum  Oil  Company? 
A.  I  did. 

"Q.  By  virtue  of  power  delegated  to  you,  or  by  virtue  of  being  a  member 
of  the  board  of  directors  or  trustees  of  the  Vacuum?  A.  By  virtue  of  power 
delegated  to  me. 

"Q.  By  the  purchasers?     A.  By  the  purchasers." 

As  further  showing  what  control  the  Vacuum  Company  was  under.  I 
asked  C.  M.  Everest  for  an  increase  of  salary  if  I  remained  at  Rochester, 
and  he  referred  me  to  Mr.  Archbold  as  the  one  to  determine  that,  and  as 
things  grew  more  unsatisfactory,  I  gave  them  notice  that  I  should  quit  in  a 
short  time.  The  State's  Attorney  had  evidently  made  out  a  convincing  case 
against  the  defendants  on  the  criminal  trial.  When  he  rested  the  case 
Judge  Haight  asked  the  jury  to  stand  up,  and  he  instructed  them  to  acquit 
Archbold.  Rogers  and  McGregor,  and  continue  the  trial  concerning  H.  B.  and 
C.  M.  Everest.  Some  of  the  jurymen  afterwards  told  me  that  this  act  of  the 
judge  greatly  embarrassed  their  subsequent  action,   as  the  very  ones   who 


AFFIDAVIT  OF  CHARLES   B.   MATHEWS.  xv 

had  the  leading  motive  in  the  conspiracy  to  destroy  competition  in  the  oil 
business  were  taken  out  of  the  case,  while  their  agents  and  tools  were  left 
for  the  jury  to  deliberate  about.  The  judge  had  in  his  hands  the  sworn 
answer  of  J.  D.  Archbold,  H.  H.  Rogers  and  McGregor  in  the  $250,000  tort 
action  in  which  they  admitted  that  they  advised  their  co-defendants,  Hiram 
B.  Everest  and  Charles  Everest,  also  directors  of  the  Vacuum  Oil  Company, 
to  re-employ  Miller  at  increased  wages,  and  advised  bringing  actions  on 
alleged  infringement  of  their  patents.  This  sworn  answer  in  the  civil  action 
was  withheld  from  the  jury  in  the  criminal  trial  by  Judge  Haight  as  not 
being  permissible  to  use  the  sworn  answer  in  civil  action  to  convict  the  one 
making  it  of  crime,  and  of  course  the  Standard  ofRcials  had  so  often  refused 
to  explain  their  doings  before  courts  and  committees  lest  their  evidence  be 
used  to  convict  them  of  crime,  that  they  were  lucky  in  escapipg  at  the  very 
moment  when  their  conviction  seemed  certain.  And  now  comes  Mr.  Arch- 
bold  to  your  committee  with  the  affidavits  of  six  of  the  panel  of  jurymen 
that  Judge  Haight  delivered  him  from.  These  affidavits  you  will  notice  were 
taken  one  year  after  the  trial.  Anyone  at  all  acquainted  with  the  situation 
will  believe  it  possible  that  even  six  of  the  jurymen,  or,  in  fact,  any  of 
them,  would  have  signed  any  such  affidavits  when  the  trial  closed  and  the  jury 
was  together  and  the  facts  of  the  trial  fresh  in  remembrance.  But  taking 
them  one  by  one  under  the  pressure  and  encouragement  of  adroit  lawyers, 
six  of  them  yielded.  When  these  affidavits  were  first  presented  District 
Attorney  Quinby  offered  to  prove  that  money  was  offered  to  procure  similar 
affidavits  from  other  jurymen  of  the  panel.  Of  course  the  Standard  defend- 
ants got  all  the  affidavits  they  possibly  could  of  that  kind.  The  affidavits 
read  as  follows: 
State  of  New  York,  County  of  Erie,  ss: 

"Nicholas  Demerly,  of  the  town  of  Boston,  John  J.  Kinney,  Bernard 
Schlebus,  R.  B.  Vusan,  George  W.  Havens,  John  Ueblueher,  being  severally 
duly  sworn,  each  for  himself  deposes  and  says:  That  he  was  one  of  the 
jury  that  served  on  the  trial  of  H.  B.  Everest  and  C.  M.  Everest  for  con- 
spiracy in  the  Erie  County  Oyer  and  Terminer  in  May,  1S87;  that  the  said 
jury  rendered  a  general  verdict  of  guilty  against  both  of  said  defendants. 
And  deponent  further  says  that,  as  he  verily  believes,  it  was  not  the  inten- 
tion of  said  jury,  in  rendering  said  general  verdict,  to  pronounce  the  defend- 
ants guilty  of  an  attempt  oi'  conspiracy  to  blow  up  or  burn  the  works  of  the 
Buffalo  Lubricating  Oil  Company,  Limited,  but  the  conviction  was,  in  the 
mind  of  deponent,  based  upon  the  enticement  of  the  witness.  Miller,  from 
the  employ  of  said  oil  company,  and  he  believes  that  the  other  members  of 
the  jury  convicted  the  prisoners  on  the  same  ground.  And  deponent  further 
says  that  he  believes  the  ends  of  justice  will  be  met  in  this  case  by  the 
imposition  of  a  fine  upon  the  defendants,  and  he  therefore  begs  to  recom- 
mend to  the  court  that  the  sentence  of  said  defendants  be  that  they  pay  a 
fine  only  and  that  they  be  not  sentenced  to  imprisonment." 

This  affidavit  was  verified  by  the  men  whose  names  appear  in  the  above 
copy  of  the  affidavit.  The  maker  of  this  affidavit  avers  that  he  did  not  vote 
for  conviction  of  the  Everests  for  blowing  or  burning  up  the  works  of  the 
Buffalo  Lubricating  Oil  Company,  but  for  the  enticement  of  the  witness. 
Miller,  from  the  employ  of  said  company. 

Now,  in  the  sworn  answer  of  the  defendants,  acquitted  by  order  of  Judge 
Haight,  they  admit  that  they  advised  the  hiring  of  Miller  from  my  company. 

It  must  be  evident  to  anyone  reading  the  official  record  of  the  conspiracy 
trial  as  given  in  the  report  of  the  Manufacturers'  Congressional  Committee's 
Report,  1888,  that  the  charges  of  the  indictment  were  fully  proven,  and  that 
the  three  big  Standard  officials  would  have  been  convicted  with  the  Everests 
if  they  could  have  gone  to  the  jury  at  the  close  of  the  trial  in  1887.  The 
Everests  went  into  this  trial  with  the  advantage  of  good  reputations  as 
honorable  business  men.  Standard  officials  have  been  repeatedly  indicted 
for  violations  of  law,  and  their  bad  reputation  is  so  well  known  that  Mr. 
Archbold  and  other  Standard  officials  and  attorneys  choose  to  refer  to  the 
"ignorance  and  prejudice"  of  the  people  against  big  corporations  as  the 
cause  of  the  conviction  of  some  of  the  conspirators  at  the  Buffalo  trial.     I 


xvi  AFFIDAVIT   OF  CHARLES  B.   MATHEWS. 

do  not  wish  to  review  the  Buffalo  trial,  but  no  one  knows  better  than  Mr 
Archbold  and  his  associates  the  truth  of  the  old  saw  that 

"No  man  e'er  felt  the  halter  draw, 

"With  good  opinion  of  the  law." 

The  Standard  defendants  had  been  unanimously  decided  against  by  two 
grand  juries  and  two  petit  juries  in  Buffalo,  and  they  all  found  abundant 
evidence  of  the  Standard  conspiracy.  If  untrue  or  misleading  testimony 
was  given  by  anyone  at  the  conspiracy  trial,  why  did  all  the  defendants 
choose  to  remain  silent  and  give  no  word  of  testimony  in  their  own  behalf, 
and  then  go  on  forever  abusing  witnesses  and  attorneys  for  telling  what  the 
conspirators  dare  not  dispute  from  the  witness  stand?  The  Standard  con- 
spiracy did  not  end  with  the  conviction  of  the  Everests  and  the  escape  of 
their  associates  in  crime  from  immediate  and  full  punishment  under  the 
law.  My  company  was  harassed  in  shipping  its  oil  to  and  from  the  refinery 
until  we  felt  obliged  to  associate  with  others  in  the  oil  field  in  building  tank 
cars,  tanks,  etc.  We  found  discriminations  in  freights  under  the  interstate 
commerce  law  were  as  harmful,  if  more  secret,  than  before,  and  finally  with 
the  failure  of  the  Excelsior,  of  Cleveland,  and  the  Keystone  Refinery,  of  Oil 
City,  we  were  so  involved  that  the  Lubricating  Oil  Company  was  thrown 
into  a  receiver's  hands.  My  company  had  trusted  for  the  benefit  of  creditors 
and  stockholders,  the  various  causes  of  action  against  the  Standard  con- 
spirators. The  judgment  creditor  obtaining  the  first  judgment  against  my 
company  was  controlled  by  the  Standard  people  and  got  a  receiver  appointed 
that  acted  in  the  Standard  interest.  The  Standard  Trust  then  made  an  offer 
of  $85,000  to  the  receiver  for  our  refinery  in  Buffalo  and  the  cancellation  of 
all  our  suits  against  the  Standard.  The  hearing  of  this  proposition  of  the 
Standard's  was  brought  before  Judge  Haight  by  Receiver  Morton.  Although 
all  the  officers  of  my  company  urged  him  not. to  take  it  before  Judge  Haight, 
to  him  it  went;  and  was  heard  by  Judge  Haight  in  February,  1888.  At  the 
hearing  of  this  motion  all  the  stockholders  of  my  company  and  the  creditors 
asked  to  have  the  Standard's  proposition  refused.  But  Judge  Haight  ordered 
the  receiver  to  accept  their  proposition  so  that  the  stockholders  and  credit- 
ors were  denied  a  trial  by  jury  of  their  causes  in  action  on  a  demand  by  the 
Standard  defendants  that  we  should  accept  their  proposition.  Judge  Haight 
said  at  this  hearing  that  the  Standard  defendants  could  not  be  twice  pun- 
ished for  the  same  offense.  Hence  consequential  and  punitive  damages 
might  be  small  if  they  were  punished  in  criminal  court,  so  he  ordered  the 
suit  settled  on  the  Standard's  terms  and  then  when  he  came  to  sentence 
them  the  following  May  he  fined  them  $250  each.  So  that  when  he  had  let 
three  of  the  five  defendants  out  at  the  criminal  trial  and  settled  the  civil 
actions  on  the  offer  of  the  Standard,  he  then  proceeded  to  fine  the  million- 
aire defendants  the  trifiing  sum  of  $250  without  imprisonment,  lest  they  be 
twice  punished  for  the  same  conspiracy  to  blow  up  the  works  of  the  com- 
petitive refinery.  The  Standard  people  had  large  interests  in  Buffalo  in  the 
way  of  natural  gas.  illuminating  gas,  electric  lighting  plants,  etc.,  and  had  a 
large  part  of  the  public  press  and  many  attorneys  retained,  and  their 
retained  newspapers  and  attorneys  were  worked  during  and  after  the  crim- 
inal trial  to  express  a  public  opinion  favorable  to  the  Standard.  But  the 
Buffalo  Morning  Express  was  the  sturdy  defender  of  the  cause  of  the  people 
and  the  good  name  of  the  intrepid  public  prosecutor. 

Mr.  Archbold  well  knows  that  Standard  oflficials  have  been  repeatedly 
sheltered  by  the  Governors  of  this  and  other  States  when  they  were  under 
indictment  for  violations  of  law,  two  Governors  of  the  State  of  New  York 
having  refused  to  extradite  them  on  the  requisitions  of  the  Governors  of 
other  States,  and  now  Mr.  Archbold  complains  before  your  committee.  The 
Buffalo  defendants  were  convicted  as  charged  in  the  indictment  of  the  con- 
spiracy to  l)low  up  the  works  of  a  competing  refinery.  The  charges  in  this 
case  were  fully  proven,  as  the  charges  of  freight  discriminations  ruining  the 
business  of  George  Rice  were  proven.  Hence  Mr.  Lloyd  in  his  book.  Wealth 
Acainst  Commonwealth,  takes  the  court  records  for  facts  in  history,  instead 
of  the  brassy  denials  of  the  guilty  parties. 


AFFIDAVIT  OF  M.  L.  LOCKWOOD.  xvii 

Large  and  frequent  claims  have  been  made  by  Standard  solicitors  and 
stockholders  about  their  great  skill  and  economies  in  refining  and  transport- 
ing oil.  The  independents  laid  the  first  pipe  lines  for  transporting  oil  for 
short,  as  well  as  long  distances.  The  Tidewater  Pipe  Line,  the  first  long- 
distance line,  was  harassed  without  ceasing  by  the  Standard  until  compelled 
to  surrender  its  independence.  Prominent  Standard  officials  declared  10 
years  ago  that  it  was  not  practical  to  pump  refined  oil  long  distances,  as  the 
oil  would  be  discolored,  and  the  Standard  fought  in  every  conceivable  way 
the  laying  of  the  United  States  Pipe  Line,  which  the  independent  people 
were  laying  for  that  purpose  (as  the  records  of  your  commission  fully  show). 

On  page  306  of  the  report  of  the  Congressional  committee's  report  on 
manufactures,  1888,  H.  M.  Flagler,  of  the  Standard,  says  "that  refined  oil 
does  not  come  from  Lima  oil  at  all.  The  Lima  oil  can  not  be  refined  suc- 
cessfully." On  page  77  of  the  same  report  I.  B.  Dean  (independent)  says 
they  are  now  able  to  refine  Ohio  oil  perfectly,  so  that  the  smell  is  taken  out 
entirely.  At  the  time  Messrs.  Flagler  and  Dean  gave  their  testimony  in 
1888.  the  Standard  was  rapidly  acquiring  oil-producing  territory  in  Ohio  and 
Indiana,  and  either  did  not  know  that  this  class  of  oil  had  been  successfully 
refined  in  Canada  for  25  years,  and  now  in  the  United  States,  or  they  were 
systematically  engaged  in  an  effort  to  beat  down  the  price  of  Ohio  oil  to 
obtain  control  of  the  production.  From  my  experience  as  an  oil  producer 
and  refiner  for  about  30  years,  I  have  found  the  independents  more  pro- 
gressive and  scientific  and  practical  in  the  art  of  refining  oils  than  the 
Standard  people  have  been,  and  the  small  per  cent,  of  refining  of  oil  now 
done  by  them  is  due  almost  entirely  to  freight  discriminations  and  rebates 
in  favor  of  the  Standard  combine.  The  remedy  for  this  evil,  that  grows 
with  the  growth  of  railroad  consolidations  and  lake  and  ocean  transporta- 
tion companies,  I  believe  must  come  through  public  ownership  of  railroads, 
so  that  they  can  be  used  by  all  people  on  equal  and  just  terms,  and  that  the 
people  can  not  be  protected  in  the  enjoyment  of  industrial  liberty  so  long  as 
the  roads  remain  in  private  hands. 

CHARLES  B.  MATHEWS. 

Subscribed  and  sworn  to  before  me  this  16th  day  of  April,  1901. 

E.  N.  HEATH, 
Commissioner  of  Deeds  in  and  for  the  City  of  Buffalo,  N.  Y. 


AFFIDAVIT  OF  M.  L.  LOCKWOOD, 

Producer  of  Petroleum,  Zelienoplo.  Pa. 
Hon.  Thomas  W.  Phillips,  Vice-Chairman  Industrial  Commission: 

Honorable  Sir — I  have  been  reminded  by  a  letter  from  a  gentleman  of 
National  reputation  that  J.  D.  Archbold  had  made  a  personal  attack  on  me 
in  his  testimony  before  your  honorable  body,  delivered  by  him  September 
8.  1899,  and  that  it  was  my  duty,  in  the  interests  of  truth,  not  to  allow  your 
permanent  report  to  be  printed  without  first  answering,  as  such  final  report 
would  become  historic,  and  be  placed  upon  the  shelves  of  the  different 
libraries  and  institutions  of  learning  throughout  the  land. 

We  who  have  kept  watch  of  Archbold  before  investigating  committees 
for  nearly  a  quarter  of  a  century  have  learned  to  pay  very  little  attention 
to  what  he  says.  But  this  letter  from  a  gentleman  of  National  repute  re- 
minds me  that  the  public  is  not  now,  and  that  future  generations  will  not 
be,  so  well  posted.  And  I  therefore  ask  that  this  sworn  answer  be  ingrafted 
into  the  testimony  of  your  report,  as  I  understand  that  you  have  adopted 
the  policy  of  allowing  witnesses  w^ho  have  had  their  testimony  attacked  to 
answer  by  sworn  statement.  And  I  have  faith  that  you  will  extend  to  me 
the  same  courtesy. 

I  will  not  burden  your  pages  by  answering  unimportant  attacks,  for  you 
will  note  that  Mr.  Archbold  denies  everything  and  anything,  not  only  of  my 
testimony  but  the  testimony  of  other  witnesses  not  satisfactory  to  the 
Standard  Oil  Company's  interests.  So  I  will  come  at  once  to  page  559  of 
his  testimony  in  your  preliminary  report.* 


*See  Vol.  1,  Rfpurt  of  the  Tiiihistrial  Cimmission,  Part  IT,  p.  .^.^9. 


xviii  AFFIDAVIT  OF  M.  L.  LOCKWOOD. 

He  says:  "Mr.  Lockwood  makes  an  absurd  statement,  intended  to  con- 
vey the  impression  that  at  the  same  time  refined  oil  is  sold  to  Germany  at 
two  cents  a  gallon,  the  people  of  Texas  and  Arkansas  are  forced  to  pay  25 
cents.  There  is,  of  course,  not  a  word  of  truth  in  any  such  statement,  nor 
does  he  pretend  to  furnish,  nor  can  he  offer,  any  evidence  in  support  of  it. 
It  is  the  sort  of  a  statement  that  a  silly  demagogue  would  make  in  order  to 
create  sentiment  on  this  question." 

My  testimony  on  this  point  was  this,  and  will  be  found  on  page  394  of 
your  preliminary  report:* 

•I  take  no  stock  in  the  idea  that  inordinately  great  capital  produces 
cheaply;  where  monopoly  begins,  there  improvement  ends;  it  is  competition 
that  drives  men  to  economy,  improvement  and  invention;  it  is  monopoly 
that  demands  great  profit.  While  competition  was  putting  refined  oil  into 
tank  steamers  for  the  competitive  markets  of  Germany  at  two  cents  a  gallon, 
monopoly,  backed  by  railway  favoritism,  was  forcing  the  people  of  Texas 
and  Arkansas  to  pay  25  cents  a  gallon  for  the  oil  that  they  burned  in  their 
lamps." 

Archbold  says:  "There  is,  of  course,  not  a  word  of  truth  in  any  such 
statement." 

I  again  reassert  its  truth,  and  here  present  the  sworn  evidence  and 
statement  from  the  export  books  of  the  independent  refiners  of  America  to 
prove  it. 

On  page  8,  independent  refiners'  export  books,  date  of  March  9,  1894, 
the  refined  oil  sold  at  this  date  for  export  was  800,000  gallons.  This  oil, 
after  commission  and  other  expenses  off,  netted  the  independent  refiners 
2.7  cents  per  gallon.  This  oil  was  shipped  to  the  competitive  markets  of 
Germany. 

On  page  11,  March  29,  1894,  oil  sold  this  day  for  export  was  3,000,000 
gallons.  This  oil,  after  commission  and  other  expenses  off,  netted  the  re- 
finers 2.1  cents  per  gallon.  This  oil  was  shipped  to  the  competitive  markets 
of  Germany. 

Page  12,  April  18,  1894,  refined  oil  sold  this  date  for  export  was  1,500,000 
gallons.  This  oil,  after  the  commission  and  other  expenses  off,  netted  the 
independent  refiners  2.1  cents  per  gallon.  This  oil  was  shipped  to  the  com- 
petitive markets  of  Germany. 

On  page  13,  April  18,  1894,  refined  oil  sold  this  date  for  export  was 
1,250,000  gallons.  This  oil,  after  the  commission  and  other  expenses  off, 
netted  the  independent  refiners  0.210  cents  per  gallon.  This  oil  was  sold 
to  the  competitive  markets  of  Germany. 

On  page  18,  June  9,  1894,  refined  oil  sold  this  date  for  export  was 
1,500,000  gallons.  This  oil,  after  the  commission  and  other  expenses  off, 
netted  the  independent  refiners  2.17825  cents  per  gallon.  This  oil  was  ship- 
ped to  the  competitive  markets  of  Germany. 

On  page  22,  July  20,  1894,  refined  oil  sold  this  date  for  export  was 
1,500,000  gallons.  This  oil,  after  the  commission  and  other  expenses  off, 
netted  the  independent  refiners  2.35  cents  per  gallon.  This  oil  was  shipped 
to  the   competitive   markets  of  Germany. 

On  page  25,  September  20,  1894,  re'fined  oil  sold  this  date  for  export  was 
1,500,000  gallons.  This  oil,  after  commission  and  other  expenses  off,  netted 
the  independent  refiners  1.9275  cents  per  gallon.  This  oil  was  shipped  to 
the  competitive  markets  of  Germany. 

On  page  26,  October  17,  1894,  refined  oil  sold  this  date  for  export  was 
1.500,000  gallons.  This  oil,  after  commission  and  other  expenses  off,  netted 
the  independent  refiners  2.0275  cents  per  gallon.  This  oil  was  shipped  to 
the  competitive  markets  of  Germany. 

The  commission  will  note  that,  in  spite  of  Mr.  Archbold's  denial,  my 
testimony  is  more  than  made  good  by  this  statement  of  the  books  of  the 
independent  refiners  of  America.  And  if  the  commission  desires  any  further 
sworn  evidence  on  this  point,  I  am  ready  to  produce  it. 

Even  at  this  late  date  the  people  of  Texas  are  paying  $1  for  a  five-gallon 
can  of  oil.  And  for  fear  that  Mr.  Archbold  will  deny  this,  I  will  present  the 
commission  with  the  sworn  testimony  of  the  citizens  of  Texas  to  prove  this 
statement. 


*See  Vol.  I,  Report  of  the  Industrial    ('"mmission,  I'ait   II,  p.  Z94. 


AFFIDAVIT  OF  M.  L.  LOCKWOOD.  xix 

Here  see  the  affidavits: 

Know  all  men  by  these  presents,  that  the  undersigned,  as  a  citizen  of 
the  State  of  Texas,  United  States  of  America,  and  a  consumer  of  petroleum 
oil,  has  been  obliged  within  the  last  year  to  pay  $1  for  a  flve-gallon  can  of 
oil,'  and  that  is  the  usual  price  here  for  that  amount  of  oil  at  this  time. 

Witness  my  hand  and  seal  this  23d  day  of  April,  1901. 

J.  P.  BUCKENDORFER. 

Know  all  men  by  these  presents,  that  personally  brought  before  me, 
D.  W.  Solliday,  a  notary  public  in  and  for  Orange  county,  of  the  State  of 
Texas,  J.  P.  Buckendorfer,  who,  being  duly  sworn,  deposes  and  says  that 
the  statement  set  forth  in  the  above  paper  is  true,  so  help  him  God  at  the 
great  day. 

[Seal]  D.  W.  SOLLIDAY, 

Notary  Public,  in  and  for  Orange  County,  Texas. 

Know  all  men  by  these  presents,  that  the  undersigned,  as  a  citizen  of 
the  State  of  Texas,  United  States  of  America,  and  a  consumer  of  petroleum 
oil,  has  been  obliged  within  the  last  year  to  pay  $1  for  a  five-gallon  can  of 
oil,  and  that  is  the  usual  price  here  for  that  amount  of  oil  at  this  time. 

Witness     my  hand  and  seal  this  23d  day  of  April,  1901. 

M.  STEPHENSON. 

Know  all  men  by  these  presents,  that  personally  brought  before  me. 
D.  W.  Solliday,  a  notary  public  in  and  for  Orange  county,  of  the  State  of 
Texas,  M.  Stephenson,  who,  being  duly  sworn,  deposes  and  says  that  the 
statement  set  forth  in  the  above  paper  is  true,  so  help  him  God  at  the  great 
day. 

D.  W.  SOLLIDAY, 

Notary  Public,  in  and  for  Orange  County,  Texas. 


And  now,  for  the  purpose  of  showing  the  commission  what  the  people 
of  other  States  have  been  paying  for  their  oil  where  monopoly  controls,  I 
desire   to   submit  the   following  sworn   statement: 

Know  all  men  by  these  presents,  that  the  undersigned,  now  a  citizen 
of  Butler  county,  Pennsylvania,  but  from  1885  to  1890  was  a  citizen  of  Orange 
county,  Florida,  that  while  there  I  was  a  consumer  of  petroleum  oil  and 
paid  while  there  not  less  than  25  cents  a  gallon  for  the  oil  that  I  burned  in 
my  lamps,  and  that  was  the  usual  retail  price  for  oil  at  that  time  in  that 
State. 

Witness  my  hand  and  seal  this  9th  day  of  May,  1901. 

STEPHEN  LOCKWOOD. 

Know  all  men  by  these  presents,  that  personally  before  me,  Paul  W. 
Miller,  a  commissioner  of  deeds  for  the  State  of  New  Jersey,  in  Pennsyl- 
vania, appeared  Stephen  Lockwood,  who,  being  duly  sworn,  deposes  and 
says  that  the  statement  set  forth  in  the  above  paper  is  true,  so  help  him 
God  at  the  great  day. 

[Seal]  PAUL  W.  MILLER, 

A  Commissioner  of  Deeds  for  the  State  of  New  Jersey,  in  Pennsylvania. 


And  yet  in  spite  of  all  these  facts,  as  proven  by  these  statements  and 
sworn  affidavits,  and  regardless  of  the  penalty  of  perjury,  and  with  customary 
audacity,  Archbold  brushes  aside  my  testimony  by  saying:  "There  is,  of 
course,  not  a  word  of  truth  in  any  such  statement." 

On  page  560  of  your  preliminary  report*  Archbold  presents  a  portion  of 
my  testimony,  as  follows: 

"Q-  (By  Mr.  KENNEDY.)  Mr.  Lockwood,  can  you  state  approximately 
what  per  cent,  of  the  refined  oil  of  this  country  is  turned  out  by  the  inde- 
pendent companies?  A.  We  calculate  that  they  are  handling  about  4  per  cent. 

"Q.  Only  4  per  cent.?  A.  Only  4  per  cent.:  you  know  this  is  an  im- 
mense business. 


*See  Vol.  I,  Report  of  the  Industrial    Commission,  Part  II,  p.  560. 
40 


XX  AFFIDAVIT  OF  M.  L.  LOCKWOOD. 

"Q.  (By  Vice-chairman  PHILLIPS.)  That  is,  taking  the  Ohio  oil?  A. 
Taking  the  Ohio  oil  and  the  Pennsylvania  oil  and  all  these  different  grades 
of  oil." 

At  the  time  I  was  called  to  testify  before  your  honorable  body  the 
rumors  were  already  afloat  that  the  Cudahys  and  Manhattan  oil  companies, 
operating  principally  in  Ohio  and  Indiana  oils,  with  their  pipe  lines  and 
refineries,  were  being  absorbed  by  the  Standard  Oil  Company,  which  rumors 
afterwards  proved  to  be  true,  and  the  absorption  was  done  through  the 
route  of  an  English  syndicate,  and  it  was  from  this  standpoint  that  my  esti- 
mates before  you  were  made. 

Mr.  Archbold  proceeds  (page  .560  of  your  preliminary  report*):  "I  will 
now  present  a  statement  showing  the  aggregate  business  done  by  the 
Standard  Oil  Company  and  by  others  in  the  United  States  for  the  five  years 
1894-1898,  inclusive,  in  which  it  appears  that  the  aggregate  percentage  of 
all  business  in  petroleum  and  its  products  done  by  the  Standard  Oil  lllom- 
pany  was  82.3  per  cent,  for  this  period  of  five  years  as  against  competitors' 
17.7  per  cent. 

"Q.  (By  Mr.  SMYTH.)  That  includes  all  by-products?  A.  Petroleum 
and  all  its  products." 

Here  are  Archbold's  figures: 

BUSINESS    OF    STANDARD    OIL    COMPANY    AND    OTHER    REFINERS, 

YEARS  1894-1898,  INCLUSIVE. 

(Barrels  of  50  gallons;   all  products,  domestic  trades.) 


Standard  Oil  Co. 

Others. 

■1  otal 

Year. 

r>„_-pi.      Percent 
Barrels.     ^^  ^^^j^ 

Barrels. 

Percent 
of  totel. 

barrels. 

1894                      

18,118.9.33  :          81.4 
18.348,0.51  j          81.8 
16,341,161  !          82.1 
18,141,479             82.4 
19,999,939             83.7 

4, 145, 232 

18.6 

22,264.]&5 

1895 

1896                       

4,084,720  1          18.2 
3,569,719             17. » 
3,876,706  1          17.6 
3,914,999  j          16.3 

22,432,771 
19,910,880 

1897                            

22, 018, 1.S5 

1898                         

23,914,938 

Total 

90,949,563  !          82.3 

19,591,376             17.7 

110,540,939 

The  commission  will  note  that  by  ingeniously  presenting  this  data  for 
years  preceding — now  mark,  preceding  this  absorption  of  the  Cudahys  and 
Manhattan  refineries — that  he  made  these  figures  do  his  falsifying  for  him, 
and  apparently  proved  to  you  that  my  estimates  were  false. 

And  more  and  worse,  on  page  541  of  his  testimony ,t  he  further  convicts 
himself  of  purposely  deceiving  and  misleading  the  commission.  He  there 
gives  what  purports  to  be  the  independent  refineries  operating  at  that  time. 
In  that  list,  in  addition  to  the  above  absorbed  refineries  and  pipe  lines,  and 
the  26  refineries  in  that  list  which  Scofield,  Shurmer  &  Teagle,  of  Cleveland, 
declare  to  be  shut  down  and  gone  out  of  the  business,  he  gives  the  Tide- 
water Oil  Company,  with  its  43,150  barrels  of  still-refining  capacity,  as  in- 
dependent and   outside  of  the   Standard   Oil   Company's  combination. 

The  Tidewater  Company  was  the  first  concern  that  ever  started  in  un- 
handicapped  by  railway  discrimination  and  upon  anything  like  even  terms 
in  transportation  facilities  in  competition  with  the  Standard  Oil  Company, 
their  pipe  lines  and  railroad  connections  guaranteeing  them  equal  transpor- 
tation charges  with  the  Standard  Oil  people,  and  since  they  whipped  the 
Standard  Oil  Company  into  giving  them  a  large  percentage  of  the  oil  busi- 
ness they  have  become  as  much  a  part  of  the  Standard  Oil  conspiracy  against 
the  producers  and  consumers  of  oil  as  Archbold  himself.  Everybody  who 
is  posted  knows  this,  and  yet  Archbold  has  the  impudence  and  audacity  to 
impose  on  your  honorable  body  this  kind  of  testimony  with  the  purpose  of 
deceiving  the  commission  and  the  country  in  an  attempt  to  prove  that  my 
estimates  were  false. 


'See  Vol.  I.  Report  of  the  Industrial     Commission,   P.irt   Tl.   i>.   .")t!0. 
tSoe  Vol.  T,  Report  of  the  Industrial  Commission,   Part    11.   p.   .'41. 


AFFIDAVIT  OF  M.  L.  LOCKWOOD.  xxi 

He  further  testifies   (preliminary  report,  p.  560): 

"Mr.  Lockwood  testifies  that  by  manipulation  of  price  of  Ohio  crude 
oil,  in  conjunction  with  the  railways,  we  succeeded  in  getting  the  price  down, 
to  an  abnormally  low  figure,  and  then  bought  substantially  the  whole  Ohio 
producing  field." 

And  here  again  Mr.  Archbold  uses  figures  to  deceive  and  mislead  the 
commission  and  the  country. 

For,  mark  you,  it  was  not  until  the  latter  part  of  1886  that  the  wither- 
ing force  of  railway  discrimination  was  applied  to  the  man  who  had  de- 
veloped the  Lima  oil  field,  and  by  July  of  1887,  after  that  withering  force  had 
befen  applied,  they  had  forced  the  price  of  crude  Lima  oil  down  to  15  cents 
a  barrel.  At  that  time,  1887,  the  Standard  Oil  Company  owned  practically 
nothing  in  production  in  the  Lima  oil  field.  Think  of  what  the  financial 
slaughter  must  have  been  to  force  over  55  per  cent,  of  the  producers  to 
transfer  their  property  to  the  Standard  Oil  people  in  a  little  more  than  two 
years.  In  some  places  nearly  whole  townships  were  sacrificed — transferred 
to  the  Standard.  I  know  all  about  it.  I  was  one  of  the  producers  who  was 
obliged  to  sacrifice  his  property  there. 

Think  of  a  financial  condition  brought  about  by  monopolistic  control  of 
the  price  of  wheat,  for  instance,  among  the  farmers  of  a  State  that  would 
force  them  in  two  short  years,  in  order  to  save  themselves  from  the  sheriff, 
to  give  up  to  such  monopoly  over  55  per  cent,  of  their  farms.  Would  it  not 
be  a  pardonable  extravagance  for  some  farmer  who  happened  to  be  in  the 
tliickest  of  it  to  testify:* 

"They  held  it  at  15  cents  a  barrel  in  Ohio  until  they  broke  the  hearts 
of  the  producers,  and  then  bought  nearly  the  entire  country  upon  that  basis." 

And  here  Mr.  Archbold  could  sit  coolly  down  in  his  office  at  26  Broadway, 
surrounded  by  his  high-priced  lawyers  and  statisticians,  and  compile  this 
table  of  figures  to  prove  what  he  wanted. 

Here  are  Archbold's  figures, t  expressed  in  barrels  of  42  gallons: 


Penns 

ylvania  oil. 

Lima  oil. 

Grand  total. 

6 

a 

5i 

ti 

6 

a 

5§ 

SSa 

1 

55 

-o 

"2 

•d 

-o 

Year. 

2d 

0.0 

IH 

2d 

0.0 

"22 

Is. 

PiJO 

■a2 

n  0 
^  « 
S"-; 

« 

ado 

g  (u  c 

cS 

•o  .c 
fl  o  o 

«n^! 

and 

oil 

tion 

■2  -ss 

0  O  o 

0  Qi/i 

o 

5^^ 

^0.0. 

o 

.^os 

Sq.$ 

^03 

SO.B 

H 

cc 

X 

H 

CD 

cc 

P4 

X 

'J} 

1890... 

30,065,867 

2,618,637 

8.71 

16,014,882 

8,400,568 

55.95 

45,080,749 

11,019,205 

2^A4: 

1891... 

35,742,127 

4,913,775 

13.74 

17,381,923 

9,319,156 

53.61 

5.3,124.050 

14,232  931 

26.79 

1892... 

3^,332,306 

4,Xi8,S22 

13.02 

1«,  68.5,  im 

7,843,324 

47.01 

50.017,499 

12, 182, 146 

24.36 

1893... 

31,256,28;^ 

6, 705, 276 

21.45  1  17,8:3,2.55 

7, 261  i,  (•99 

40.74 

49,079,5;« 

13  966,175 

28.46 

1894... 

30.  696, 716 

7, 210,  .345 

2:^.  49 

18,575,603 

6, 690  951 

36.02 

49,272,319 

13,9 '1,296 

28. 21 

1895... 

30,891,868 

9,119,920 

29.  ,52 

21,719,2,50 

6,808,876 

31.35 

52.611,118 

15,928,796 

30.28 

1896... 

33  908,041 

9,  .580, 654 

27. 66 

25,222,091 

8,031,793 

31.84 

,59, 130, 132 

17,412,447 

29  45 

1897... 

a5, 170, 367 

9,7x7,353 

27.83 

22,79.3,0,33 

7,497,349 

32.89  j  57,963.400 

17,284,702 

29. 82 

1898... 

31,&15,151 

11,248,443 

35.55     20,266,328 

7,220,«06 

35.63  j  51,911,479 

18, 469, 049 

3.5.58 

Total 

292,708,726 

65,323,225 

22.32 

175,481,558 

69,073,522 

39.36 

468,190,284 

134,396,747 

28.70 

The  commission  will  especially  note  that  these  statistics  given  by  Arch- 
bold did  not  begin  until  the  year  1890,  after  the  financial  slaughter  was  over 
in  Ohio  and  the  price  of  Lima  oil  had  gone  up.  But  they  seem  to  prove  to 
his  satisfaction  that  the  situation  was  not  as  bad  as  I  had  pictured  it.  he 
selecting  his  figures  from  such  dates  as  to  best  deceive  the  commission  and 
the  country.  Why  did  he  not  give  his  statistics  for  the  years  1887.  1888, 
1889?  The  answer  is  "because  they  would  have  proved  too  much,"  and  ex- 
posed the  awful  wreckage  which  in  a  little  over  two  years  enabled  the 
Standard  Oil  people  to  get  possession  of  over  55  per  cent,  of  the  oil  produc- 
tion of  the  Lima  oil  field. 


*See  Vol.  I,  Report  of  the  Industrial  Commission,  Part  IT,  p.  403. 
tThe  table  here  quoted  is  to  be  found  In  Mr.  Archbold's  testimony,  Vol.  I,  Report 
of  the  Industrial  Commission,  Part  II,  page  561. 


xxii  AFFIDAVIT  OF  M.  L.  LOCKWOOD. 

His  figures,  however,  are  of  service,  for  they  prove  that  just  in  propor- 
tion as  the  producer  is  able  to  get  a  fair  price  for  his  product,  that  he  is 
more  than  able  to  hold  his  own  with  the  Standard  Oil  Company  in  the  acqui- 
sition of  property,  for  in  1895,  when  Lima  oil  went  to  $1.27  a  barrel,  the  pro- 
ducers of  Lima  oil  had  been  able  to  reduce  the  Standard  Oil  Company's 
percentage  of  production  to  less  than  32  per  cent. 

Mr.  Archbold  further  testifies,  on  page  561,  that  "Mr.  Lockwood's  state- 
ment *  *  *  is  so  ridiculous  as  not  to  call  for  any  answer."  He  takes 
exception  to  my  attack  upon  the  courts  and  upon  the  corruption  of  our  public 
men  by  railroads  and  corporate  interests,  and  then  he  takes  the  commission 
into  his  confidence  and  says:  "I  think  you  will  agree  with  me  that  we 
must  conclude  that  the  fool  killer  has  been  very  remiss  in  his  duty  in  the 
vicinity  of  Zelienople,  Pa." 

And  now,  in  conclusion,  I  desire  to  submit  that  when  Mr.  Archbold 
ruthlessly  denies  all  facts  and  systematically  and  cunningly  compiles  figures 
and  falsifies,  as  per  his  classification  of  the  Tidewater  Oil  Company,  that  the 
commission  must  agree  with  the  country  that  the  knave  killer  has  not  done 
his  full  duty  in  the  vicinity  of  No.  26  Broadway,  New  York. 

And  now  I  desire  to  repeat  what  in  substance  I  said  when  I  appeared  and 
testified  before  your  honorable  body,  that  I  have  no  combat  against  Mr.  Arch- 
bold and  his  associates,  for  I  do  not  believe  that  they  are  any  worse  than 
some  other  men  might  be,  armed  as  they  have  been  with  special  privileges 
and  advantages  over  the  highways,  the  railways,  of  the  country.  I  have  no 
combat  with  men.  My  protest  is  against  this  accursed  system  of  favoritism 
over  the  railways  by  which  a  few  men,  by  the  organization  of  trust  combina- 
tions, can  monopolize,  destroy  the  equal  rights  of  the  citizenship,  declare  48 
per  cent,  dividends  on  a  three-times  watered  stock  in  12  months,  and  thereby 
absorb  the  wealth  produced  by  the  many. 

M.   L.   LOCKWOOD. 

Witness:     IRA  S.  ZEIGLER. 

I  do  solemnly  swear  that  the  above  statement  is  true  to  the  best  of  my 
knowledge,  information  and  belief. 

M.   L.  LOCKWOOD. 
Sworn  and  subscribed  to  before  me  this  14th  day  of  May,  A.  D.  1901. 
[Seal]  IRA  S.  ZEIGLER, 

Notary  Public. 


State  of  Texas,  County  of  Orange: 

Before  me,  V.  H.  Stark,  a  notary  public  in  and  for  Orange  county,  Texas, 
on  this  day  personally  appeared  J.  T.  Stark,  who,  after  being  by  me  duly 
sworn,  on  oath  deposes  and  says  that  he  is  a  resident  citizen  of  the  United 
States  of  America,  and  is  now  a  resident  citizen  of  the  State  of  Texas,  and 
has  resided  in  the  said  State  of  Texas  for  a  period  of  44  years  next  preced- 
ing the  date  of  this  affidavit;  that  for  a  period  of  10  years  he  has  been  a 
consumer  of  illuminating  oil;  that  he  now  pays  for  said  oil  20  cents  per 
gallon;  that  for  five  years  next  preceding  the  filing  of  this  affidavit  he  has 
not  been  able  to  purchase  illuminating  oil  for  a  less  price  than  20  cents  per 
gallon,  and  that  said  prices  have  been  the  regular  price  from  the  merchant 
to  the  consumer  for  said  oil  for  the  period  above  mentioned  in  Orange 
county,  Texas. 

That  for  a  period  of  seven  years  next  preceding  said  above  three  years 
he  has  paid  25  cents  per  gallon  for  said  oil. 

J.  T.  STARK. 

Sworn  to  and  subscribed  before  me  this  14th  day  of  May,  A.  D.  1901. 
And  I  do  hereby  certify  that  affiant  above  subscribing  is  credible. 

I  Seal]  V.  H.  STARK, 

Notary  Public,  Orange  County,  Texas. 


AFFIDAVIT  OF  F.   S.  MONNETT.  xxiii 

State  of  Texas,  County  of  Orange: 

Before  me,  V.  H.  Stark,  a  notary  public  in  and  for  Orange  county,  Texas, 
on  this  day  personally  appeared  H.  T.  Fountain,  who,  after  being  by  me  duly 
sworn,  on  oath  deposes  and  says  that  he  is  a  resident  citizen  of  the  United 
States  of  America,  and  is  now  a  resident  citizen  of  the  State  of  Texas,  and 
has  resided  in  the  said  State  of  Texas  for  a  period  of  18  years  next  preced- 
ing the  date  of  this  affidavit;  that  for  a  period  of  five  years  he  has  been  a 
consumer  of  illuminating  oil;  that  he  now  pays  for  said  oil  20  cents  per 
gallon;  that  for  five  years  next  preceding  the  filing  of  this  affidavit  he  has 
not  been  able  to  purchase  illuminating  oil  for  a  less  price  than  20  cents  per 
gallon,  and  that  said  prices  have  been  the  regular  price  from  the  merchant 
to  the  consumer  for  said  oil  for  the  period  above  mentioned  in  Orange 
county,  Texas. 

H.  T.  FOUNTAIN. 

Sworn  to  and  subscribed  before  me  this  14th  day  of  May,  A.  D.  1901. 
And  I  do  hereby  certify  that  affiant  above  subscribing  is  a  credible  person. 

[Seal J  V.  H.   STARK, 

Notary  Public,  Orange  County,  Texas. 


State  of  TexaSj  County  of  Orange: 

Before  me,  V.  H.  Stark,  a  notary  public  in  and  for  Orange  county,  Texas, 
on  this  day  personally  appeared  N.  Burton,  who,  after  being  by  me  duly 
sworn,  on  oath  deposes  and  says  that  he  is  a  resident  citizen  of  the  United 
States  of  America,  and  is  now  a  resident  citizen  of  the  State  of  Texas,  and 
has  resided  in  the  said  State  of  Texas  for  a  period  of  34  years  next  preced- 
ing the  date  of  this  affidavit;  that  for  a  period  of  30  years  he  has  been  a 
consumer  of  illuminating  oil;  that  he  now  pays  for  said  oil  20  cents  per 
gallon;  that  for  four  years  next  preceding  the  filing  of  this  affidavit  he  has 
not  been  able  to  purchase  illuminating  oil  for  a  less  price  than  20  cents  per 
gallon,  and  that  said  prices  have  been  the  regular  price  from  the  merchant 
to  the  consumer  for  said  oil  for  the  period  above  mentioned  in  Orange 
county,  Texas. 

N.  BURTON. 

Sworn  to  and  subscribed  before  me  this  14th  day  of  May,  A.  D.  1901. 
And  I  do  hereby  certify  that  affiant  is  a  credible  person  and  is  at  present 
district  and  county  clerk  of  Orange  county,  Texas. 

[Seal]  V.  H.   STARK, 

Notary  Public,  Orange  County,  Texas. 


AFFIDAVIT  OF  F.  S.  MONNETT, 

Ex-Attorney-General  of  Ohio,  Columbus,  Ohio. 

The  Honorable  Industrial  Commission,  Washington,  D.  C: 

I  beg  leave  to  submit  a  reply  affidavit  to  the  scurrilous  misrepresenta- 
tion of  a  man  by  the  name  of  John  D.  Archbold,  testifying  before  your  com- 
mission, as  appears  upon  page  543*  et  seq. 

ANSWER  TO  ARCHBOLD'S  PRELUDE. 

The  State  of  Ohio,  Franklin  County,  ss: 

It  is  true  that  the  Standard  Oil  Company  is  and  has  been  interested  in 
Ohio,  as  set  forth  in  the  prelude  of  Archbold's  testimony;  that  certain  cor- 
porations, like  the  Buckeye  Pipe  Line  Company,  the  Ohio  Oil  Company, 
Solar  Refining  Company,  and  the  Standard  Oil  Company  of  Ohio,  are  and 
have  been  duly  chartered  by  the  State,  but  I  specifically  deny  that  they  are 
"carefully  observing  the  obligations  imposed  upon  them  by  their  charter." 
but  each  and  every  one  have  openly  and  notoriously  violated  their  charter, 
and  have  violated  the  statutes  of  the  State,  criminally  and  civilly,  and  are 
now  so  violating  them,  and  did  not  dare  to  come  into  court  and  answer  the 
charges  of  such  violation  as  set  forth  in  the  petition  in  quo  warranto  and 

*See  Vol.   I.,  Report  of  the  Industrial  Commission,  Part  II,  page  543. 


xxiv  AFFIDAVIT  OF  F.  S.  MONNETT. 

the  interrogatories  thereto  attached,  the  Buckeye  Pipe  Line  Company,  the 
Solar  Refining  Company,  and  the  Standard  Oil  Company  of  Ohio,  other  than 
filing  such  an  aflfidavit  to  their  pleadings,  as  the  inclosed  one  indicates,  and 
as  appears  on  page  34  of  the  Supreme  Court  record  of  the  case,  and  which 
still  stands  in  open  and  notorious  defiance  of  the  State  laws. 

COPY  OF  BUCKEYE  PIPE  LINE  COMPANY'S  JURAT  TO  ANSWER  IN 
SUPREME  COURT  OF  OHIO. 

The  State  of  New  York,  County  of  New  York,  ss: 

Henry  H.  Rogers,  being  duly  sworn,  says  that  he  is  president  of  the 
defendant  herein,  a  corporation,  and  that  the  averments  of  its  foregoing 
answer  are  not  verified  because  the  admission  of  the  truth  of  certain  facts 
stated  in  the  pleadings  might  subject  the  defendant  and  its  officers  to  a 
criminal  or  penal  prosecution  and  to  a  forfeiture  of  its  charter,  franchises 
and  privileges,  and  for  the  same  reason  the  interrogatories  are  not  answered. 

HENRY  H.  ROGERS. 

Subscribed  and  sworn  to  by  the  said  Henry  H.  Rogers  before  me  this 
18th  day  of  January,  1899. 

JOHN  BENSINGER, 
Notary  Public  for  Kings  County. 
Certificate  filed  in  New  York  County. 

They  ceased  to  hold  bona  fide  meetings  in  the  State  of  Ohio  of  their 
directors  and  stockholders,  as  required  by  statute;  they  removed  their  prin- 
cipal place  of  office  to  26  Broadway,  New  York,  entered  into  and  remained  in 
the  Standard  Oil  Trust  by  part  of  the  companies,  continuing  to  nourish  the 
trust  certificates  issued  by  the  Standard  Oil  Trust  by  paying  dividends 
thereon,  in  open  defiance  of  the  court,  for  eight  years;  they  escaped  the 
contempt  of  the  court  for  violating  the  original  decree  of  the  Standard  Oil 
Company,  wherein  they  were  adjudged  to  have  entered  into  the  trust  con- 
tract illegally,  and  escaped  punishment  in  contempt  by  the  Supreme  Court 
of  Ohio  by  a  vote  of  three  to  three.  The  three  judges  voting  to  hold  them 
in  contempt  were  the  three  judges  that  were  on  the  bench  when  the  original 
decision  was  rendered.  It  is  charged  and  uncontradicted  that  their  infiuence 
defeated  .Joseph  P.  Bradbury  for  renomination  as  judge  of  the  Supreme 
Court  of  the  State  of  Ohio,  who  was  known  to  be  against  their  treatment  of 
the  court  in  this  decree,  and  not  until  after  his  defeat  and  election  of  a 
judge  in  his  place  did  they  get  a  tie  vote  that  failed  to  convict  them.  They 
have  openly  and  notoriously  evaded  the  taxes  due  the  State  by  making 
returns  upon  their  property,  in  many  instances  estimated  at  less  than  10  per 
cent  of  its  real  value,  considering  the  earning  capacity  of  the  property. 

I  reaffirm  that  on  their  own  figures,  as  reported  to  the  excise  board,  they 
shipped  from  the  oil  fields  of  Ohio  to  their  various  refineries  an  average  of 
upward  of  30,000,000  barrels  per  year,  as  appears  in  my  testimony,  on  page 
311  of  the  records*  of  your  commission,  and  that  the  gross  receipts  for 
refined  oil  and  by-products  received  by  the  Standard  Oil  combination  com- 
panies from  Ohio's  crude  oil  would  reach  $120,000,000  a  year.  I  did  not 
claim,  as  indicated  in  Archbold's  reply,  that  any  such  amount  was  consumed 
in  Ohio;  it  was  the  amount  that  was  extracted  from  Ohio  and  mostly  piped 
out  of  Ohio.  If  Archbold's  testimony  is  as  represented  in  its  prelude  on 
page  .543,*  in  which  he  says  that  the  said  corporations  composing  his  com- 
bination of  companies  are  "carefully  observing  the  obligations  imposed  upon 
them  by  their  charters,"  I  wish  to  caution  the  commission  against  drawing 
any  conclusions  or  deductions  from  any  of  his  evidence;  and  his  reiteration 
of  this  matter,  after  all  that  has  been  shown  in  the  courts  by  the  affidavits 
of  their  own  officers  and  their  conduct  before  the  court  and  in  the  State 
Legislature  regarding  the  same,  Is  most  reprehensible. 


*See  Vol.   I,   Report  of  the  Industrial    Commission,  l^art  IT. 


AFFIDAVIT  OF  F.   S.  MONNETT.  xxv 

I  would  like  to  characterize  this  absurd  statement  of  Archbold's  and  his 
misrepresentation  of  the  conduct  of  his  companies  in  Ohio  in  much  stronger 
terms,  but  I  "bow  to  the  wish  of  the  commission." 

He  entirely  misquotes  Mr.  Kinkead;  at  least,  he  misconstrues  Mr. 
Kinkead's  "satisfaction  on  his  investigation."  Mr.  Kinkead  demanded  rec- 
ords and  answers  to  the  State's  interrogatories  that  were  never  answered, 
but  when  Mr.  Archbold  undertakes  such  a  large  job  of  swearing  as  to 
malign,  contradict  and  vilify,  and  reflect  upon  Senator  Theo.  F.  Davis,  M. 
L.  Lockwood,  Mr.  Lloyd,  Mr.  Phillips,  Senator  Lee,  Mr.  Emery,  Theodore  B. 
Westgate,  David  Kirk,  Messrs.  Dennison,  Akin  and  Murphy,  and  the  whole 
army  of  witnesses,  their  victims  and  others  that  do  not  bow  down  their 
knee  to  worship  at  his  oily  shrine,  and  cry  "Allah,  Allah"  at  the  altar  of  his 
by-products,  I  am  not  surprised  that  he  would  palm  off  such  testimony  upon 
the  commission. 

Looking  at  his  testimony  in  the  light  of  the  various  records  as  shown  in 
the  courts,  in  the  face  of  the  testimony  of  the  other  witnesses  and  of  the 
company's  refusal  to  testify  when  called  upon  to  do  so,  what  strength  or 
force  can  his  testimony  have  as  to  what  his  corporations  have  done  to  obey 
the  law  in  Ohio  when  these  companies  had  an  opportunity  to  demonstrate  to 
the  court  that  they  were  law  abiding,  but  did  not  dare  answer  the  interroga- 
tories submitted  to  them  for  fear  of  penal  or  criminal  prosecution,  as  they 
allege,  in  Ohio. 

BURNING  OF  THE  BOOKS. 

I  submitted  to  the  commission  the  sworn  testimony  of  the  witnesses 
who  helped  burn  the  books  and  of  the  draymen  who  helped  haul  them  to  the 
funeral  pyre.  I  also  gave  them  an  opportunity  to  produce  a  single  volume, 
whether  daybook  or  ledger,  covering  the  subject-matter  that  was  contained 
in  the  books  so  burned.  They  never  did  produce  them,  and  never  have  pro- 
duced them,  and  openly  refused  to  produce  them  under  the  court's  order, 
and  flagrantly  subsidized  110  newspapers  in  the  State  of  Ohio  to  protect 
them  in  their  methods.  Since  said  sworn  testimony  one  of  their  traveling 
auditors  or  employes  has  admitted  that  he  was  out  collecting  the  books  and 
records  that  were  shipped  into  the  office  and  burned,  and  he  himself  was 
ordered,  if  subpoenaed,  to  answer  no  questions,  but  to  go  to  jail  in  contempt. 
This  employe  said  the  State  was  "hot  on  their  trail." 

THE  BRIBERY  CASE  IN  OHIO.  * 

I  charged  them  before  the  Supreme  Court  with  having  attempted  to 
bribe  the  Hon.  D.  K.  Watson,  former  Attorney-General,  and  also  myself  as 
Attorney-General,  as  fully  set  forth  in  the  complaint,  and  began  taking  tes- 
timony to  establish  the  fact,  but  Mr.  Archbold  said  in  his  testimony  on  page 
544*  that  they  had  called  upon  the  court  to  investigate  the  charges,  and  if 
the  court  did  not  investigate  they  would.  On  the  day  I  began  to  take  the 
testimony  to  establish  every  allegation  made  in  reference  to  the  bribery  in 
my  reach,  showing  how  the  $400,000  was  offered,  and  showing  how  $100,000 
was  offered  to  my  predecessor,  and  giving  all  the  details,  telegrams  and  inter- 
mediaries, and  all  the  evidence  connected  therewith,  the  Chief  Justice  of  the 
Supreme  Court,  at  the  request  of  the  attorneys  of  record  of  the  Standard  Oil 
Company,  verbally  ordered  me  not  to  take  the  testimony,  and  the  charges 
were  thereafter  dismissed  by  the  court  without  the  hearing  of  any  testimony 
on  the  part  of  the  State  to  establish  the  same.  So  that,  instead  of  the  trust 
"courting  investigation,"  they  deliberately  evaded  and  suppressed  an  inves- 
tigation of  these  bribery  charges,  the  court  holding  among  other  grounds 
that  they  had  no  jurisdiction  over  the  question  of  contempt  as  charged,  as 
to  whether  the  Standard  Oil  Company  was  allowed  taken,  either  by  the 
company  or  the  court,  although  the  State  stood  ready  to  give  a  full  exposi- 
tion and  exposure  thereof. 

Through  their  pipe-line  charges  and  by  means  of  their  monopoly  in 
transportation,  the  Standard  Oil  combinations  continue  their  monopoly  in 
handling  oil  in  Ohio,  as  every  consumer  of  oil  in  this  State  can  verify  by  his 
pocketbook. 


•See  Vol.   I,   Report  of  the  Industrial  Commissijn,  Part  II,  page  511. 


xxvi  AFFIDAVIT  OF  JAMES  W.  LEE. 

Campaigns  come  and  go,  commissions  investigate,  and  legislatures  meet 
and  adjourn,  and  magazine  articles  are  written  and  read,  and  yet,  through 
their  monopolistic  and  criminal  exactions,  the  Standard  Oil  combinations  of 
transportation  and  distribution  thereof  levy  tribute  upon  the  owner  of  the 
oil  rock  and  exact  from  the  consumer  of  the  refined  oil  and  its  by-products 
this  unnatural  profit.  The  public  are  its  victims;  the  little  band  of  law 
violators  owning  the  controlling  shares  are  the  beneficiaries  of  the  plunder. 
The  public  for  a  short  time  stand  aghast  at  their  very  boldness  and  defiance. 
The  government  alone  can  check  their  abuses. 

Subsidized  papers  and  public  officials  bribed  by  these  law  violators  will 
work  their  own  ruin  sooner  or  later.  The  exposure  made  by  the  Industrial 
Commission  has  had  its  wholesome  place  in  this  work,  but  some  more  drastic 
measures  must  soon  be  administered.  The  States  have  the  sovereign  power 
to  protect  all  lawful  efforts  of  organized  wealth,  but  when  the  State  creates 
the  corporations  that  use  their  delegated  powers  for  other  purposes  than  the 
government  itself  could  use  them,  it  is  time  then  to  revoke  such  charters  by 
the  courts.  This  government  was  established  to  promote  the  "general  wel- 
fare," not  for  the  special  welfare  of  a  few  magnates;  neither  can  this  sover- 
eignty delegate  its  governmental  functions  to  seven  trustees  to  operate  the 
government  for  their  "special  welfare"  and  for  "their  posterity." 

No  corporate  creature  of  this  government  can  deprive  a  citizen  of  his 
property  through  monopolistic  combinations  and  exact  an  unnatural  and  an 
unconscionable  tribute  or  excise  from  the  consumer  by  this  brute  force,  and 
long  hold  the  public  good  will.  Neither  can  this  band  of  law  violators  long 
deny  the  common  citizen  the  equal  protection  of  the  laws;  neither  can  they 
destroy  competitors'  property  at  will  without  adequate  compensation.  They 
have  shown  little  respect  in  Ohio  for  "vested"  rights  of  competitors,  and 
little  respect  for  "vested  facts"  or  "truth"  in  their  reports  and  testimony 
from  my  views  of  this  evidence. 

F.  S.  MONNETT. 

I  swear  that  these  statements  made  by  me  of  my  own  knowledge  are 
true,  and  that  all  other  statements  I  believe  to  be  true. 

F.  S.  MONNETT. 

Sworn  and  subscribed  to  before  me  this  6th  day  of  June,  1901. 

(Seal.)  L.  R.  PUGH, 

Notary  Public,  Franklin  County,  Ohio. 


AFFIDAVIT  OF  JAMES  W.  LEE, 

President  Pure  Oil  Company,  Pittsburg,  Pa. 
State  of  Pennsylvania,  County  of  Allegheny,  ss: 

James  W.  Lee,  being  duly  sworn,  deposes  and  says,  in  answer  to  the 
statement  made  on  page  507,  Volume  1,  Part  II,  of  the  report  of  the  Indus- 
trial Commission: 

It  is  not  true  that  the  said  affiant  acknowledged  himself  to  be  not  only  a 
member  but  the  head  of  a  trust.  The  company  to  which  reference  is  made  is 
the  Pure  Oil  Company,  and  it  is  not  now  nor  has  it  ever  been  in  any  sense  a 
trust.  It  was  organized  to  have  exactly  the  opposite  effect,  to  prevent,  if 
possible,  instead  of  securing  monopoly.  The  fact  that  a  portion  of  its  stock 
is  held  in  a  voting  trust  does  not  in  any  way  contribute  to  make  it  a  trust. 
This  voting  trust  was  created  for  the  express  purpose  of  preventing  monop- 
olies in  the  business  in  which  it  is  engaged  from  securing  the  control  of  its 
business  and  destroying  the  small  measure  of  competition  which  the  said 
company  affords  in  the  industry  in  which  it  is  engaged.  These  voting  trusts 
had  been  employed  for  proper  and  laudable  purposes  long  prior  to  the  date 
at  which  modern  trusts  came  into  existence. 

Aflfiant  is  not  now  nor  ever  has  been  connected  with  modern  trusts — that 
is,  a  corporation  or  combination  of  corporations  intending  to  create  and 
maintain  a  monopoly  in  any  industry. 


AFFIDAVIT  OF  JOHN  D.  ARCHBOLD.  xxvii 

Affiant  desires  to  reiterate  the  statement  that  the  Standard  Oil  Company 
was  absolutely  opposed  to  the  passage  of  the  free-pipe  line  law  in  Pennsyl- 
vania in  1883,  and  to  the  attempted  passage  of  a  similar  law  in  1879  and  1881. 
This  was  a  matter  of  common  and  general  knowledge  at  the  time,  and  their 
agents  forwarded  hundreds  of  telegrams  in  opposition  to  the  measure  during 
the  time  of  its  consideration. 

The  letters  submitted  on  pages  517  to  526  of  the  report*  are  wholly 
inconsequential  as  proving  the  matter  which  they  were  offered  to  establish. 
They  are  in  the  nature  of  negative  testimony.  Affiant  has  knowledge  of  a 
case  in  which  the  general  freight  agent  swore  that  no  discrimination  in  rates 
was  made,  and  then  the  honest  auditor  of  said  road  testified  and  submitted 
written  statements  showing  discriminations  to  the  amount  of  thousands  of 
dollars  in  said  year. 

Affiant  desires  to  call  attention  to  the  average  price  given  for  oil  in 
New  York,  beginning  in  March,  1896,  and  says  that  the  average  prices  were 
given  for  the  month  of  March.  The  price  he  gave  was  9  to  9%,  which  was 
the  price  on  March  9,  1896,  and  the  statement  of  the  average  price  for 
March  7,  1898,  on  page  528,*  is  simply  confirmatory  of  affiant's  statement  of 
the  rapid  reduction  in  price  after  the  Pure  Oil  Company  began  the  sale  of  oil 
in  the  city  of  New  York.  On  page  528  Mr.  Archbold  gives  the  average  price 
for  July  at  6.23,  while  the  affiant  gave  the  price  at  5V2.  The  price  given  by 
affiant  was  correct,  and  Mr.  Archbold  found  it  necessary  to  give  the  average 
price  of  all  their  business  for  July  in  order  to  raise  the  price  above  this 
figure  of  5%.  The  average  price  for  July  as  given  by  him  includes  not  only 
the  sales  made  in  July  but  their  previous  contracts  for  July,  some  of  them 
possibly  made  before  the  Pure  Oil  Company  began  business. 

Affiant  says  that  the  statement  made  by  Mr.  Archbold  on  page  530*  that 
affiant  approached  the  Standard  Oil  Company,  or  any  of  its  officers  or  em- 
ployes, seeking  the  sale  of  any  portion  of  the  independent  interests,  is  wholly 
untrue.  The  only  approach  affiant  ever  made  to  an  officer  or  employe  of 
said  company  was  made  to  the  attorney  of  the  company,  and  there  was  no 
suggestion  of  sale  or  even  of  combination,  but  simply  that  the  Standard  Oil 
Company  would  cease  to  use  the  destructive  methods  which  they  were 
employing  against  the  independent  interests,  stating  to  said  attorney  that 
this,  if  it  was  not,  should  be  a  free  country  in  which  anyone,  even  with 
limited  capital,  should  be  entitled  to  engage  in  a  legitimate  business  and  to 
carry  it  on  without  efforts  on  the  part  of  others  engaged  in  the  same  busi- 
ness seeking  by  unfair  methods  to  destroy  it. 

JAMES  W.   LEE. 

Sworn  to  and  subscribed  before  me  this  June  11,  A.  D.  1901. 

JAMES   S.   CAMPBELL, 

Notary  Public. 


AFFIDAVIT  OF  JOHN  D.  ARCHBOLD, 

Vice-President  Standard  Oil  Company. 

To  the  Honorable  Industrial  Commission,  Washington,  D.  C: 

Gentlemen — I  beg  to  submit  the  following  affidavit  relative  to  the  new 
assertions  contained  in  the  affidavits  of  F.  S.  Monnett,  Charles  B.  Mathews. 
M.  L.  Lockwood  and  J.  W.  Lee,  filed  with  you  in  June  last.  At  the  time  I 
gave  my  former  testimony,  the  question  of  attempted  bribery  and  burning  of 
books  was  pending  before  the  Supreme  Court  of  Ohio  for  investigation,  and 
I  was  instructed  by  counsel  that  it  was  not  proper  to  go  into  details  respect- 
ing these  matters.  That  court  has  completely  vindicated  the  Standard  Oil 
Company  from  both  charges,  and  has  dismissed  all  the  actions  instituted 
against  it  by  Attorney-General  Monnett.  The  Attorney-General,  notwith- 
standing this  result,  reiterated  before  you  his  charges  and  reflected  upon  the 
purity  of  the  court.    I  therefore  desire  the  privilege  of  setting  forth  the  facts 


'Report  of  the  Industrial  Commis.^iim,  Vol.  I. 


xxviii  AFFIDAVIT  OF  JOHN  D.  ARCHBOLD. 

shown  by  the  court  in  some  detail  in  order  that  you  may  judge  between 
F.  S.  Monnett  on  the  one  side,  and  the  Supreme  Court  of  Ohio  and  the 
Standard  Oil  Company  on  the  other. 

BRIBERY. 

The  first  public  mention  of  the  bribery  charge  came  from  George  Rice  in 
an  interview  at  Marietta,  which  was  given  out  to  the  newspapers  on  March 
3,  1899.     The  last  paragraph  of  this  interview  was  as  follows: 

Ir»  this  connection  it  miglit  be  of  interest  to  the  citizens  of  the  State  to  know 
that  they  have  an  incorruptible  official  in  Attorney-General  F.  S.  Monnett,  who 
within  the  past  month  has  been  offered  the  sum  of  $500,000,  less  $100,000,  to  be  re- 
tained by  the  person  attempting  the  bribery,  to  stop  proceedings  against  the  Stand- 
ard Oil  interests,  and  evidence  has  come  to  me  from  such  source  and  in  such  manner 
that  establishes  this  fact  beyond  the  possibility  of  a  doubt. 

To  his  friends  Monnett  pretended  surprise  and  expressed  anger  at  Rice's 
disclosure.  He  told  the  court  afterwards  that  the  story  had  been  given  Rice 
in  confidence  in  the  Attorney-General's  office,  and  that  Rice  had  given  it  out 
because  he  had  been  goaded  to  anger  by  charges  of  blackmail. 

The  story  was  soon  made  prominent  in  all  the  newspapers.  Reporters 
thronged  Monnett's  office  and  telegrams  crowded  his  desk  urging  him  to  tell 
what  he  knew  about  it.  He  put  on  a  mask  of  fairness;  he  feigned  hesitation, 
and  told  them  the  matter  was  in  court  and  he  did  not  "feel  at  liberty  to  dis- 
cuss it,"  but  before  closing  his  mouth  confirmed  it  in  confidential  paren- 
theses. He  pretended  it  was  true,  conceded  the  reported  negotiation  and 
figures,  but  concealed  the  name  of  the  man  who  offered  them.  When  pressed 
for  the  name,  his  usual  reply  was,  "I  do  not  think  it  a  wise  plan.  If  I  were 
to  give  out  his  name,  half  a  dozen  different  departments  of  the  trust  would 
be  after  him  at  once,  and  it  might  be  they  could  force  him  or  persuade  him 
to  keep  his  mouth  shut,  and  in  that  case  I  might  be  placed  in  an  unpleasant 
predicament." 

The  Standard's  attorneys,  Kline  and  Elliott,  after  a  few  days  of  this 
mystery,  addressed  Monnett  a  letter  on  the  20th  of  March,  as  follows: 

New  York,  March  20,  1S99. 
Hon.  P.  S.  Monnett,  Attorney-General  of  Ohio: 

On  March  4,  instant,  George  Rice  annr.vnced  to  the  public  press  that  a  bribe  of 
$500,000,  less  $100,000  commission,  had  been  offered  you  to  induce  you  to  stop  or  delay 
proceedings  against  the  Standard  Oil  Company,  now  pending  in  the  Supreme  Court 
of  Ohio. 

You  are  reported  to  have  entirely  denied,  at  Toledo,  the  Rice  story,  but  by  the 
time  you  arrived  at  Columbus,  on  the  evening  of  the  same  day,  you  concluded  that 
the  story  was  true,  an(^  accordingly  in  various  newspapers  on  the  morning  of  the  5tli 
instant  you  made  the  statement  that  the  Standard  Oil  Company,  through  some  friend 
of  yours,  had  offered  you  $400,000  to  influence  your  action  with  respect  to  the  cases 
pending  against  it  and  other  companies  in  the  Supreme  Court  of  Ohio.  Reputable 
newspapers  of  the  State,  notably  the  Clev*:'land  Leader,  the  Toledo  Blade,  and  the 
Ohio  State  Journal,  have  called  upon  you  to  disclose  the  name  of  the  "friend"  who 
thus  corruptly  approached  you. 

You  are  reported  in  the  Cleveland  Plaindealer  of  March  7  as  saying  that  "if  you 
v.'ere  to  give  out  the  name  of  your  friend,  h?lf  a  dozen  departments  of  the  trust  would 
be  after  him  at  once,  and  it  might  be  they  could  force  or  persuade  him  to  keep  his 
mouth  shut." 

You  do  not  seem  to  realize  that  the  reason  given  by  you  for  refusing  to  disclose 
the  name  of  your  friend  is  an  admission  that  the  company  does  not  know  the  name 
of  tlie  party  whom  you  say  it  commissioned  to  offer  you  $400,000,  and  therefore  you 
must  have  Icnown  that  the  alleged  friend  made  the  offer  to  you  without  the  author- 
ity or  knowledge  of  the  Standard  Oil  Company. 

In  the  New  York  World  of  the  9th  instant  you  are  reported  as  saying  that  you 
had  written  the  friend  who  tried  to  bribe  you  that  you  would  not  expose  him  until 
public  interest  demanded  it. 

In  another  interview  in  the  Cincinnati  Commercial  Tribune  of  the  6th  instant, 
you  are  reported  as  saying  that  "Your  friend  had  agreed  to  protect  you."  The  ar- 
langoment  for  protection,   therefore,   seems  to  be  mutual. 

So  far  as  any  connection  with  the  Standard  Oil  Company  with  any  attempt  to 
bribe  you  is  concerned,  it  is  totally  false.  You  have  the  names,  or  claim  to  have, 
not  only  of  the  friend  who  approached  you,  but  also  of  others  acting  with  him.  b<i- 
cause,  on  the  14th  instant,  you  said  in  the  public  prints  that  these  men  were  tele- 
graphing jou  from  New  York. 


AFFIDAVIT  OF  JOHN   D.   ARCHBOLD.  xxix 

While  nolhing  in  your  story  has  directly  connected  the  Standard  Oil  Company 
with  the  attempted  bribery,  you  have  desired  the  public  to  assume  such  connection. 
AVe  now  demand  that  you  give  the  name  or  names  of  the  person  or  persons  who  made 
such  an  offer  to  you,  claiming  to  represent  the  Standard  Oil  Cojnpany  that  we  may 
take  steps  to  quiet  this  last  and  most  vicious  of  the  many  false  and  sensational  stor- 
ies to  which  you  have  given  currency.  Respectfully, 

VIRGIL  P.  KLINE, 
M.  F.  ELLIOTT, 
Attorneys  for  Standard  Oil  Company. 

After  studying  over  the  letter  25  days,  on  April  15,  1899,  Monnett  filed  in 
the  Supreme  court  a  paper  which  he  called  a  bill  of  information  in  contempt. 
This  bill  contained  not  only  a  statement  of  what  Monnett  claimed  was  an 
attempt  to  bribe  him,  but  contained  allegations  of  an  attempt  to  bribe  D.  K. 
Watson  in  1890  l)y  several  mysterious  persons,  no  names  of  such  persons 
being  given.  It  then  referred  to  conversations  at  different  dates  between 
another  mysterious  person  and  Monnett,  still  failing  to  name  the  person. 

The  effect  upon  the  public  of  an  information  of  this  character  after  the 
direct  demand  made  upon  him  by  the  Standard's  attorneys  can  be  best 
judged  by  the  following  extracts  from  the  newspapers  of  that  day: 

The  Attorney-General  has  filed  the  long-promised  statement  of  the  attempt  tc 
bribe  him  by  the  Standard  Oil  Company,  It  is  as  unsatisfactory  as  the  play  of 
Hamlet  with  Hamlet  omitted.  He  gives  no  names,  but  says  that  certain  parties  or  a 
certain  party  offered  to  do  so  and  so.  What  the  public  wants  is  the  name  of  the 
briber  and  then  proof  that  he  was  an  agent  of,  and  authorized  to  act  for,  the  com- 
pany. If  it  can  be  proven  and  is  proved  that  the  Standard  Oil  Company  offered  a 
bribe  to  the  Attorney-General  there  is  not  an  honest  citizen  who  will  not  insist  on 
the  punishment  of  the  guilty  man  or  men. 

"A  certain  party"  may  be  nobody,  or  nobody  with  authority,  a  mere  myth.  Let 
us  have  the  name  of  the  briber  and  his  connection  with  the  company.— Sandusky  Reg- 
ister, April  17,  1899. 

Attorney-General  Monnett's  bill  of  information  is  a  disappointment.  It  fails  lo 
answer  definitely  the  request  of  the  Standard  Oil  Company's  attorneys  for  the  name 
of  the  man  who  is  said  to  have  attempted  to  bribe  him  in  the  interest  of  the  com- 
pany. Net  only  is  the  man  not  named,  but  the  recital  of  the  circumstances  sur- 
rounding the  alleged  attempt  to  bribe  the  State  officer  is  much  w^eaker  than  the 
stories  that  have  filled  the  newspapers.  Instead  of  clarifying  the  matter,  he  has  made 
it,  if  possible,  more  confused,  and  has  prer-aturely  invoked  the  aid  of  the  Supreme 
Court.  At  710  time  has  there  been  placed  in  the  hands  of  the  Attorney-General  a  bet- 
ter weapon  than  this,  which  he  says  he  has,  but  seems  afraid  to  use.  Using  it  prop- 
erly in  his  v^arfare  against  illegal  corporations,  he  might  abandon  the  other  weapons 
which  it  has  been  troublesome  for  him  to  employ  successfully.  Using  this  effectively, 
he  would  early  have  at  his  back  a  public  sentiment  that  would  do  more  than  aught 
beside  to  further  his  crusade. 

The  boldness  of  the  company's  attorneys  in  demanding  the  name  of  the  alleged 
bribe  offerer  and  the  failure  of  the  Attorney-General  to  comply  with  that  reasonable 
demand  have  certainly  created  a  bad  impression.  The  party  from  whom  concealment 
would  naturally  be  expected  is  not  an  offictr  of  the  law  who  has  refused  a  bribe,  but 
rather  the  company  or  individual  whom  the  bribe  offerer  represented.  Was  the  bribe 
offering  a  dream  or  a  reality?  The  Attoriiey-General's  information  does  not  make  it 
clear.— Columbus  Dispatch,  April  17,  1S99. 

Mr.  Monnett,  anxious  to  have  the  pi  ess  promulgate  his  charge  against  the 
Standard  Oil  Company  and  to  have  himself  praised  loud  and  long  for  refusing,  a 
princely  sum,  utterly  ignored  the  claim  of  the  people,  made  through  the  press,  for 
the  names  of  the  alleged  bribers.  He  had  numerous  excuses  to  offer,  but  declined 
to  recognize  the  just  demand,  until,  to  bring  the  matter  to  a  focus,  the  Standard  Oil 
Company  took  the  steps  that  forced  Mr.  Monnett  to  give  the  names  of  the  alleged 
briljers.  the  manner  of  the  reputed  tender,  and  all  other  information  connected  there- 
^\ith.— Cincinnati  Times-Star,  May  9,  1899. 

The  charge  made  by  Monnett  called  for  action— action  against  the  agent  who  ten- 
dered the  bribe  and  the  principal  who  supplied  the  bribe.  A  crime  had  been  com- 
mitted and  the  duty  of  the  Attorney-General  of  the  State  was  to  expose  the  criminal 
and  to  taken  such  action  as  would  bring  him  and  the  Standard  Oil  Company  into 
court  to  be  tried  for  a  serious  and  reprehensible  violation  of  the  law. 

So  far  Rrr.  Monnett  has  declined  to  make  known  the  man  who  sought  to  de- 
bauch him,  and  no  effort  has  been  exerted  to  punish  the  Standard  Oil  Company  for 
seeking  to  bribe  the  Attorney-General  of  the  State  of  Ohio.— Cleveland  Leader,  May 
3,  1899. 


XXX  AFFIDAVIT  OF  JOHN  D.  ARCHBOLD. 

The  more  the  attitude  of  Attorney-General  Moimett  is  examined  into  as  regards 
the  Standard  Oil  muddle,  the  more  conscientious  people  of  all  classes  question  his 
consistency.  That  his  conduct  was  inspired  all  the  way  through  by  a  feeling,  of 
buncombe  is  plainly  evident.  He  hoped,  by  coping  with  the  biggest  corporation  in 
tlie  world,  to  incite  a  feeling  of  admiration  on  the  part  of  the  trust-opposed  people 
that  would  give  him  the  nomination  and  land  him  in  tiie  Gubernatorial  chair.  That 
the  people  are  not  falling  over  themselves  to  honor  him  indicates  that  they  under- 
stand his  motives  and  are  not  in  sympathy  with  his  political  triclis,  even  if  they 
would  like  to  see  some  of  the  trusts  brought  under  subjection  to  anti-trust  laws.  But 
In  the  case  of  the  Standard,  Mr.  Monnett  has  not  as  yet  proven,  or  come  anywhere 
near  proving,  that  the  company  is  in  any  particular  exceeding  the  prerogatives  of 
its  charter.— Fostoria  Times,  May  10,  1S99. 

No  process  was  issued  upon  the  filing  of  this  paper  and  no  notification 
given  the  Standard  Oil  Company  that  it  had  been  filed.  But  learning  of  the 
fact,  the  Standard's  attorneys  immediately  went  into  court  with  the  follow- 
ing motion,  which  appears  in  the  records  of  the  case.  Notice  of  the  filing  of 
the  motion  was  immediately  given  Monnett: 

In  the  Supreme  Court  of  Ohio. 

The  State  of  Ohio,  ex  rel.  D.  K.  Watson^  Attorney-     |  ' 

General,  Plaintiff,  j 

V.  I      No.  2294.     Motion. 

The  Standard  Oil  Company,  Defendant.  | 

(Filed  in  Supreme  court  May  4,  1899.) 

Now  come  Virgil  P.  Kline  and  M.  F.  Elliott,  attorneys  for  defendant  in 
above  case,  in  reference  to  a  paper  filed  in  above  case  by  F.  S.  Monnett, 
Attorney-General,  on  the  15th  day  of  April,  A.  D.  1899,  and  making  known 
to  the  court  that  no  notice  has  been  given  to  the  defendant  of  the  filing  of 
said  paper,  and  that  no  process  has  been  issued  requiring  an  appearance,  yet, 
being  unwilling  that  such  false,  defamatory  and  libelous  charges  should 
remain  among  the  records  of  this  court  without  contradiction  and  in  order 
that  the  falsity  thereof  may  be  made  susceptible  of  proof,  they  move  the 
court: 

I.  That  the  Attorney-General  be  required  to  make  the  charges  in  para- 
graph designated  "First"  more  specific  and  certain  by  naming  the  person 
who  it  is  therein  alleged  requested  Hon.  Daniel  J.  Ryan  to  use  his  influence 
as  therein  stated. 

II.  That  the  Attorney-General  be  required  to  make  the  charges  in  para- 
graphs designated  "Second,"  "Third,"  "Fourth,"  "Fifth,"  and  "Sixth"  more 
specific  and  certain  by  naming  the  persons  who  it  is  therein  alleged  made 
the  offers  and  representations  to  D.  K.  Watson  therein  stated. 

III.  That  the  Attorney-General  be  required  to  make  the  charges  in 
paragraph  designated  "Seventh"  more  specific  and  certain  by  naming  the 
party  who  had  the  conversation  with  him  therein  referred  to,  and  also  by 
naming  the  "certain  party"  referred  to  in  the  telephone  message  from 
Cleveland,  and  by  naming  the  "parties  representing  the  Standard  Oil  Com- 
pany" therein  referred  to,  and  by  naming  the  three  persons  designated  as 
"one  of  the  stockholders  of  defendant  company  and  two  other  people,"  and 
by  naming  the  parties  in  New  York  who  were  telegraphed  to  from  Columbus, 
as  stated,  and  if  any  others  are  referred  to  therein  as  "representatives  of  the 
Standard  Oil  Company"  that  they  be  named. 

IV.  That  a  commissioner  be  appointed  to  take  all  legal  testimony  which 
bears  upon  the  truth  or  falsity  of  the  charges  in  said  paper  contained. 

V.  That  a  disinterested  attorney  be  appointed  to  conduct  the  examination 
upon  the  part  of  the  court. 

In  support  of  the  requests  contained  in  paragraphs  IV  and  V  of  this 
motion,  the  attorneys  for  the  defendant  make  the  following  statement  upon 
information  and  belief,  to-wit: 

That  all  the  facts  set  forth  in  said  paper,  so  far  as  they  connect  the 
defendant  with  any  attempt  at  bribery  or  undue  influence,  are  false;  that 
while  Attorney-General  Monnett  may  have  had  conversations  with  some 
person  connected  with  and  unknown  to  defendant,  nothing  therein  occurred 
which  gave  the  Attorney-General  any  reason  to  believe  the  defendant  had 
any  knowledge  of  or  connection  with  the  matter:   that  the  Attorney-General 


Cause  No.  2294.    Notice  of  motion. 


AFFIDAVIT  OF  JOHN  D.  ARCHBOLD.  xxxi 

has  filled  the  newspapers  with  false  and  libelous  reports  of  attempts  at 
bribery  on  the  part  of  the  defendant,  well  knowing  that  there  was  "no  founda- 
tion for  the  same.  That  until  the  Attorney-General  gives  the  name  of  his 
friend  defendant  can  not  prepare  to  meet  these  charges,  and  by  reason  of 
the  facts  alleged  it  is  evident  that  both  F.  S.  Monnett  and  S.  W.  Bennett 
must  be  witnesses  in  the  case;  that  the  Attorney-General  is  not  disinterested 
and  can  only  acquit  himself  of  false  and  libelous  statements  and  free  him- 
self from  suspicion  by  proving  defendant  guilty  of  the  charges  he  has  pre- 
ferred. 

Wherefore  it  is  highly  improper  and  unjust  that  he,  as  representative  of 
the    court,    should    conduct    the    investigation. 

STANDARD  OIL  COMPANY, 

By  VIRGIL  P.  KLINE  and 
M.  F.  ELLIOTT, 

Its  Attorneys. 

In  the  Supreme  Court  of  Ohio. 
The  State  of  Ohio,  ex  rel.  D.  K.  Watson, 
Attorney-General,  Plaintiff, 

V. 

The  Standard  Oil  Company,  Defendant. 

(Filed  in  the  Supreme  court  May  4,  1899.) 
To  Hon.  F.  S.  Monnett,  Attorney-General  of  Ohio: 

You  are  hereby  notified  that  the  defendant  in  the  above  cause  has  filed 
therein  a  motion  to  require  you  to  make  certain  allegations  in  the  paper 
styled  "A  bill  of  information  in  contempt,"  filed  by  you  therein  on  the  15th 
day  of  April,  1899,  more  specific  and  definite;  and  also  asking  the  court 
to  appoint  a  commissioner  to  take  all  legal  testimony  bearing  upon  the  truth 
or  falsity  of  the  charges  in  said  bill  of  information  in  contempt  contained; 
and  to  appoint  a  disinterested  attorney  to  conduct  the  examination  relating 
to  the  charges  in  said  bill  of  information  in  contempt  set  forth,  on  the  part 
of  the  court. 

Said  motion  will  be  for  hearing  at  8:30  a.  m.  on  the  18th  day  of  May,  1899. 

Dated  this  4th  day  of  May,  1899. 

LAWRENCE  T.  NEAL, 

Of  Counsel  for  Defendant. 

I  hereby  acknowledge  service  of  the  above  notice  this  4th  day  of  May, 
1899.     We  ask  for  an  earlier  hearing  of  motion. 

F.  S.  MONNETT, 

Attorney-General. 

Forced  by  this  motion  and  notice,  Monnett  filed  what  he  termed  an 
amendment  to  the  complaint  in  contempt,  in  which  he  confessed  his  inability 
to  name  the  persons  referred  to  as  approaching  Watson,  and  in  which  he 
named  Charles  B.  Squire  as  the  friend  who  had  approached  him.  This 
Charles  B.  Squire,  let  it  be  remembered,  was  the  intimate  friend  of  F.  S. 
Monnett,  had  no  connection,  and  never  had,  with  the  Standard  Oil  Company, 
and  no  acquaintance,  so  far  as  we  can  learn,  with  any  of  its  leading  members. 

Charles  B.  Squire  immediately  caused  the  following  explanation  of  his 
connection  with  Monnett  to  be  published.  Whether  it  is  true  or  not,  the 
Standard  has  no  means  of  knowing,  as  it  is  in  utter  ignorance  of  the  whole 
affair,  and  Mr.  Monnett  and  his  friend  must  settle  this  question  of  veracity 
between  them: 

If  Attorney-General  Monnett,  in  his  statement  to  the  court  of  Ohio,  said  tliat  I 
offered  liim  a  bribe,  as  representing  the  thiee  men  he  mentions,  it  is  absolutely  ai:d 
unqualifiedly  false. 

I  know  nothing  about  the  statement  you  say  the  Attorney-General  has  made,  but 
he  surely  could  not  have  said  I  offered  him  a  bribe  of  $400,000  or  any  other  sum  as 
lepresenting  men  from  the  Standard  Oil  Company,  or  anybody  else.  I  never  offered 
a  man  a  bribe  in  my  life,  and  if  anybody  says  I  did  he  tells  an  untruth. 


xxxii  AFFIDAVIT  OF  JOHN  D.  ARCHBOLD. 

What  I  have  said  before  is  true.  I  had  been  approached  by  a  promoter  of 
schemes  and  warned  the  Attorney-General  to  beware  of  him.  I  do  not  believe  the 
man  in  question  ever  had  any  connection  with  the  Standard  Oil  Company,  or  repre- 
sented it  in  any  way  in  his  offer.  He  was  merely  "fishing"  in  the  hope  of  getting 
sometliing  for  himself.  I  thought  at  the  time  he  might  have  been  representing  the 
Standard,  and  that  is  why  I  warned  Monnett  to  keep  away  from  him,  and  by  all 
means  not  to  resign  or  drop  the  prosecution,  as  the  talk  would  be  that  he  had  been 
bribed. 

Later  I  learned  that  the  man  had  no  connection  wi.h  the  Standard  Oil  Company; 
that  he  was  a  promoter  and  evidently  had  tried  to  approach  the  Attorney-General 
merely  on  his  own  hook,  and  without  any  authorization  whatever  from  the  Stand- 
ard Oil  Company. 

I  can  not  understand  why  the  Attorney-General— if  he  did  so— could  say  1  attempt- 
ed to  offer  him  a  bribe.  It  is  absurd  and  untrue.  The  contrary  is  the  case.  I  warned 
him  to  beware  of  certain  persons  that  might  possibly  lead  him  into  a  trap.— (Charles 
B.  Squire  in  a  statement  to  the  Press  last  night.) 

This  was  the  state  of  the  record  on  September  8.  1899,  when  I  was 
called  before  the  Industrial  Commission.  I  said  in  relation  to  the  bribery- 
charge  that  "we  had  answered  the  charge  of  bribery  and  our  answer  was 
before  the  Supreme  court.  We  court  an  investigation.  We  deny  it  (the 
bribery)   to  the  very  uttermost."* 

Monnett,  in  his  affidavit  filed  in  June,  1901,  with  the  Industrial  Com- 
mission, says: 

I  charged  them  before  the  Supreme  Court  with  having  attempted  to  bribe  tne 
Hon.  D.  K.  Watson,  former  Attorney-General,  and  also  myself  as  Attorney-General, 
as  fully  stt  forth  in  the  complaint,  and  began  taking  testimony  to  establish  the  fact 
but  Mr.  Archbold  said  in  his  testimony,  on  page  544,  that  they  called  upon  the  court 
to  investigate  the  charges,  and  if  the  couit  did  not  investigate  they  would.  On  the 
day  I  began  to  take  the  testimony  to  establish  every  allegation  made  in  reference  to 
the  bribery  in  my  reach,  showing  how  the  $400,000  was  offered  and  showing  liow 
$100,000  was  offered  my  predecessor,  and  gi^-ing  all  the  details,  telegrams  and  inter- 
mediaries, and  all  the  evidence  connected  therewith,  when  the  Chief  Justice  of  the 
Supreme  Court,  at  the  request  of  the  attorneys  of  record  of  the  Standard  Oil  Com- 
pany, verbally  ordered  me  not  to  take  the  testimony,  and  the  charges  were  thereafter 
dismissed  by  the  court  without  the  hearing  of  any  testimony  on  the  part  of  the  Stats 
to  establish  the  same. 

Compare  with  this  statement  the  record  as  I  have  disclosed  it.  Con- 
sider the  motion  made  on  May  4,  1899,  that  a  commissioner  be  appointed  to 
take  the  testimony,  and  that  a  disinterested  attorney  be  appointed  to  con- 
duct the  examination  upon  the  part  of  the  court,  and  notice  the  reasons 
given  for  said  motion,  to-wit,  that  "the  Attorney-General  has  filled  the  news- 
papers with  false  and  libelous  reports  of  attempts  at  bribery  on  the  part  of 
the  defendant,  well  knowing  there  was  no  foundation  for  the  same,"  and  that 
"it  is  evident  that  F.  S.  Monnett  and  Bennett  must  be  witnesses  in  the  case," 
and  "that  the  Attorney-General  is  not  disinterested  and  can  only  acquit  him- 
self of  false  and  libelous  statements  and  free  himself  from  suspicion  by 
proving  the  defendant  guilty  of  the  charges  he  has  preferred.  Wherefore 
it  is  highly  improper  and  unjust  that  he  should,  as  a  representative  of  the 
court,  conduct  the  investigation." 

Can  it  be  possible  that,  pending  that  motion  and  oblivious  to  the  reasons 
given  in  its  support,  without  awaiting  the  action  of  the  court,  Monnett  did. 
as  he  swears,  "begin  taking  testimony  to  establish  the  fact?"  How  could 
he  begin  to  take  testimony  when  the  court  had  appointed  no  commissioner 
to  take  It,  and  how  dare  he  begin  to  take  testimony  when  the  record  showed 
he  was  a  party  implicated  and  could  only  clear  his  own  character  by  proving 
the  guilt  of  the  defendant?  The  plain  fact  is  that  he  did  not  begin  to  take 
testimony,  as  he  swears.  But  it  is  true  that,  utterly  regardless  of  his  duties 
as  an  attorney  and  as  a  representative  of  the  court,  he  did  give  notice  that 
he  would  take  testimony  before  a  notary  public,  a  proceeding  which  he 
knew  to  be  illegal,  preposterous  and  contemptuous.  This  notice  of  an  in- 
tended illegal  proceeding  was  brought  to  the  attention  of  the  court  in  the 
proper  manner,  and  the  court  very  properly  and  peremptorily  stopped  it. 

These  are  the  facts  to  prove  the  falsity  of  Monnett's  oath  that  "instead 
of  the  trust  courting  investigation  they  deliberately  evaded  and  suppressed 
an  investigation  of  these  proper  charges."  The  motion  for  an  investigation 
was  made  in  good  faith  and  pressed  in  good  faith,  and  it  was  not  until  De- 
cember, 1899,  that  the  court  unanimously  entered  the  following  order: 


•See  Vol.  T,  Report  of  the  Industrial  Commission,  Part  II,  p.  544. 


AFFIDAVIT  OF  JOHN  D.  ARCHBOLD.  xxxiii 

It  is  ordered  that  the  information  herein  filed  by  the  Attorney-General  on  the  15th 
day  of  April,  1899,  be  striclien  from  the  files,  it  not  appearing  that  there  is  any  com- 
petent evidence  to  connect  the  defendant  with  the  alleged  offer  to  the  Attorney-Gen- 
eral. 

It  is  only  necessary  to  add  to  this  record  the  now  well-known  fact  that 
the  original  action  against  the  Standard  Oil  Company  for  contempt,  insti- 
gated by  the  Attorney-General  at  the  request  of  George  Rice,  was  after- 
wards dismissed  by  the  court,  and  that  the  present  Attorney-General  of  the 
State  of  Ohio,  after  carefully  considering  all  the  evidence  taken  by  Attorney- 
General  Monnett  in  the  various  other  cases  instituted  by  him  against  the 
Standard,  moved  for  the  dismissal  of  the  cases,  which  motion  was  promptly 
granted  by  the  court.  Nothing  was  left  Monnett  but  the  usual  rule,  when  an 
attorney  has  lost  his  case,  to  abuse  the  court  which  had  decided  against  him. 

Burning  Books. 

Monnett's  charge  that  the  Standard  Oil  Company  burned  its  books  was 
first  published  in  Cleveland,  Ohio,  newspapers  on  the  evening  of  December 
21,  1899.     This  charge  was  promptly  and  completely  denied  by  Kline,  Carr, 
Tolles  &  Goff,  attorneys  for  the  Standard,  in  the  following  letter: 
Editor  The  Cleveland  Press: 

The  charge  or  insinuation  made  by  Attorney-General  Monnett  that  the  Standard 
Oil  Company  has  burned  of  destroyed  any  of  its  books  of  account  is  absolutely 
false.  It  is  simply  based  upon  the  fact  that  the  company,  from  time  to  time,  de- 
stroys useless  material  which  accumulates  in  its  business,  as  is  the  case  with 
every  other  large  corporation  or  business  house.  This  it  does  openly  and  has  always 
done. 

The  Attorney-General  having  learned  of  such  a  transaction  occurring  in  Novem- 
ber, has  undertaken  to  create  an  impression  through  the  public  press  that  this  was 
an  attempt  on  the  part  of  the  company  to  evade  the  order  of  the  Supreme  Court,  an 
impression  which  is  entirely  unfounded. 

In  view  of  the  notice  you  have  given  the  public  in  this  matter,  we  trust  you  will 
kindly  publish  this  statement. 

Very  respectfully, 

KLINE,  CARR,  TOLLES  &  GOFF. 

A  few  days  thereafter  Monnett  revived  the  charge,  and  for  the  first 
time  used  it  officially  in  a  paper  filed  with  the  Supreme  court  in  an  applica- 
tion for  issuing  further  process  and  for  the  removal  of  Commissioner  Brins- 
made. 

In  that  paper  Monnett  said: 

The  Slate  is  informed  and  believes  that  many  valuable  records  and  documentary 
evidence  have  already  been  destroyed  since  the  former  adjournment  of  said  referee 
on  or  about  November  15,  1S9S,  and  the  order  of  said  court  on  December  7,  189S. 

While  this  slander  was  new,  Mr.  Kline,  in  the  presence  of  the  court 
and  the  Attorney-General,  in  discussing  the  question  of  producing  books, 
said  to  the  court: 

Now,  yo'ir  honor  has  inquired  whether  we  have  books  showing  the  gross  earn- 
Irgs  and  disbursements  of  this  corporation.  Yes;  and  all  its  business  detail  in  all  its 
relations  to  all  the. world,  and  this  talk  about  destruction  is  the  merest  chaff.  We  are 
glad  to  have  an  opportunity  to  meet  in  this  tribunal  the  claim  that  books  have  been 
destroyed.  The  Attorney-General  may  send  to  this  court  every  single  scrap  ol;  testi- 
mony, whether  it  be  signed  or  not.  There  is  an  intimation  of  collusion,  or  that  the 
master  has  acted  unfairly  and  that  we  are  destroying  valuable  records.  Of  course 
these  falsehoods  will  get  around  the  world  before  the  Truth  can  get  after  them.  But 
we  can  satisfy  this  court  and  we  owe  it  to  this  court. 

According  to  Monnett's  testimony  before  the  Industrial  Commission  at 
Washington  on  May  16,  1899,  five  months  afterwards,  the  original  basis  of 
this  charge  was  anonymous.    On  this  point  Monnett  then  and  there  testified:* 

We  received  an  anonymous  communication  that  they  had  burned  their  books. 
We  subpoenaed  certain  parties  and  had  them  testify  to  the  fact.  The  information  to 
the  State,  after  following  up  the  matter,  was  that  they  had  burned  Ifi  boxes  of  books. 
I  give  you  Mr.  McNirney's  testimony  touching  upon  the  subject: 

"Q.  (By  Professor  JENKS.)  You  believe  those  books  that  were  burned  were  the 
ones  you  required  Mr.  Squire  to  produce?  A.  That  is  thefair  legal  presumption  from  the 
testimony,  considering  the  size  of  the   books,  the  size  of  the  boxes,  the  number,  the 


*See  Vol.  I,  Report  of  the  Industrial  Commission,  Part  II,  pp.  303,  306-307. 


xxxiv  AFFIDAVIT  OF  JOHN  D.  ARCHBOLD. 

circumstances,  and  the  refusal  to  produce  them  afterv.?ards,  although  Mr.  Kline  in 
open  court  stated  that  they  had  not  destroyed  them,  that  they  had  them  yet,  and 
that  ihey  would  not  produce  them  on  the  request  of  the  Chief  Justice  of  the  court. 
They  absolutclj-  refused  to  produce  them,  and  relied  upon  their  constitutional  privi- 
lege to  refuse  to  answer.  The  exact  testhnony  as  to  the  burning  of  the  books  I  will 
furnish  you  for  j'our  own  conclusions." 

Compare  the  testimony  of  Monnett  in  Washington,  and  his  charges  in 
Ohio,  with  the  following  testimony  taken  by  him  in  the  case. 

McNirney  testified: 

I  am  employed  by  the  Standard  Oil  Company  as  car  builder  and  repairer.  On  or 
about  November  19,  1898,  was  ordered  to  and  did  help  load  boxes  of  books  and  sacks 
from  the  general  offices  of  the  Standard  Oil  Company  on  Euclid  avenue,  Cleveland, 
into  a  wagon  to  be  hauled  to  the  warehouse  of  the  Standard  Oil  Company  at  their 
No.  1  works.  Moran  helped  me  in  the  loading.  There  were  16  boxes  in  all.  Moran  is 
a  car  builder  and  laborer.  We  burned  some  of  the  boxes  the  next  Monday.  We  did 
not  burn  them  all;  think  we  burned  all  we  took  out.  We  also  burned  papers  and  letters 
in  the  sacks.  I  think  we  burned  nine  chests  and  six  sacks.  Those  sacks  were  all  let- 
ters and  copying  books,  I  should  think,  or  something  like  them.  Loose  paper,  waste 
paper,  I  say.  Moran  helped  me  throw  tiiem  in  the  furnace.  Moran  helped  me 
through  the  whole  transaction.  George  Field,  the  car-shop  foreman,  gave  me  the 
order  to  go  to  the  general  office,  and  also  t'.  do  the  burning.  We  went  to  the  office 
about  9  or  10  o'clock  in  the  morning.  Don't  know  whether  the  books  were  tagged  for 
the  car  shop  hill  or  just  "Chas.  liogan  '  for  distributit^n.  Charles  Hogan  is  general 
superintendent.    He  can  tell  you  more  about  this  book  burning  than  I  can. 

On  cross-examination  McNirney  said: 

Everybody  in  the  shop  knew  that  thote  books  were  destroyed,  and  those  papers, 
and  they  all  understood  that  they  were  waste  paper,  as  we  understood  it.  There  was 
no  secret  about  that,  no  secret  about  this  case  at  all.  All  the  employes  in  the  car 
shop  knew  that  those  books  and  papers  were  destroyed  and  understood  that  they 
v/ere  waste  paper,  and  we  understood  they  were  waste  paper. 

On  the  same  day  Charles  Hogan  testified  that — 

His  place  of  business  was  the  Standard  Oil  Company's  No.  1  works.  Had  charge 
of  the  mechanical  department.  On  or  about  November  19,  1898,  gave  instructions  to 
George  Field  to  have  him  send  to  the  general  offices  for  boxes.  Order  to  me  to  send 
for  them  came  by  telephone  from  the  general  office.  Saw  the  boxes  and  personally 
inspected  the  burning  of  the  contents.  The  boxes  contained  miscellaneous  lot  of 
paper,  letter-press  copying  books,  etc.    Tne  contents  were  burned  in  the  furnace. 

Cross-examination : 

Have  been  at  No.  1  works  21  years.  It  is  a  very  common  occurrence  to  burn 
accumulations  of  waste  paper.  This  kind  of  stuff  was  of  same  character  as  on  pre- 
\ious  occasions.  Was  ordered  to  burn  nothing  less  than  10  years  old.  This  was  the 
C'ld  accumulation  gotten  out  of  the  block  at  the  time  of  changing  office  rooms,  occu- 
pN'iiig  two  floors  instead  of  five. 

William  Moran  testified: 

Work  for  Standard  Oil  Company  as  car  repairer.  Went  with  John  McNirney  and 
teamster  to  Standard  Oil  Company  offices  to  get  boxes— about  16  boxes;  took  them 
to  storehouse;  left  them  in  Hogan's  charge.  There  were  boxes  and  sacks.  A  lot  of 
the  scrap  paper  was  lying  on  the  floor  and  we  picked  it  up  and  put  it  into  tlie  sacks. 
The  followinj,"  Monday  morning  we  burned  a  lot  of  scrap  paper;  it  was  9  or  10  o'clock 
en  Monday  morning.  John  McNirney  assisted  m.e  in  burning  the- books.  We  also 
burned  similar  stuff  a  year  or  a  year  and  a  half  ago.  This  was  done  before  the 
emijloyes  and  no  effort  at  secrecy.  Nothing  unusual  about  the  transaction  of  burning 
this  waste  stuff,  and  no  suggestion  from  Mr.  Hogan  or  anybody  that  it  was  to  be 
kept  secret. 

In  addition  to  the  foregoing  statement  taken  by  Monnett  there  were 
submitted  and  read  in  his  presence  two  affidavits,  one  by  Charles  C.  Hogan 
and  the  other  by  S.  H.  Tolles,  the  substance  of  which  is  as  follows: 

Hogan's  Affidavit. 

In  the  Supreme  Court  of  Ohio. 
The  State  of  Ohio  ex  rel.   F.   S.   Monnett,  ; 

Attorney-General,   plaintiff,  !     Affidavit.       Filed   in    Supreme   Court. 

vs.  I 

The  Standard  Oil  Company,  defendant.  | 

The  State  of  Ohio,  Cuyahoga  County,  ss: 

Charles  C.  Hogan,  of  lawful  age,  being  duly  sworn,  upon  his  oath  says  that  he  is 
in  the  employment  of  the  defendant  and  has  charge  of  the  mechanical  department  of 
it.';  No.  1  works;  that  he  has  been  in  the  employment  of  the  company  since  November 
1,  1878. 


AFFIDAVIT  OF  JOHN  D.  ARCHBOLD.  xxxv 

During  all  that  time  it  has  been  the  practice  of  the  company,  currently,  every 
two  or  three  months  to  burn  up  accumulations  of  waste  paper  and  books  from  its 
general  offlces,  the  quantity  of  material  thus  burned  having  been  currently  much 
larger  prior  to  1S91  than  since  that  time,  by  reason  of  the  fact  that  about  that  date 
the  company's  business  became  largely  reduced. 

It  is  the  practice  at  the  company's  ofHce  to  keep  all  invoices,  reports,  and  other 
like  transactions  in  tissue-paper  impression-books,  whicli  are  kept  during  the  cur- 
rent month  and  until  the  transactions  therein  contained  get  on  to  the  company's  reg- 
ular books,  after  which  time  they  are  useless,  and  at  the  end  of  the  current  month, 
after  the  book  entries  are  made,  are  thrown  aside.  These  books,  together  with  the 
accumulations  of  reports,  incoming  invoices  which  have  been  transferred  to  vouchers, 
and  other  accumulations  of  waste  paper,  liave  been,  during  all  the  time  of  affiant's 
connection  with  the  company,  at  current  intervals,  destroyed  by  fire.  This  has  been  the 
case  with  all  waste  accumulations  except  such  as  had  one  blank  side  and  could  be 
used  over  again,  which  are  sent  to  the  printing  department,  cut  up,  and  worked  into 
pads  for  miscellaneous  purposes.  A  considerable  quantity  was  formerly  burned  at 
tlie  boiler  of  the  company's  candle  works.  The  furnace,  however,  being  of  small 
capacity,  tliree  or  four  years  ago,  while  waste  paper  was  being  burned  there,  fire 
was  communicated  to  the  works  and  they  were  burned  down.  Since  that  time  all 
refuse  has  been  burned  at  No.  1  works,  either  at  the  cooper  shop  or  the  pumping 
station  boilers,  the  capacity  of  the  furnaces  at  those  places  being  larger  and  the 
burning  attended  with  little  risk.  During  the  time  of  my  connection  with  the  com- 
,pany,  portions  of  the  refuse  material  have  been  burned  at  the  No.  1  works,  and  since 
'the  date  last  named  all  has  been  burned  there.  Prior  to  1SS9  the  material  there  de- 
stroyed was  burned  at  what  was  known  as  No.  1  boilers,  which  were  then  located 
directly  in  the  rear  of  the  company's  office  at  the  works,  and  conveniently  adjacent 
thereto.  In  1889  those  boilers  were  dismantled,  leaving  the  only  places  for  such  burn- 
ing the  boilers  at  the  cooper  shop  and  the  pumping  station.  Affiant  has  seen  such 
burnings  during  those  years  a  large  number  of  times. 

Prior  to  1S96,  the  general  office  of  the  company  on  Euclid  avenue  occupied  five 
lloors  of  the  Standard  block,  so  called,  and  had  a  large  quantity  of  vault  room,  in 
\^hich  were  stored  accounts  and  records  cf  the  business  dating  back  prior  to  the 
organization  of  the  defendant  corporation,  and  to  the  time  of  Rockefeller,  Andrews 
&  Flagler,  in  1SG3.  In  1896,  the  general  offlces  of  the  company  were  consolidated  upon 
two  floors  of  the  building  it  had  formerly  occupied,  so  that  it  became  necessary  to 
find  a  storage  place  for  a  large  quantity  of  these  accumulations,  which  were  then 
brought  out  and  then  placed  ni  the  old  wareliouse  at  No.  1  works,  and  thereafter, 
from  time  to  time,  such  records  and  books  as  were  not  of  the  character  above  de- 
scribed as  currently  destroyed,  were  brougnt  out  and  placed  in  the  storehouse,  so 
that  its  capacity  became  crowded.  These  books  were  loaded  into  wagons,  brought 
out  and  stacked  up  in  the  warehouse  and  being  crowded  for  room,  affiant  applied 
to  the  auditor  of  the  company  to  make  some  disposition  of  old  records,  account  and 
letter  books,  of  which  in  his  judgment  there  were  at  least  20  cords  piled  up  in  the 
warehouse,  so  as  to  get  them  out  of  the  way,  and  received  in  reply  to  his  complaint 
a  communication  from  the  auditor  of  tlie  company,  bearing  date  March  15,  1898,  which 
was  as  follows: 

"Subject:  Storing  books  and  papers. 
"Mr.  C.  C.  Hogan,  No.  1  Works: 

"Dear  Sir— Referring  to  your  favor  of  Marcii  14,  Mr.  Kline  says  that  we  may 
destroy  all  books  of  account,  vouchers,  as  well  as  miscellaneous  books,  reports,  etc., 
that  are  over  six  years  old.  I  believe,  however,  that  we  had  better  modify  this  some- 
what, and  that  you  had  better  keep  all  books  of  account,  mainly  ledgers,  journals  and 
cashbooks,  that  are  not  more  than  10  years  old,  for  the  present,  at  least.  You  may 
destroy  everything  that  is  older.  All  letter  books,  letter  files  and  miscellaneous 
books  and  reports,  canceled  checks,  which,  I  believe,  represent  the  bulk  of  stuff 
stored  in  the  old  warehouse,  you  may  destroy  up  to  the  six-year  limit.  This  will 
reduce  the  amount  of  shelving  you  will  require." 

Thereupon  affiant  went  through  the  storehouse  and  personally  superintended  die 
selection  of  books  and  papers  for  destruction  af  that  time.  He  personally  examined 
every  book  of  account  which  was  set  aside  for  destruction  and  destroyed,  and  of  his 
personal  knowledge  knows  that  no  book  of  account  which  was  not  more  than  10 
years  old  at  that  time  was  taken  out  and  destroyed.  Impression  books,  letter  files, 
miscellaneous  books  and  reports,  canceled  checks  and  papers  of  that  character  that 
were  more  than  six  years  old,  he  set  aside  and  had  burned  with  the  books  of 
account  and  other  refuse  matter  selected  by  him. 

He  knows  from  his  personal  examination  and  selection  that  there  were  destroyed 
no  books  of  account  less  than  10  years  old.  and  no  other  material  less  than  six  years 
old,  all  books  and  papers  within  those  limits  remaining  in  the  warehouse;  that  be- 
tween that  time  and  November,  1898,  from  time  to  time,  there  was  sent  out  and 
burned  waste  material  of  the  kind  herein  described,  but  no  books  of  account,  and 
about  November  19,  1898,  another  lot  of  refuse  matter,  which  has  been  spoken  of  in 
the  testimony  taken  before  H.  C.  Mason,  notary  public.  The  quantity  then  burned 
was  not  larger,  nor  was  its  character  other  than  that  which  currently  comes  out  and 
41 


xxxvi  AFFIDAVIT   OF  JOHN  D.  ARCHBOLD. 

is  destroyed.  Since  that  time— and  while  the  testimony  was  being  taken  before 
Mason,  the  notary  public— another  batch  of  refuse  has  been  sent  out  and  destroyed 
at  the  cooper  shop  furnace.  At  none  of  these  times  has  affiant  known  of  books  of 
account  being  burned,  except  at  the  time  above  mentioned  by  him. 

There  never  has  been  secrecy  about  the  destruction  of  this  refuse  matter.  It  has 
always  taken  place  in  open  day  and  in  the  presence  of  a  large  number  of  defend- 
ant's employes,  and  conducted  by  men  not  specially  selected  for  the  purpose,  but 
any  of  the  company's  workmen  who  might  happen  to  be  detailed  by  their  foreman 
therefor.  Affiant  has  never  had  any  instructions  as  to  secrecy,  nor  have  any  ever 
been  given  by  him,  and  he  has  never  known  of  anything  being  burned  except  waste 

and  refuse  material. 

CHARLES  C.  HOGAN. 
Subscribed  and  sworn  to  by  said  Charles  C.  Hogan  before  me  this  3d  day  of  Jan- 
uary, 1S99. 

(Notarial  Seal.)  H.  O.  JONES,  Notary  Public. 

In  the  Supreme  Court  of  Ohio. 
The  State   of  Ohio  ex  rel.   F.   S.   Monnett,   | 

Attorney-General,  plaintiff,  |    Affidavit.  Filed  in  Supreme  Court  Jan- 

VS.  I  uary  5,  1S99. 

The  Standard  Oil  Company,  defendant.  j 

The  State  of  Ohio,  Cuyahoga  County,  ss: 

S.  H.  Tolles,  of  lawful  age,  being  first  duly  sworn,  upon  his  oath  says  that  he  is' 
an  attorney  at  law  and  a  member  of  the  firm  of  Kline,  Carr,  Tolles  &  Goff,  attorneys 
for  the  defendant  in  the  contempt  proceedings  herein,  that  regardless  of  the  orders 
heretofore  made  appointing  a  commissioner  before  whom  parties  to  this  contempt 
proceeding  were  directed  to  take  their  evidence  in  this  action,  the  Attorney-General, 
late  in  the  evening  of  December  19,  1898,  served  notice  upon  affiant's  firm  that  deposi- 
tions would  be  taken  in  this  proceeding  in  the  office  of  Harry  C.  Mason,  in  the  city 
of  Cleveland,  on  the  21st  day  of  December,  1898,  and  caused  subpoenas  to  be  issued 
by  the  said  Harry  C.  Mason,  as  notary  public,  for  sundiy  witnesses  to  appear  before 
him  at  that  time. 

That  said  Harry  C.  Mason  is,  in  fact,  one  of  the  attorneys  for  the  State,  being 
one  of  the  counsel  appointed  under  the  provisions  of  law  by  the  Food  Commissioner 
and  the  Attorney-General  to  represent  the  State  in  prosecutions  brought  for  viola- 
tions of  the  pure  food  laws. 

That  thereupon,  at  the  time  fixed  in  said  notice,  and  over  the  protest  of  affiant 
as  such  counsel,  the  Attorney-General  proceeded  to  examine  witnesses  before  said 
IMason,  acting  as  such  notary  public;  that  there  were  present  on  said  day  at  such 
hearing  Victor  Bkorklund,  an  engineer;  Charles  Anderson,  a  foreman;  Denman  Bol- 
ton, a  night  watchman;  C.  A.  Birch,  a  night  watchman,  and  Nels  Anderson,  a  fire- 
man, all  in  the  employment  of  the  Cleveland  Arcade  Company,  of  Cleveland,  Ohio, 
who  were  examined  upon  some  supposed  theory  that  some  books  of  the  defendant 
had  been  burned  under  boilers  of  said  Arcade  Company. 

In  addition  thereto,  one  Ludwig  Darmstaetter,  a  Bohemian  rabbi,  was  examined 
by  the  Attorney-General,  and  testified  that,  being  one  evening  in  a  saloon,  he  over- 
Iieard  some  Bohemians  talking  about  hauling  papers  and  books  from  the  Euclid  ave- 
nue office  of  this  defendant  to  its  works. 

There  were  called  by  him,  also,  one  Edward  O'Hearn,  a  teamster  in  the  employ- 
ment of  this  defendant,  and  one  Cornelius  O'Hearn,  employed  in  the  car  shops  of 
this  defendant,  to  prove  that  on  or  about  November  19  they  assisted  in  hauling  some 
boxes  and  sacks  of  loose  paper  from  defendant's  office  to  the  warehouse  at  its  No. 
1  works. 

The  hearing  then  adjourned  to  the  following  day,  Thursday.  Thursday  morning 
the  Attorney-General  produced  Emanuel  Pollack,  a  saloonkeeper,  from  whom  Edward 
O'Hearn  rented  rooms,  who  testified  that  when  O'Hearn,  the  teamster,  returned 
home  on  the  evening  of  November  19,  being  a  little  late,  he  said  he  had  been  hauling 
some  boxes. 

Also  a  witness,  John  McNirney,  whose  testimony  occupied  about  30  printed 
pages,  testified  that  on  the  morning  of  November  19  he  assisted  in  burning  up  some 
books  and  papers  at  one  of  the  furnaces  of  the  defendant;  went  down  to  the  block 
later  in  the  day  and  hauled  some  boxes  and  sacks  of  loose  paper  to  the  warehouse, 
and  on  Monday  morning  assisted  in  burning  some  sacks  of  loose  paper  and  some  of 
the  contents  of  the  boxes  in  one  of  the  defendant's  furnaces.  He  wound  up  his  tes- 
timony with  the  statement  that  there  was  no  secret  about  the  transaction;  that  all 
the  employes  of  the  car  shops  knew  of  the  burning,  and  supposed  and  understood 
that  what  was  being  burned  was  waste  paper.  The  witnesses  further  testified  that  the 
burning  was  done  In  the  forenoon,  in  broad  day  light,  and  in  the  presence  of  the 
hundreds  of  employes  of  the  defendant's  car  shops. 

At  the  conclusion  of  the  taking  of  the  tesumony  of  McNirney,  the  hearing  was 
adjourned  until  4  o'clock,  at  which  time  the  Attorney-General  examined  Charles  C. 
Hogan,  superintendent  of  the  defendant's  No.  1  works,  who  testified  as  to  the  burn- 
ing of  waste  paper  and  impression  books,  and  to  the  fact  that  there  was  nothing 
unusual  in  th.e  transaction. 


AFFIDAVIT  OF  JOHN  D.  ARCHBOLD.  xxxvii 

Thereupon,  it  having  appeared  in  the  testimony  of  the  witnesses  examined  that 
one  Moran,  an  employe  of  the  defendant,  assisted  McNirney  in  the  work  done  by 
him,  and  they  had  been  designated  for  this  service  by  George  Field,  foreman  of  the 
defendant's  car  shops,  and  that  men  named  Gabeline,  Schaff  and  Becker  assisted  in 
the  teaming  of  the  boxes  from  the  defendant's  office  to  the  works,  the  Attorney-Gen- 
eral announced  that  they  had  been  endeavoring  to  serve  these  people  with  process, 
l)ut  were  unable  to  do  so,  and  would  be  obliged  to  adjourn  until  the  next  day,  Friday 
morning  at  10  o'clock,  Intimating  as  usual  that  the  defendant  was  keeping  these  wit- 
nesses hidden. 

Thereupon  affiant  produced  the  witnesses  Moran  and  George  Field  for  examina- 
tion by  the  Attorney-General,  and  also,  having  ascertained  the  names  of  the  firemen 
at  each  of  the  furnaces  at  which  burnings  were  had,  and  of  the  clerk  who  had 
superintended  the  burning  at  one  of  the  furnaces,  Mr.  Hogan  having  superintended  it 
at  the  other,  produced  to  the  Attorney-General  the  two  firemen  and  the  clerk  in 
charge,  whose  name  was  Stanbury.  Gabeline,  Schaff  and  Becker  not  then  being  at 
work  for  the  defendant,  affiant  was  unable  to  produce  them. 

Thereupon,  on  the  morning  of  Friday,  the  Attorney-General  examined  the  wit- 
nesses Field  and  Moran,  but  declined  to  examine  the  fireman  and  clerk,  who  were 
the  only  other  persons  who  had  anything  to  do  with  the  transaction  directly,  but, 
inasmuch  as  affiant  had  failed  to  get  the  witnesses  Schaff,  Gabeline  and  Becker,  an- 
nounced that  they  were  the  only  ones  whom  he  really  cared  to  examine,  and  the 
hearing  v.-as  adjourned  until  these  witnesses  could  be  found. 

Thereupon  affiant,  having  ascertained  the  homes  of  the  witnesses  Gabeline  and 
Schaff,  sent  for  them  so  that  Lhey  might  be  examined,  desiring  that  any  person  who 
knew  anything  about  the  transaction  might  be  accessible  to  the  Attorney-General; 
but  on  inquiry  at  the  office  of  Mr.  Mason  it  was  learned  that  the  hearing  had  been 
acjournod  until  Saturday  morning  at  9  o'clock;  that  upon  attending  said  hearing  at 
said  hour  it  was  ascertained  that  the  Attoriiey-General  had  the  night  before  left  the 
city. 

A  transcript  of  the  evidence  given  by  the  witnesses  examined  by  the  Attorney- 
General  before  the  notary  public  is  annexed  to  and  made  a  part  of  this  affidavit,  so 
that  the  court  may  see  the  character  thereof. 

Affiant  believes  that  said  pretended  taking  of  depositions  was  not  done  in  good 
faith,  with  the  design  of  using  same  in  court,  and  that  none  of  the  matters  therein 
contained  are  material,  relevant,  or  important  to  any  Issue  in  this  action,  but  be- 
lieves that  the  same  were  taken  without  design  of  using  them  as  evidence  herein,  but 
merely  as  a  fishing  expedition. 

That  during  the  taking  of  said  testimony  and  upon  December  22,  1S98,  at  about  10 
o'clock,  the  Attorney-General  said  to  the  affiant  that  It  was  then  time  to  adjourn  and 
go  over  to  the  commissioner,  who  was  ready  to  begin  taking  testimony.  Affiant  re- 
plied that  the  defendant  had  no  notice  tnat  the  taking  of  any  testimony  before  the 
commissioner  was  designed,  except  as  the  statement  had  appeared  in  the  morning 
paper  of  that  day;  that  the  Attorney-General  was  that  morning  going  to  have  the 
books  of  the  defendant  produced  and  examine  its  officers,  and  the  Attorney-General 
left  the  office  of  the  notary  to  attend  said  hearing.  Affiant  was  not  present  before  the 
commissioner,  but  attaches  hereto  and  makes  a  part  hereof  a  stenographic  account  of 
what  took  place  at  that  time. 

S.   H.   TOLLES. 

Sworn  to  before  me  by  the  said  S.  H.  Tolles  and  by  him  subscribed  in  my  presence 
this  3d  dav  of  January,  1899. 

(Notarial  Seal.)  C.  H.  GALE.  Notary  Public. 

The  foregoing  are  the  substantial  parts  of  all  the  evidence  given  by  the 
witnesses  in  the  matter  of  burning  books. 

Consider  Monnett's  treatment  of  the  facts  above  recited. 

In  his  testimony  before  the  Industrial  Commission  on  May  16,  1899,  with 
all  this  evidence  known  to  him,  he  submitted  to  the  commission  only  the 
testimony  of  McNirney  in  direct  examination,*  which  closed  with  the  ques- 
tion by  Monnett  in  the  form  of  a  statement,  as  follows:  "I  was  informed 
he  could,  but  we  have  not  been  able  to  subpoena  him  yet,"  meaning  that 
they  had  not  at  that  time  been  able  to  get  the  testimony  of  Hogan,  who. 
according  to  McNirney,  "could  tell  more  about  it  than  he  could." 

Is  it  not  clear  that  Monnett  intended  to  have  the  commission  believe  that 
Hogan  had  not  testified,  and  that  the  principal  witness  to  the  charge  of 
burning  was  McNirney.  when,  as  a  matter  of  fact,  Hogan  testified  on  the 
same  day  that  McNirney  did,  was  the  next  witness,  was  voluntarily  produced 
by  the  Standard,  and  was  examined  by  Monnett?  He  suppressed  that  part 
of  the  evidence  known  to  him  of  McNirney,  and  the  evidence  of  Hogan  and 
Moran,  all  to  the  effect  that  the  stuff  burned  was  waste  paper  and  old  books, 


*See  Vol.  I,  Report  of  the  Industrial  Commission,  Part  IT,  pp.  303-306. 


xxxviii  AFFIDAVIT   OF  JOHN  D.  ARCHBOLD. 

the  testimony  of  Hogan  and  Moran  that  such  destruction  of  old  books  and 
papers  was  of  frequent  occurrence  and  submitted  the  first  part  only  of  Mc- 
Nirney's  testimony,  closing  with  his  own  question  in  the  form  of  a  statement 
to  the  effect  that  they  had  not  been  able  to  get  Hogan,  who  knew  more  about 
the  burning  than  McNirney  did.  There  was  in  his  evidence  both  suppression 
of  truth  and  suggestion  of  falsehood;  and  now  after  two  years  granted  for 
reflection  and  repentance,  thoroughly  discredited  by  the  records  of  the  court 
he  represents,  he  again  returns  to  the  charge  in  his  affidavit  filed  before 
the  commission  in  June,  1901,  pretending  he  has  found  new  evidence.  I  leave 
him  face  to  face  with  the  record  that  the  commission  may  judge. 

James  W.  Lee. 

In  relation  to  the  denial  of  James  W.  Lee  that  the  Pure  Oil  Company 
is  a  trust,  it  is  only  necessary  to  call  attention  to  his  definition  of  a  trust, 
to-wit:  "A  corporation  or  combination  of  corporations  intending  to  create 
and  maintain  a  monopoly  in  any  industry."  Under  this  definition  there  are 
no  trusts.  Mr.  Lee  admits  that  a  portion  of  the  stock  of  the  Pure  Oil  Com- 
pany is  held  in  a  voting  trust.  I  am  informed  by  able  lawyers  that  a  voting 
trust  has  been  held  to  be  illegal  as  often  as  the  question  has  been  raised  in 
the  courts,  including  the  highest  court  of  New  Jersey,  the  State  in  which 
the  Pure  Oil  Company  is  organized.  I  desire  also  to  reiterate  my  former 
statement  as  to  approaches  to  us  of  many  connected  with  the  Pure  Oil  Com- 
pany in  relation  to  sale  and  combination  and  to  say  that  Mr.  Lee's  suggestion 
did  include  a  combination  of  interests  of  the  competitive  pipe  lines. 

M.  L.  Lockwood. 

My  former  testimony,*  which  gave  statistics  and  figures  in  refutation 
of  wild  statements  of  M.  L.  Lockwood,  need  only  be  referred  to  as  an  answer 
to  his  subsequent  affidavit.  One  point,  however,  deserves  some  comment, 
as  certain  newspapers  have  already  been  misled  by  Mr.  Lockwood's  state- 
ment. The  New  York  World  on  June  21,  1901,  announced  editorially  that 
"affidavits  just  submitted  to  the  Industrial  Commission  by  M.  L.  Lockwood, 
of  Buffalo,  afford  evidence  to  the  effect  that  at  a  certain  date  the  Standard 
Oil  combine  was  shipping  its  tanks  to  Germany  at  two  cents  per  gallon, 
while  at  the  same  time  it  was  charging  its  customers  in  Texas  and  Arkansas, 
where  it  has  no  competitors,  25  cents  per  gallon."  This  was  the  substance 
of  Mr.  Lockwood's  original  statementf  to  the  commission  and  it  was  denied 
by  me.  In  his  last  affidavit  he  reasserts  the  truth  of  his  former  statement 
and  attempts  to  establish  it  by  showing — 

First — That  the  independent  refineries  exported  oil,  which  after  deduct- 
ing commissions  and  other  expenses,  netted  the  refineries  something  over 
two  cents  per  gallon.  This  is  very  far  from  proof  of  the  assertion  that  oil 
is  put  into  tank  steamers  for  Germany  at  two  cents  per  gallon.  The  way- 
faring man,  though  a  fool,  should  see  the  difference  between  a  selling  price 
and  a  net  profit.  If  the  independent  refineries  netted  two  cents  per  gallon 
they  did  remarkably  well.  Further  to  sustain  the  assertion  under  oath  that 
the  monopoly  forces  the  people  of  Texas  to  pay  25  cents  per  gallon  for  oil 
burned  in  their  lamps,  he  produced  affidavits  from  residents  of  Orange 
county,  Texas,  and  Orange  county,  Florida,  that  the  usual  price  of  a  five- 
gallon  can  of  oil  in  those  counties  was  $1.  Suppose  this  to  be  true.  How 
does  it  show  that  the  monopoly,  aided  by  the  railways,  forced  that  price? 
That  was  the  retail  price  in  a  remote  section,  and  how  many  middlemen's 
profits  had  been  added  to  the  wholesale  price  is  not  shown.  Besides,  oil 
transported  such  a  distance  in  cans  is  not  expected  to  be  the  cheapest. 
It  is  transportation  in  bulk  that  enables  oil  to  be  retailed  cheaply  at  dis- 
tant points.  The  result  of  Mr.  Lockwood's  statement  is  that  neither  the 
Standard  Oil  Company  nor  any  of  its  competitors  sold  oil  for  Germany  at 
two  cents  per  gallon,  and  that  monopoly,  backed  by  railway  favoritism,  did 
not  force  the  people  of  Texas  and  Arkansas  to  pay  25  cents  per  gallon  for  oil 
they  burned  in  their  lamps. 


*See  Vol.  I,  Report  of  tho  Tndu.strial  (^cmmi.ssion,  Part  II,  pp.  506-580. 
Ilbid.,  p.  .-394. 


AFFIDAVIT  OF  JOHN  D.  ARCHBOLD.  xxxix 

Charles  B.   Mathews. 

In  relation  to  the  affidavit  of  Charles  B.  Mathews,  I  need  only  appeal  to 
the  record,  which  is  the  only  correct  evidence  as  to  the  facts.  Mathews 
appeared  before  a  committee  of  Congress  in  1888  and  swore  as  in  his  present 
affidavit  to  facts  of  which  the  record  is  the  only  correct  evidence.  The 
Standard  Oil  Company  was  not  permitted  by  that  committee  to  put  wit- 
nesses on  the  stand  to  contradict  Mathews  as  to  specific  statements,  but 
was  allowed  to  put  their  entire  record  in  evidence.  It  did  so,  and  it  was 
published  in  the  report  of  the  committee.  Those  who  read  it  will  easily 
find  that  there  was  not  in  that  case  a  particle  of  evidence  against  any  mem- 
ber of  the  Standard  Oil  Company  upon  which  any  court  could  have  held 
them,  and  the  record,  supplemented  liy  the  subsequent  affidavits  of  several 
of  the  jurors,  shows  that  the  Everests  were  only  convicted  of  enticing  away 
a  workman  under  contract,  and  that,  too,  a  workman  who  had  been  seduced 
away  from  them  and  carried  with  him  the  secrets  of  the  Everests'  manu- 
factory to  incorporate  into  a  rival  manufactory. 

JNO.  D.  ARCHBOLD. 

State  of  New  York,  City  and  County  of  New  York,  ss: 

Before  me,  a  notary  public  in  the  aforesaid  State  and  city,  personally 
appeared  J.  D.  Archbold,  who,  being  duly  sworn,  saith  the  facts  above  set 
forth  are  true  to  the  best  of  his  knowledge  and  belief.  Sworn  to  and  sub- 
scribed before  me  this  20th  day  of  July,  1901. 

I  Seal]  WALTER  F.  LIVINGSTON, 

Notary  Public. 

Kings  county  certificate  filed  in  New  York  county. 


WHOLESALE  AND  RETAIL  PRICES, 


An  investigation  of  the  local  differences  in  prices  of  four  leading  articles, 
embracing  illuminating  oil,  sugar,  salt  and  baking  powder,  produced  by  cer- 
tain industrial  combinations,  was  undertaken  by  the  Industrial  Commission, 
and  the  results,  so  far  as  they  relate  to  illuminating  oil,  are  presented  in  the 
following  pages.  The  object  of  this  investigation,  as  explained  by  the 
commission,  was  as  follows: 

"The  charge  is  sometimes  made  regarding  various  industrial  combina- 
tions that,  for  the  purpose  of  destroying  competition,  they  lower  the  prices 
of  the  commodities  produced  by  them  in  certain  specific  towns  or  sections  of 
the  country  in  which  competitors  are  seeking  to  gain  a  foothold,  while  keep- 
ing prices  at  a  higher  level  elsewhere  in  order  to  recoup  themselves.  It  is 
asserted  that  some  industrial  combinations  fix  prices  in  different  localities 
in  a  more  or  less  arbitrary  manner,  according  not  merely  to  the  degree  of 
competition  encountered,  but  to  the  attitude  of  the  people,  the  population, 
and  various  other  conditions.  It  has  been  the  aim  of  the  Industrial  Commis- 
sion to  make  an  investigation  as  to  the  basis  of  these  charges  by  inquiries 
addressed  to  5,000  retail  dealers  in  towns  throughout  the  entire  country.  For 
this  purpose  four  articles  were  selected — illuminating  oil,  sugar,  salt  and 
Royal  baking  powder.  These  were  chosen  primarily  because  of  the  fairly 
uniform  quality  of  the  product,  which,  it  was  believed,  would  make  it  possible 
to  compare  accurately  the  prices  in  different  localities.  As  to  many  other 
articles  made  by  industrial  combinations  such  comparison  would  be  impos- 
sible; the  variety  of  grades,  styles  and  classes  is  so  great  that  there  could 
be  no  certainty  that  the  dealers  were  reporting  regarding  precisely  the  same 
thing  in  each  case." 

The  following  is  a  copy  of  the  schedule  of  inquiries  which  was  sent  to 
retail  grocers  throughout  the  United  States: 

THE  INDUSTRIAL  COMMISSION. 

Inquiry  Relating  to  Wholesale  and  Retail  Prices. 

(Extract  from  law  creating  commission.) 

An  act  authorizing-  the  appointment  of  a  non-partisan  commission  to  collate 
information  and  to  consider  and  recommend  legislation  to  meet  the  problems 
presented   by  labor,   agriculture,   and    capital. 

It  shall  be  the  duty  of  this  commission  to  investigate  questions  pertaining  to 
immigration,  to  labor,  to  agriculture,  to  manufacturing,  and  to  business,  and  to 
report  to  Congress  and  to  suggest  such  legislation  as  it  may  deem  best  upon  thf^^e 
subjects. 

Tt  shall  have  the  authority  to  send  for  persons  and  papers,  and  to  administer 
oaths    and   affirmations. 

Washington.  D.  C, .  1901. 


Mr. . 

Dear  Sir:  The  Industrial  Commission  is  making  an  investigation  into  in-iops  of 
a  few  products  throughout  different  sections  of  the  United  States,  in  order  to  see 
what  degree  of  uniformity  exists  and  the  reasons  for  differences  in  prices  in  differ- 
ent localities. 


xlii  WHOLESALE  AND  RETAIL  PRICES. 

The  commission  therefore  asks  you  to  aid  it  by  filling  out  the  following  I^lanks 
as  accurately  as  possible  and  returning-  the  schedule  of  inquiries  in  the  inclosed 
envelope,  which  requires  no  postage. 

The  questions  regarding  the  persons  from  whom  and  the  points  from  which 
you  obtain  these  articles,  and  the  freight  rates,  are  designed  to  make  it  more 
possible    to    obtain   accurate    comparisons  between   the   uifferent   localities. 

For  the  sake  of  making  the  figures  obtained  more  perfectly  comparable,  and 
avoiding  any  errors  which  might  arise  from  difference  in  prices  at  different  dates, 
the  commission  requests  that  you  give  all  the  figures  as  of  date  February  15,  or  as 
near    that    date    as    your    purchases    make  it  possible  for  you  to  give  them. 

This  information  will  be  considered  entirely  confidential.  Your  name  will  not 
be  printed  in  any  report  and  will  not  be  given  to  any  person.  It  is  the  intention 
simply    to   group    the   answers   for   statistical  purposes. 

Please  be  good  enough  to  give  the  matter  your  immediate  attention.  It  is  be- 
lieved that  the  information  obtained  through  these  schedules  will  be  of  great  value 
to  the  country. 

RespeciiUlly, 

UNITED  STATES  INDUSTRIAL  COMMISSION. 

Address,  35-39  B  Street  NW.,  Washington,  D.  C. 

The  inquiries  relating  to  refined  oil  were  embraced  under  tlie  following 
questions: 

(Date) 

1.  What  price  are  you  paying  per  gallon  for  standard  white  illuminating  kero- 
sene oil,  in  lots  of  from  1  to  10  barrels  (we  refer  to  oil  testing  at  least  llo  ,  or  of 
sufficienuy  n.gh  test  to  meet  the  requirements  of  the  laws  of  your  State  or  of  the 
insurance  companies)?  cents. 

2.  At  what  price  per  gallon  do  you  sell  such  standard  wliite  illuminating  oil. 
In  lots  of  5  gallons  or  less? cents. 

3.  If  you  handle  other  grades  of  kerosene  oil,  what  price  do  you  pay  for  Ihem 
and  at  what  price  do  you  sell   them?     Grade, ;  cents. 

4.  What  is  the  name  of  the  maker  of  tiie  standard  white  oil  which  you  sell,  and 

from  whom  do  you  purchase  it? .      Name    of    the    maker    of    other 

grades?    ■ •  . 

5.  From    what    point   is   your   oil   shipped? .     If  you  pay  the  freight, 

what  is  the  rate  paid,  and  between  what  points? . 

Replies  were  received  from  1,578  dealers  in  all  parts  of  the  Union,  and 
these  have  been  compiled  and  presented  in  tabulated  form  so  as  to  be 
readily  comprehended.  These  tables  are  arranged  to  show  the  wholesale 
cost  of  the  commodity,  the  current  freight  charge,  the  retail  price  and  the 
dealer's  profit.  What  the  consumer  pays  for  any  article  must  pay  the  profits 
of  the  retailer,  the  wholesale  jobber,  the  transportation  company  and  the 
manufacturer.  In  the  case  of  illuminating  oil,  most  dealers  buy  directly 
from  original  sources,  and  there  is  no  middleman's  profit  in  the  transaction. 
Sugar  and  baking  powder,  on  the  other  hand,  are  bought  almost  invariably 
from  the  wholesale  dealers.  Salt  is  purchased  by  some  retailers  direct  from 
the  manufacturer,  while  many  depend  upon  the  jobbers  for  their  supply. 

As  might  have  been  anticipated  from  an  inquiry  of  this  kind,  there  is  a 
wide  variation  as  to  the  results  and  the  conclusions  to  be  drawn  are  of 
comparatively  little  value.  Nothing  at  all  is  shown  to  stibstantiate  the 
charge  that  the  manufacturer  makes  any  discrimination  in  the  wholesale 
prices  for  or  against  certain  localities,  and  the  freight  charges  appear  to  be 
fairly  based  upon  the  distance  of  the  consumer  from  the  point  of  manufac- 
ture and  the  number  of  miles  that  the  commodity  is  to  be  transported.  If 
anything  positive  is  shown,  it  is  that  the  retailer,  the  final  medium  in  the 
transaction  between  the  producer  and  the  consumer,  makes,  on  the  average, 
the  greatest  profit  of  all. 

In  the  general  tables  setting  forth  the  replies  to  these  schedules  the 
names  of  the  towns  from  which  the  replies  were  received  are  presented 
alphabetically  under  each  State.  The  tables  also  show  from  whom  the  oil 
is  obtained,  whether  it  is  delivered  with  the  freight  prepaid  and  if  not,  the 
point  from  which  it  is  shipped,  with  the  freight  rate  to  the  point  of  destlna- 


WHOLESALE  AND  RETAIL  PRICES.  xliii 

ticn.  The  wholesale  price  paid  by  the  dealer,  the  price  at  which  it  is  sold  to 
the  consumer,  the  retail  dealer's  net  profit  per  gallon  and  his  percentage  of 
gain  are  likewise  exhibited. 

The  report  of  the  commission  says: 

"It  is  especially  to  be  noted  that  a  large  majority  of  the  dealers  buy 
their  oil  from  local  tank  stations  or  delivery  wagons,  having,  accordingly, 
no  freight  or  cartage  to  pay.  Almost  always,  too,  they  buy  from  the  original 
refiner,  and  not  from  a  jobber." 


"While  oil  is  thus  a  much  more  bulky  commodity  in  proportion  to  its 
value  than  either  sugar  or  baking  powder,  the  freight  rate  charged  per 
hundredweight  does  not  differ  greatly  from  that  charged  for  sugar,  although 
it  is  materially  lower  than  that  for  baking  powder.  Rates  on  salt  per 
hundredweight  are  usually  from  10  to  50  per  cent,  lower  than  on  sugar.  Oil 
in  barrels  shipped  in  less  than  carload  lots  falls  in  the  third  of  the  six  classes 
of  the  Official  or  Eastern  classification  and  thus  is  a  rather  expensive  article 
to  transport  in  that  manner.  Very  seldom,  however,  is  oil  shipped  any 
considerable  distance  in  less  than  carload  lots,  especially  in  the  more  densely 
settled  parts  of  the  country.  In  carload  lots  oil  in  barrels  takes  fourth  class 
under  the  Official  classification,  while  in  tank  cars,  the  ordinary  method  of 
shipment  for  longer  distances,  it  takes  commodity  rates,  which  each  railroad 
determines  for  itself.  These  commodity  rates  differ  considerably  on  different 
railroads,  even  within  the  territory  of  any  one  of  the  three  freight  classifica- 
tions which  apply  in  the  great  divisions  of  the  country.  By  way  of  illus- 
trating the  relation  of  oil  rates  to  those  on  other  products,  the  following 
specific  cases  may  be  cited:  From  Oil  City,  Pa.,  to  Chicago  and  New  York, 
territory  within  the  scope  of  the  Official  classification,  the  freight  rates  on 
petroleum  and  its  products  in  tank  cars  are  about  equal  to  fourth-class  rates. 
In  the  territory  of  the  Southern  classification,  barreled  oil  in  part  carloads  is 
third  class,  while  in  carload  lots,  whether  in  barrels  or  tank  cars,  it  falls  in 
the  lowest,  or  sixth  class.  In  shipments  from  the  Ohio  river  south,  however, 
special  commodity  rates  apply.  The  rates  from  Cincinnati  and  Louisville, 
for  example,  to  Montgomery,  Atlanta,  and  other  leading  Southern  points,  are 
from  10  to  30  per  cent,  less  than  the  sixth-class  rates.  Commodity  rates  on 
oil  from  Chicago  and  Peoria  to  Missouri  river  points,  in  the  territory  of  the 
Western  classification,  are  nearly  the  same  as  the  rates  on  fifth-class  com- 
modities." 


"It  should  be  pointed  out,  however,  that  greater  differences  in  the  prices 
charged  to  retail  dealers  for  salt  and  for  oil  are  to  be  expected  than  would 
be  expected  in  the  case  of  sugar  and  baking  powder.  The  freight  charges  to 
the  point  of  consumption  bear  a  much  larger  proportion  to  the  cost  of  oil  or 
salt  at  the  place  of  production  than  they  bear  to  the  cost  of  sugar  or  of 
baking  powder  at  the  factory.  Oil  and  salt  are  much  heavier  in  proportion 
to  their  value  than  either  of  the  last-named  articles.  A  gallon  of  oil,  which 
at  the  center  of  production  might  be  bought  at  wholesale  for  perhaps  6  cents, 
weighs  6.4  pounds  (constructive  weight  fixed  by  all  railroads),  and  a  single 
pound  of  coarse  salt  is  worth  little  more  than  a  quarter  of  a  cent  at  the 
producing  plant.  On  the  other  hand,  a  single  pound  of  sugar  sells  for  5  or  6 
cents  at  the  factory  and  a  pound  of  baking  powder  sells  at  from  35  to  40 
cents." 


xliv 


WHOLESALE  AND  RETAIL  PRICES. 


The  commission  compiled  the  following  table,  giving  the  through  freight 
rates  on  oil  from  the  central  refining  points  to  certain  leading  trade  centers 
throughout  the  country: 

FREIGHT  RATES  ON  ILLUMINATING  OIL. 

(Railroad  companies  treat  all  petroleum  products  as  weighing  6.4  pounds 
per  gallon.) 


Point   of   Destination. 


^>iuuiie,    Aia 

Birmingham,  Ala.  .. 
i^ittle  Rock,  Ark.... 
San    Francisco,   Cal. 

Denver,  Colo 

Jacksonville,   Fla.    .. 

Savannah,    Ga 

Springtield,  111 

Indianapolis,   Ind.    .. 

Dubuque,   Iowa   

Des  Moines,  Iowa  .. 

Atchison,  Kans 

Louisville,    Ky 

"Winchester,  Ky.  ... 
New  Orleans,  La.  ... 

Portland,  Me 

Hagerstown,  Md.  .. 
Worcester,    Mass.    .. 

St.  Paul,  Minn 

\  ;cksburg.   Miss.    ... 

Jackson,  Miss 

Kansas  City,   Mo.    .. 

Lincoln,   Neb 

Keene,   N.   H 

Albany,  N.  Y 

Wilmington,  N.  C.  .. 

Fargo,  N.   Dak 

Portland,  Oreg 

llarrisburg.   Pa 

(_harleston,  S.  C.  ... 
Sioux  Falls,  S.   Dak. 

Memphis,   Tenn 

Windsor,  Vt 

Seattle,  Wash 

Wheeling,  W.  Va.... 

Madison,  Wis 

Cheyenne,  Wyo 


Point  of  Supply. 


Whiting    . . . 

...  do  

...  do  

...  do 

...  do  

Baltimore    . 

...  do  

Whiting     ... 

...  do  

...  do  

...  do  

...  do  

...  do  

Parkersburg 
Whiting  ... 
Buffalo  .... 
Franklin  . . 
Buffalo  .... 
Whiting    . . . 

...  do  

...  do  

..  do  

...  do  

Buffalo  .... 
Parkersburg 
Baltimore  . 
Whiting    ... 

...  do  

P'ranklin  .. 
Baltimore  . 
Whiting    ... 

...  do  

Buffalo  .... 
Whiting  ... 
Pittsburg   .. 

Whiting 

...  do 


1  Rate  in  Cents. 
1 

|Per  100 

Per 

1    lbs. 

gallon 

1      23 

1.5 

1      44 

2.8 

1      301/2 

1.9 

1      781/2 

5 

1      77 

4.9 

1      29 

1.9 

1      22 

1.4 

1        9 

.6 

1      s 

.5 

1      15 

.95 

231/2 

1.5 

27 

1.7 

1      111/2 

.74 

1      121/2 

.74 

1      23 

1.5 

1     24y2 

1.6 

1    i4y2 

.92 

1    181/2 

1.2 

1    20 

1.3 

1      23 

1.5 

1      ■« 

2.8 

1      27 

1.7 

1       30 

1.9 

1       I81/2 

1.2 

1        121/2 

.8 

1      20 

1.3 

1      47 

3 

1      781/2 

5 

1      471/, 

3 

1      20 

1.3 

j      28 

l.S 

1      18 

1.15 

1      I81/2 

1.2 

1      781/2 

0 

!        7 

.45 

1      121/2 

.8 

1      77 

4.9 

It  will  be  noted  that  the  freight  rate  on  a  gallon  of  oil  from  Whiting,  Ind., 
to  Madison,  Wis.,  is  eight-tenths  of  a  cent  per  gallon;  to  Denver,  Col.,  and 
Cheyenne,  Wyo.,  it  is  4.9  cents  and  to  San  Francisco  5  cents  per  gallon.  The 
charges  run  all  the  way  from  12%  to  7SV2  cents  per  hundred  pounds.  The 
consumer,  remote  from  the  base  of  supply,  always  expects  to  pay  more  for  a 
given  commodity  than  one  on  the  spot  where  it  may  be  produced.  It  would 
not  be  reasonable  to  expect  to  buy  a  gallon  of  oil  as  cheap  in  Mexico  or  the 
Klondike  as  in  Oil  City  or  Los  Angeles.  It  was  hardly  necessary  to  make 
any  extended  investigation  to  reveal  such  facts  as  these. 

In  the  investigation  of  the  prices  of  illuminating  oil,  replies  were 
received  from  1,553  retail  dealers  in  oil  scattered  through  every  State  in  the 
Union.  Of  those,  1,475  bought  their  oil  direct  from  the  Standard  Oil  Com- 
pany or  some  of  its  branches.     The  highest  wholesale  price  reported  is  2714 


WHOLESALE  AND  RETAIL  PRICES. 


xlv 


cents  per  gallon  in  Nevada,  and  the  lowest  5  cents  per  gallon  in  Virginia. 
The  extreme  is  due  to  the  fact  that  a  higher  grade  of  oil  was  considered 
than  that  called  for  in  the  report,  and  the  point  where  the  oil  was  delivered 
was  remote  from  any  railroad. 

It  may  be  objected  to  these  averages  that  a  sufllcient  amount  of  data 
was  not  received  upon  which  to  base  a  satisfactory  estimate.  For  instance, 
while  147  dealers  reported  from  New  York  and  121  from  Pennsylvania,  only 
two  reported  from  Nevada  and  nine  from  Colorado.  These  numbers  may 
have  been  fairly  proportionate,  however,  for  the  States  of  smaller  population 
as  compared  with  the  numbers  represented  by  the  larger  Commonwealths, 
but  when  the  great  number  of  dealers  in  oil  is  considered,  the  number  of 
replies  is  comparatively  very  small. 

The  retail  price  of  refined  oil  runs  all  the  way  from  6  cents  per  gallon 
in  Pittsburg  to  35  cents  in  Virginia  City  and  40  cents  in  Idaho  City.  The 
highest  price  received  at  retail  for  a  gallon  of  oil  in  Pennsylvania  was  15 
cents,  and  the  average  price  for  the  State  10.70  cents.  This  gives  the 
retailers  an  average  profit  throughout  the  State  of  2.43  cents  per  gallon.  On 
a  barrel  of  50  gallons  the  Pennsylvania  retailer  thus  clears  $1.21,  or  nearly 
30  per  cent.  The  manufacturer  of  refined  oil  is  content  with  a  profit  of  15 
cents*  a  barrel.  Of  course,  it  does  not  always  imply  that  the  highest  retail 
price  means  the  greatest  percentage  of  profit.  It  is  a  singular  fact  that 
some  of  the  biggest  percentages  of  profit  are  reported  by  the  Pennsylvania 
dealers.  A  dealer  at  Audenreid  reports  a  profit  of  81  per  cent,  on  the  whole- 
sale cost  of  refined  oil.  At  Allegheny  the  gain  was  74  per  cent,  and  at 
Bradford  77. 

A  comparison  of  the  average  wholesale  price,  including  freight,  the 
average  retail  price,  the  profit  per  gallon  and  the  rate  per  cent,  of  profit  on 
illuminating  oil,  for  each  State,  is  given  in  the  following  table: 

Average  Average  Profit  Per 

Wholesale  Retail  Per  Cent. 

State.                                            Price.  Price.  Gallon.  of 

Cts.                  Cts.  CtP.  Profit. 

Alabama   1-3.08                  16.86  3.7S  29 

Arkansas    13.50                  17.69  4.49  3:3 

California     14.60                  15.89  1.29  8 

Colorado    16.90                  21.22  4.32  2.J 

Connecticut    9.75                  12.21  2.46  2.5 

Delaware    9.16  12.00  2.S4  31 

Florida    13.36  15.72  2.36  17 

Georgia    13.52  17.95  4.43  32 

Idaho    21.84  31.56  9.72  44 

ininois    9.20  11.93  2.73  30 

Indiana    8.33  11.18  2.85  34 

Iowa    10.34  13.19  2.85  27 

Kansas    12.57  15.00  2.43  19 

Kentucky     S.74  11.40  2.66  30 

Louisiana    10.97  15.11  4.14  37 

Maine    10.18  12.90  2.72  26 

Maryland   8.39  10.96  2.57  30 

Massachusetts    9.90  11.78  1.88  19 

Michigan    8.92  10.70  1.84  20 

Minnesota    10.15  13.07  2.92  2S 


*Mr.  J.  W.  Lee  in  testifying  as  to  the  profits  of  the  independent  refining  com- 
panies before  the  Industrial  Commission  said  that  they  would  be  entirely  satisfied 
with  a  manufacturer's  profit  of  ten  cents  a  barrel  on  the  oil  that  runs  through 
their  refineries.  In  reply  to  the  question  whether  he  called  this  a  very  good  man- 
ufacturing profit,  he  answered:  "Yes,  I  should  say  so.  I  have  heard  independent 
refiners  say  they  would  be  entirely  satisfied  to  enter  mto  a  contract  for  any  num- 
ber of  years  to  make  ten  cents  a  barrel  ou  every  barrel  of  crude  oil  they  refined,  ami 
with  oil  at  one  dollar  a  barrel  that  would  be  about  ten  per  cent,  profit."  (See 
Report  of  the  Industrial  Commission,  Trusts  and  Industrial  Combinations,  Vol.  J, 
page  273.) 


xlvi  WHOLESALE  AND  RETAIL  PRICES. 

Mississippi     12.69  17.11  4.42  34 

Missouri    11.16  14.57  3.41  30 

Montana    21.70  26.73  5.03  23 

Nebraska    12.02  15.65  3.63  30 

Nevada    25.78  32.50  6.72  32 

New    Hampshire    S.82  12.33  3.51  40 

New   Jersey    8.45  10.96  2.51  30 

New  York   8.71  10.76  2.05  23 

North   Carolina   10.94  14.39  3.45  31 

North   Dakota    13.31  17.23  3.92  31 

Ohio    8.35  10.10  1.75  20 

Oregon    15.40  19.54  4.14  26 

Pennsylvania    8.27  10.70  2.43  29 

Rhode  Island   9.44  12.13  2.69  28 

South   Carolina    12.44  15.81  3.37  27 

South    Dakota    13.57  18.71  5.14  38 

Tennessee    13.29  16.53  3.24  24 

Texas     13.30  17.14  3.84  29 

Itah   20.87  25.45  4.58  22 

Vermont    9.84  1.3.07  3.23  32 

Mrginia     9.09  11.75  2.'".6  21 

Washington    16.54  21.06  4.52  21 

West  Virginia    8.50  11.17  2.67  31 

Wisconsin    9.03  13.71  4.68  51 

Wyoming    18.77  24.58  5.81  30 

It  will  be  observed  that  the  smallest  percentage  of  the  retail  dealer's 
profit  is  credited  to  California,  but  there  is  a  net  difference  of  1.29  cents  per 
gallon,  or  54 1/^  cents  per  barrel,  between  what  he  pays  for  the  oil  and  what 
he  receives  for  it.  The  gi-eatest  profit  is  in  Wisconsin,  51  per  cent.,  but 
Idaho  dealers  are  able  to  realize  9.72  cents  on  the  gallon,  while  those  of 
Wisconsin  make  4.68  cents.  The  States  in  which  more  than  4  cents  a  gallon 
is  realized  upon  refined  oil  are  Arkansas,  Colorado,  Georgia,  Idaho,  Louisiana, 
Mississippi,  Montana,  Nevada,  Oregon,  South  Dakota,  Utah,  Washington. 
Wisconsin  and  Wyoming.  The  States  in  which  not  less  than  3  nor  more 
than  4  cents  a  gallon  is  realized  by  the  retail  dealer  upon  refined  oil  are 
Alabama,  Missouri,  Nebraska,  New  Hampshire,  North  Carolina,  North  Da- 
kota, South  Carolina,  Tennessee,  Texas  and  Vermont.  The  States  in  which 
the  average  profit  is  not  below  2  nor  in  excess  of  3  cents  a  gallon  are 
Connecticut,  Delaware,  Florida,  Illinois,  Indiana,  Iowa,  Kansas,  Kentucky, 
Maine.  Maryland,  Minnesota,  New  Jersey,  New  York,  Pennsylvania,  Rhode 
Island,  Virginia  and  West  Virginia.  In  only  four  States  does  the  profit  fall 
below  2  cents  a  gallon,  or  $1  a  barrel,  viz:  California,  Massachusetts,  Mich- 
igan and  Ohio.  It  can  thus  be  set  down  with  absolute  certainty  that  the 
greater  proportion  of  the  consumers  of  the  country  pay  the  retailer  on  the 
average  above  $1  profit  upon  every  barrel  of  oil  they  consume.  The  States 
of  greatest  population  are  mostly  included  between  the  2  and  3-cent-a-gallon 
class. 

The  Industrial  Commission  makes  no  attempt  to  draw  any  conclusions 
as  to  the  results  of  its  investigations  upon  the  wholesale  and  retail  prices  of 
the  four  products  it  has  taken  under  consideration.  It  admits  that  its 
efforts  at  making  comparisons  have  proved  ineffectual  and  that  it  is  imprac- 
ticable to  obtain  any  exact  data  upon  the  subject.  But  one  thing  has  been 
thoroughly  demonstrated  and  that  is  that  the  consumer  pays  the  retail 
dealer  a  greater  profit  for  handing  out  the  commodities  he  needs  in  the 
quantities  he  desires  than  he  does  the  middleman,  the  freight  carrier  or  the 
manufacturer.  But  he  has  little  occasion  to  find  fault  that  such  is  the  case. 
The  retail  dealer  is  entitled  to  a  fair  return  for  the  money  he  has  invested 
in  his  business  and  the  work  he  performs  in  the  preparation  and  delivery  of 
his  goods. 


WHOLESALE  AND  RETAIL  PRICES. 


xlvil 


WHOLESALE    AND    RETAIL    PRICES    OF    ILLUMINATING    OIL 
(150°  test  or  less,  the  common  lower  grade,  unless  indicated). 

The  complete  tables  of  the  results  of  the  Industrial  Commission's  inves- 
tigations on  refined  oil  prices  in  the  different  States  are  herewith  presented: 

ALABAMA. 


Annipton 

Bessiemei' 

Columbia 

Decatur 

Dothan 

Florence 

Gadsden 

Gate   City.... 
Girard 

Hamilton 

Huntsville — 

Livingston 

Luverne 

Madison 

Montgomery.. 
New  Decatur. 

Oxford 

Ozark 

Pratt  City 

Successor 

Troy 

Tuscaloosa 

York  Station.. 


Standard  Oil  Co Delivered 

.do do 

.do Eufaula,    Ala 

.do Delivered 

.do do 

.do do 

.do •  do 

.do do 

.do Columbus,   Ga 

,  f  Tupelo,    Miss 

j  I  Memphis, Tenn 

do Delivered 


Shipping  point, 
when  stated. 


"5° 


—  o 
Or: 


.1 


.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 


do 

Montgomery. 

Delivered 

do 

Decatur 

Delivered 

do 

do 

do 

do 

do 

Meridian,  Mis 


3.12 
4.12 


Cents. 

nvz 
iiy2 

*15 

111/2 
131/2 

101/4 

12 '/2 

12 

12 


J. 

0)  0) 

<a 

HD 

o-°c 

0 

ft  . 

fc 

^^=i 

4,  (u  im 

o" 

|q;c. 

(!£  — 

SB'S 

F  «> 

eta 

on. 

xce 
ale 
uct 

i     «- 

K"-'? 

Q^^ 

Cents.  1 

Cents.   1 

15 

3V2 

30 

15 

31/2 

30 

20 

41/2 

30 

1.5 

3V2 

30 

20 

6V2 

48 

16 

S'/2 

28 

15 

3 

25 

15 

3 

25 

1      11 

20         1 

12 
tl6 

25 

+I6V2 

20 

121/2 

15 

13 

15 

im 

15 

12 

15 

16 

18 

12 

15 

ni2 

13% 

17 

101/4 

15 

13 

18        1 

5—6 


9 

3% 

21/i 

2 

21/4 

3 

2—4 

3 

314 

31/4 

41/2 

3  3-10 


56 
21 
20 
15 
20 
25 
12V4— 25 
25 
30 
26 
43 
25 


ARKANSAS. 


Benton 

Waters-Pierce  Oil  Co.§.. 
do 

Delivered 

do 

1116 
141/i 

20 

16  2-3 

20 

20 

17 

20 

IS 

15 

1214 

15 

17 

20 

15 

20 

15 

20 

18 

20 

20 

18 

4 

2  1-6 
5  9-20 
51/2 
.3% 

25 
15 

Berryville 

do 

do 

do 

EurekaSp'gs.Ark. 

.95 

131/2 

14% 

1314 

13 

14 

11 

40 
38 

do  

26 

do 

do          

54 

do 

do 

4 

Devall  Bluff.   ..     . 

do 

do     

4 
11/4 

4 

7 

1 14 

4 

4 

"4—7 
3% 

36 

do 

do           .... 

11 

13 

do 

.   .     do 

i2y2 

13 
13 

13% 
15 
11 
13 
14 
15 
1116 
141/2 

20 

do 

do           ... 

30 

Do 

do 

.   ..  do 

do 

do      

Globe  Oil  Co 

do 

33  1-3 

Waters-Pierce  Oil  Co... 
do 

do 

Hope. 

do 

54 
28 

33  1-3 
25—43 
24 

Hot  Spring"! 

do 

do 

do 

do 

2.3 

Do 

do 

do 

Standard  Oil  Co 

do 

*Probably  includes  charge  for  barrel. 
tHigher  grade,   175°. 

tProbably  a  higher  grade,  or  includes  charge  for  barrel,   being  shipped  from  Montgomery. 
§This  company   is  controlled  by  the  Standard  Oil  Company. 

IIEupion    oil,    a    somewhat    higher   grade    than    Brilliant,     the    grade    of    the    Waters-Pierce 
Company   given    in    table.     Brilliant    is    reported  to  test  about  110°,  and  Eupion  about  150°. 


xlviii 


WHOLESALE  AND  RETAIL  PRICES. 


WHOLESALE    AND    RETAIL    PRICES    OF    ILLUMINATING    OIL 
U50°  test  or  less,  the  common  lower  grade,  unless  indicated). — Cont'd. 

ARKANSAS.— Continued. 


>> 

■°    ■ 

I        ' 

i     1 

ho 

0)   d) 

IK 
O 

u 

0,  £  M 

0  cC 

o  t- 

G 

cS 

^^t 

^'^ 

Town. 

Maker. 

Shipping  point. 

O 

■S  aJ  P- 

when  stated. 

P. 

rt  0 

2  rt 

I 

OS 

Id 
(D   0 

Cents. 

Cents. 

Cents. 

Cents. 

Waters-Pierce  Oil  Co... 
do  

iiy2 

11  y2 

15 
14 

12 
13 

14 
15 
15 

i7y2 

2% 

21 

Do '.'.' 

do 

30 

do      

do  

do 

do 

3.3 

SMi 

25 

do    

do 

Mammoth  Spring. 
Nashville 

do           

do  

15 

2 

15 

Standard  Oil  Co 

do        

131/2 

111/2 

12 

IW2 

14% 

14 

20 
15 

6y2 
3y> 

4S 

do     

30 

do  

do 

20 

8 

66  2-3 

Siloam  Springs.... 

do      

do  

do 

do 

20 

5% 

37 

Texarkana 

do 

do 

20 

6 

43 

do             

Monticello 

1.06 

12% 

20 

6.31 

46 

CALIFORNIA. 


standard  Oil  Co.... 

do 

do 

do 

do 

do 

do 

do 

do 

do Delivered 

do do 


Delivered 

do 

do 

do 

Sacramento 

Delivered 

San  Francisco. 

do 

do 


.do. 


Alameda 

Bakersfield. . . 

Do 

Chico 

Colusa 

Coronado 

Eureka 

Do 

Femdale 

Fresno 

Grass  Valley. 
Jamestown.. . 

Loren do 

Los  Angeles | do 

Do ! do 

JIarysville ' do 

Mendocino  C'y —  j do 

National  City do 

Oakland do 

Oroville ; do 

Pacific  Grove do 

Pasadena I do 

Do do 

Placerville ; do i  Sacramento 

Pleasant  on do San  Francisco 

Sacramento j do j   Delivered 

Do ' do do 

San  Jose do I do 

San  Rafael do San  Francisco 

San  Diego do delivered 

San  Francisco do ' do 

Do do do 

Santa  Cruz do do 

Santa  Rosa do do 

Stockton do do 

Vallejo do do 

Ventura do do 

Visalia do do 

Woodland do .' do 


San  Francisco... 

Delivered 

do 

do 

do 

San  Francisco... 

Delivered 

do 

Marysville 

San  Francisco... 

Delivered 

do 


13 

20 
20 

i4y2 

13 

13 

13% 

13y2 

13 

16% 

16% 

13 


13 
13 
13V2 

13V2 

13 

13 

13 

13 

13 

13 

13 

19 

13 

14% 

14 

13% 

13% 

15% 

17 

14 


5 

3% 

3 

10.625 
5.625 
5.43 
21A 
8% 
4.55 


4.08 

2 

2% 

3 

2.75 

4% 

1% 

4.35 

7 
3 

7 

2 
3 


5y2 

6 

4% 
1% 
3 


•Probably  higher  grade. 


WHOLESALE  AND  RETAIL  PRICES. 


xlix 


WHOLESALE    AND    RETAIL    PRICES    OF    ILLUMINATING    OIL 
(150°  test  or  less,  the  common  lower  grade,  unless  indicated). — Cont'd. 

COLORADO. 


1 

bo 

2 

"3° 

P. 

J,  41  60 

o  <D 

Town. 

Maker. 

Shipping  point, 

■u   HI 

p. 

o 

O     _  o 

•5  a;  p. 

bo  — 

when  stated. 

p, 

OT  C> 

Ml  75 

o — 

0)  o 

8^1 

<U   0) 

•-■a 

|s5 

^^ 

Cents. 

Cents. 

Cents. 

Cents. 

Continental  Oil  Co.* 

do 

19 

20 
■'0 

25 
25 
23 

6 
3 

31 
25 
15 

do 

Central   City 

do 

do 

do 

do 

16 

18 

2 

121^ 
25 

33  1-3 
25 

do 

do 

16 
15 

20 

4 

Golden 

do 

do 

do 

do 

16 
15 

20 
20 

4 

do 

do 

33  1-3 
23 

do 

11-5 

15 

20 

3  4-5 

CONNECTICUT. 


Bristol 

Bridgeport 

Brooklyn 

Danbury 

Greenwich 

Meriden 

Do 

Milford 

Mystic  

New  Britain 

Do 

North  Grosvenor 
Dale. 

Norwich 

Seymour ,i do 

Sharon | 3o 

South  Manchester.] do 

Southport do 

Stafford  Springs...' do 

Stamford do 

Stonington do 

Stratford do 

Taftville I do 

Waterbury do, 


IP,' 


Standard  Oil  Co. 
do 


Delivered. 

do.... 

do.... 

do.... 

do.... 

do.... 

do.... 

do.... 

do.... 

do.... 

do 


do 

do 

do 

do 

Hartford.. . 

New  York. 

Delivered.. 
do 

do 

do , 

do , 

do 


1 

ay* 

12 

9V4 

12 

9 

12 

fVa 

12 

9 

12 

914 

12 

71/4 

13 

91/2 

12 

8 

12 

914 

11 

9Vi 

12 

9 

11 

s% 

12 

9y4 

12 

10 

14 

tl3 

17 

11 

13 

gy. 

12 

gy* 

12 

9% 

12 

9y4 

11 

8% 

10 

10% 

13 

2% 
2% 
3 

2y2 

2Vi 

2% 

5% 

1% 

4 

1% 

2% 


3% 

2% 

4 

3.36 

II2 

21., 

2% 

2% 

1% 

1% 

2% 


29 

29 

33  1-3 

25 

25 

29 

79 

17 

50 

19 

29 

22 
45 
29 
40 
24 
13 
25 
29 
29 
19 
21 
26 


DELAWARE. 


Camden j  Atlantic  Ref.  Co.* ;  Delivered. 

Delaware  City !  Standard  Oil  Co ' do 


Fred  erica I do 

Georgetown ' do 

Lewes j do 

Wilmington Atlantic  Ref.  Co. 


.do. 
.do. 
.do. 
.do. 


FLORIDA. 


Monticello do. 

Palatka do. 

Pensacola ' do. 

Port  Tampa  City..' do. 

St.  Augustine I do. 


Charleston. 

Delivered. . 

do 

do 

do 


<;a!nesville ;  Standard  Oil  Co !   Delivered 

Lake  City | do I do 

Miami do I do.... 

Milton I do ' do.... 


151/2 

n 

14 

10% 

14 

113% 


ll'a 

17 

IS 


•This  company  is  controlled  by  the  Standard  Oil  Company. 
tThis  is  Pratt's  Astra!   oil.   a   higher  grade.  JPossilily  a  higher  grade. 


[  WHOLESALE  AND  RETAIL  PRICES. 

WHOLESALE    AND    RETAIL    PRICES    OF    ILLUMINATING    OIL 
(150°  test  or  less,  the  common  lower  grade,  unless  indicated). — Cont'd. 

GEORGIA. 


Shipping  point, 
when  stated. 


Americus Standard  Oil  Co. 

Augusta do 

Barnesville do 

Brunswick do 


Columbus 

Conyers 

Cuthbert 

Dublin 

Eastman 

Fitzgerald 

Hart  well 

Sifton 

Macon 

Madison 

Milledgeville. 

Xewnan 

Sparta 

Thomasville. . 

Woodburj- 

Waresboro 

Wayneaboro.. 


.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do.. 


Delivered 

do 

do 

do 

do 

Atlanta,  Ga. 

Delivered 

do 

do 

do 

do 

do 

do 

do 

do 

do 

do 

do 

Atlanta,  Ga. 

Delivered 

do 


at  u 


Qj    O 


Cents. 

Cents. 

IH2 

15 

11 

15 

13 

18 

12 

15 

11V4 

15 

15 

17 

loVa 

20 

ISVa 

18 

16 

20 

12y2 

15 

15 

20 

15 

20 

nvz 

15 

13 

20 

12 

15—18 

121/2 

20 

15 

20 

14 

16 

14 

20 

14% 

20 

12 

20 

P  lKi-3 


Cents 
314 
4 
5 
3 


4Vi> 
4% 
4 

2y2 


31/2 

7 
3 

7% 

2 

31/2 

5% 


30 
36 
38 
25 
30 
4 
29 

33  1-3 
25 
20 

33  1-3 
33  1-3 
30 
53 
25 
60 

33  1-3 
14 
21 
35 
66  2-3 


IDAHO. 


Caldwell Standard  Oil  Co Delivered | 

Coeur  d'Alene do Spokane.  Wash.,  i       1 

Genesee do 1  Delivered | 

Idaho  City do I   Boise *6 

Idaho  Falls Continental  Oil  Co.t Delivered..'.'.'.'. .'.'.'  

Moscow Standard  Oil  Co I do I 

Salmon  City do I  Chicago,  111 *15i4 

Wardner do Delivered 


25% 

30 

20 

30 

22 

25 

26 

40 

23 

30 

21 

25 

i2y2 

37y2 

22% 

35 

4% 
9 
3 
8 
7 
4 

9% 
12% 


ILLINOIS. 


Amboy 

Ashland 

Astoria 

Harrington 

Belleville 

Bemont 

Bloomington.. 

Braceville 

Bunkerhill 

Cairo 

Do 

Canton 

Carmi 

Carroll  ton 

Centralia do 

Chatsworth I do 

Choroa I do 

Chicago I do 

Do I do 

Do ' do 


Standard  Oil  Co Delivered. 

do do 

do do.... 

do do 

Waters-Pierce  Oil  Co.t do 

Standard  Oil  Co do 


.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do.. 


9 

13 

4 

44 

10 

15 

5 

50 

9 

15 

6 

66  2-3 

6 

8 

0 

33  1-3 

9 

12 

3 

33  1-3 

8y2 

12 

3% 

41 

8% 

15 

6V2 

76 

8y2 

i2y2 

4 

47 

9 

12 

3 

33  1-3 

8% 

12% 

4 

47 

9 

12—15 

3—6 

33^^-66% 

9Vi 

12 

2Vi 

26 

9 

12 

3 

33  1-3 

9% 

i2y2 

3 

31 

9 

i2y2 

3y2 

39 

8y2 

13 

4y2 

53 

»V2 

13 

4y2 

53 

tio 

12 

2 

20 

6y2 

9 

2y2 

38 

6% 

10 

3% 

53 

•Not  on  railroad. 

tThis  company  \s  controlled  by  the  Standard  Oil  Company. 

tHigher  grade. 


WHOLESALE  AND  RETAIL  PRICES. 


11 


WHOLESALE    AND    RETAIL    PRICES    OF    ILLUMINATING    OIL 
(150°  test  or  less,  the  common  lower  grade,  unless  indicated). — Cont'd. 

ILLINOIS.— Continued. 


Shipping-  point, 
when  stated. 


2  c 

■3° 


Chicago , 

Do 

Do do 

Do do 

Do do.. 

Chillicothe do.. 

Columbia do.. 

Danville do.. 

Delavan j do.. 

Duquoin 1 do.. 

Earlville do.. 

Edwardsville do.. 

Effingham | do.. 

Eureka | do.. 

Forieston do.. 

Galesburg do.. 

Geneva do. . 

Golconda do.. 

Grayville 1 do.. 

Greenfield do.. 

Greenup | do.. 

Griggsville \ do.. 

Hillsboro I do.. 

Hoopeston ! do. . 

Jacksonville < do.. 

Jersey vi lie do.. 

Kewanee do.. 

Kinmundy do.. 

Lacon do. . 

Lebanon do.. 

Lewiptown do. . 

Marine do. 

Marion do. 

Marseilles do. 

Mattoon do. 

Monmouth ] do. 

Mount  Carmel j do. 

Milford j do. 

Minonk | do. 

Morriaon j do. 

Mount  Carroll do. 

Mound  City do. 

Naperville , do. 

NauvOo do. 

Onarga do . 

Oregon 1 do. 

Ottawa ; do. 

Peoria do. 

Peotone do. 

Savanna do. 

Sumner do. 

Taylorville do. 

I'pper  Alton do. 

^■andalia do. 

Virdon do. 


Standard  Oil  Co. 
do 


Delivered 

do 

do 

do 

do 

do 

do 

do 

do 

do 

Chicago,  111 ! 

Delivered ] 

do 

do 

do 

do ! 

do 1 

Evansville,  Ind..,! 

do I 

Delivered 

do 

Jacksonville 

Delivered 

do : 

do ; 

do 

do I 

do 

Peoria,   III ! 

Delivered 

do 

do 

do 

do 

do t 

do I 

do 

do I 

do ! 

do ' 

do 

do 

do 

Fort  Madison,  la. 

Delivered 

do 

do 

do 


IVs 


V2 
0.95 


.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 


X  o 

J3  C8 


3V2 

9 
9 

9 

S'/i 

81/2 
81/2 

•12 

Sif. 


91  i 
6% 

sv. 
S1/2 

71/4 

8 

71/0 

81/.^ 

9 

9 


oj  (D  tm 

g  .  O) 

.9  (U  p. 

CO  o 


Cents. 

Cents. 

61/2 

9 

6 

7 

6 1/2 

10 

61/2 

10 

eva 

8 

SVz 

12 

9% 

12V^ 

81/2 

10 

81/2 

12 

9 

121/2 

■71/2 

10 

9 

121/2 

91/2 

13 

8y2 

12 

10 

12 

8V2 

12 

7 

10 

10 

1.5 

9 

15 

91/0 

12 

9 

12 

9 

111/2 

914 

121/2 

sv^ 

10 

10 

12 

9 

12 

9 

12 

9 

13 

Cents. 
31/2 
1 

31/2 
31/2 

11/2 
3l^ 

3" 
1% 
3y2 
31/2 
1.2 
31/2 
31/2 


3 

41,2 
6 

2y2 


Ms 
5  ci 


53 

16  2-3 

53 

53 

23 

41 

31 

17 

41 

39 

16 

39 

36 

41 

20 

41 

42 

45 

66  2-3 

26 

33  1-3 

11 

31 

17 

20 

33  1-3 

33  1-3 

44 


1       13 

4 

47 

12Vo 

3.5 

39 

13 

4 

44 

12 

2.5 

26 

15 

6 

66  2-3 

13 

4.5 

53 

12 

3.5 

41 

121/2 

4 

47 

15 

3 

25 

13 

4.5 

53 

12 

3.5 

41 

10 

1 

11 

13 

4 

44 

13 

3.5 

39 

13 

6.25 

92 

10 

.5 

5 

12 

3.5 

41 

10 

2.5 

33  1-3 

12 

4 

50 

10 

£.5 

33  1-3 

12 

3.5 

41 

14 

5 

55 

121A 

3.5 

39 

121/i 

3.5 

39 

12 

3 

33  1-3 

121/i 

3.5 

39 

121/2 
1 

3.5 
1 

39 
1 

*Possibly  a  higher  grade.    Only  one  reported. 
42 


lii 


WHOLESALE  AND  RETAIL  PRICES. 


WHOLESALE    AND    RETAIL    PRICES    OF    ILLUMINATING    OIL 
(150°  test  or  less,  the  common  lower  grade,  unless  indicated). — Cont'd. 

ILLINOIS.— Continued. 


be 

(D   V 

o 

"5° 

. 

o  £  "» 

»c 

^■3 

o 

a 

oi 

qj  U 

0, 

4) 

S"^fc 

^ 

Town. 

Maker. 

Shipping  point. 

0!  a 

•9  oJa 

Ml— 
2  oj 

when  stated. 

P. 

il  o 
o  — 

Pi" 

c  ti! 

W   hi 

1^ 

Cents. 

Cents. 

Cents. 

Cents. 

Standard  Oil  Co 

do      .               .       .   .  . 

Delivered 

81/2 

10 
9 
9 

121/2 

12 
13 
10 

4 
2 

3.3 
1 

47 

do 

20 

Peoria,   111 

0.6 

34 

White  Hall 

do 

do           .                  .... 

11 

do 

8 

s 

10 
9 

1 

25 

Woodstock 

Wyoming 

Yorkville 

do 

do 

12y-. 

do 

do 

9 

12 

3 

33  1-3 

do 

do 

8 

10 

2 

25 

INDIANA. 


Albion Independent  Oil  Co. 

Alexandria \  Standard  Oil  Co  — 

Angola [ do 

Attica I do 

.\uburn do 

Batesville | do 

Bedford i do 

Do I do 

Bloomfleld ; do 

Bourbon ; do 

I^iazil I  St.  Josephs  Oil  Co.. 

Brookston Standard  Oil  Co 

Butler j do 

Cannellon I do 

Charlestown do 

Columbus i do 

ConnersviUe do 

CrawfordsviUe do 

Cruwnpoint | do 

Delphi i do 

Dublin I do 

Kas^t  Chicago ; do 

Edinburg do 

E 1  w  o  o  d do 

Elkhart I do 

Fort  Wayne do 

Do do 

Do , do 

Greenfield ; do 

Hammonti do 

Do ; do 

Hartford  City '' do 

Huntington ! do 

Indianapolis I   Scoftold.   S.   &  T.... 

Do I  Standard  Oil  Co 

Do do 

JefferHonville ' do 

Knights^  town | do 

I^awrenceburg do 

Madison do 

Michigan  City j do 

Monticello do 

Mount   V'ernon I do 

Nanpanff do 

Oakland  City do 


I>elivered. 
Anderson. 
Delivered. 

do.... 

do.... 

do.... 

do 

do 

do 

do 

, do 

, do 

, do .... . 

do 

do 

do 

do 

do 

do 

do 

do 

do 

do 

do 

do 

do 

do 

do 

do 

do 

do 

do 

do 

do 

do 

do 

do 

do 

do 

do 

do 

do 

do 

do 

do 


1/2 

Circa  1 


8% 
10  Ve 

81/2 

8V2 

8% 

8 

9 

7 

8 

81/2 

7 

81/2 

8y2 

9 

S1/2 

8 


8% 

8y2 

7% 


*Sl2 

C'a 
6V2 

8 ''2 

S 

SVi 

9 

SVi; 


10 

15 

10 

121/2 

11 

10 

12 

10 

12 

10 

121/2 

13 

10 

11 

12 


1.5 

4 

1.5 

3 

2.25 

2 

3 

3 

4 

1.5 

5.5 

4.5 

1.5 


1 


3 

3.5 

3.75 


I       1. 


•Probably  a  higher  grade. 


WHOLESALE  AND  RETAIL  PRICES. 


liii 


WHOLESALE    AND    RETAIL    PRICES    OF    ILLUMINATING    OIL 
(150°  test  or  less,  the  common  lower  grade,  unless  indicated). — Cont'd. 

INDIANA.— Continued. 


, 

,    , 

^ 

0. 

o'Oc 

0 

rs 

o 

P. 

<u 

P. 

6 

S"^fc 

.■s 

Town. 

Maker. 

Shipping  point. 

g  p, 

•s  S 

1^ 

0 

■9  <u*  ft 

be— 

01   I.I 

when  stated. 

P. 

03  0 
"(Ho 

1  ^ 
.- 

Cents. 

Cents. 

Cents.  1 

Cents. 

Orleans. 

9 

814 
7 
8 
9 
g 

8»4 
iVi 
7 
•IOV2 
81,4 
61/2 
6V2 
ZVz 
7% 

15 
10 
10 
12 
15 
10 
12 
12 
10 
20 

6 

1.5 

3 

4 

6 

3.5 
3.5 
3 
8  38 

66  2-3 

Plymouth 

.     .  do     

do 

17 

Richmond 

do              

do 

42 

Do 

do 

.do 

50 

Rookport 

do 

do 

66  2-3 

Seymour 

do                             

do 

25 

South  Bend 

do 

do 

41 

Sullivan 

do 

do 

41 

Terre  Haute 

do           

do 

42 

Tipton 

do 

Indianapolis 

1  12 

72 

do  

10 

10 

10 

12% 

10 

1.5 
3.0 
3.5 

4 

17 

do                

53 

Do < 

do 

do         

53 

Wabash 

do  

do 

47 

Winamac 

do 

Logansport 

0.44 

2 

26  2-3 

Winchester 

do 

do 

7% 

10 

2.5 

33  1-3 

IOWA. 


Atlantic Standard  Oil  Co... 

Anita ' do 

Audubon do 

Belle\ue I  National  Ref  g  Co. 

Bloomfield !  Standard  Oil  Co... 


Delivered 

Des  Moines ; 

Delivered 

do 

K'kuk&Ottumvva 


.do. 
.do. 
.do. 
.do. 


Boone 

Carroll 

Cedar  Rapids.. 

Do 

Centerville 

Clarinda j do. 

Clinton do. 

Do I do. 

Cresco I do. 

do. 

do. 

do. 

do. 

do. 

do. 

do. 

do. 

do. 


do Delivered. 


Davenport 

Decorah 

Denison 

Des  Moines 

Do 

Dubuque 

KIden 

Klkader 

Fort  Madison.., 

Greenfield | do 

Criswold j do 

Humboldt ! do 


Independence. 

Indianola 

Iowa  City 

Jefferson 

Knoxville , 

Dansing 

I^eon 

I^yons 

Malvern 


...do. 
...do. 
...do. 
...do. 
...do. 
...do. 
...do. 
...do. 
...do. 


.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 


10 

12 

2 

11 

14 

1.84 

10 

12 

2 

tl5 

20 

0 

9% 

15 

4.5 

9% 

13 

3.5 

10 

14 

4 

8% 

12 

3.5 

9% 

15 

5.25 

9 

121/2 

3.50 

11 

14 

3 

9 

13 

4 

9 

13 

4 

10% 

14 

3.0 

7 

10 

3 

10 '/2 

13 

2.5 

10 

14 

4 

8 

10 

2 

S% 

tl5 

6.0 

9 

12 

2 

9% 

15 

5.50 

10 

15 

5 

9 

15 

5 

10 

13 

3 

10 

15 

4.1 

10 

13 

3 

10 

13 

3 

9V2 

12 

2.5 

10 

13 

3 

9% 

12 

2.5 

8% 

10 

1.50 

10% 

12 

1.50 

9% 

10 

.50 

9 

13 

4 

U 

12% 

1.50 

•Eocene,  higher  grade. 


tProbably  higher  grade. 


liv 


WHOLESALE  AND  RETAIL  PRICES. 


WHOLESALE    AND    RETAIL    PRICES    OF    ILLUMINATING    OIL 
(150°  test  or  less,  the  common  lower  grade,  unless  indicated). — Cont'd. 

IOWA. — Continued. 


hi 

V 

P. 

tic 

0 

■3° 

0 

a 

e    wh 
eight 
gallo 

p.  . 

<u 

"S-3 

Town. 

Maker. 

Shipping  point. 

IP  p 

♦J   CI 

0. 

0 

abov 
ice,  fr 
,  per 

be— 

when  stated. 

ci 

P. 

«'5 

l§ 

S   ■ 

V  <v 

tf^ 



Cents. 

Cents. 

Cents. 

Cents. 

Manchester 

Standard  Oil  Co 

do 

101/2 

10 

IOV2 

9% 

91/2 
10 
101/2 

8 
11 

91/2 

12 

15 

13 

14 

12 

15 

13 

121/2 

14 

1211- 

1.5 

5 

2.5 

4.5 

2.5 

5 

2.5 

4.5 

3 

14 

Mapleton 

do           

50 

Maquoketa 

do 

do 

24 

Muscatine 

do 

do 

47 

Nawton 

do 

do                .... 

26 

...     do  . .             

do 

50 

dnawa 

do 

do     

23 

( )9lialoosa 

do 

do 

56 

Shenandoah 

do 

do 

do 

27 

Sigourney 

Rock  Island,  III.. 

O.S 

19 

...     do     .          

10 
SV2 

13         ] 
13        1 

3 
3.50 

30 

do 

do 

36 

KANSAS. 


Abilene Standard  Oil  Co. 

Argentine do 

.\rkansas  City 1 do 

.\tchiaon j do 

Do do 

.Vugusta National  Oil  Co.. 

Bellesville \  Standard  Oil  Co. 

Burlingame j do 

Concordia I do 

Emporia ' do 

Florence do 

Predonia [ do 

Girard do 

Ooodland do 

Herington do 

Hoi  ton do 

Junction  City do 

Kingman do 

Leavenworth 1 do 

Do ' do 

Marion do 

McPherson , do 

Minneapolis do , 

.Veodesha do 

Newton do 

Osage  City do 

Oswego I do 

Ottawa do 

Do ' do 

Paola I do 

('arsons ,; do 


I'fahody 

Pittsburg..., 
Floasanton. . 

Sabetha 

St.   Mary.'i... 

Topeka 

Do 

Washington. 
Wichita 


.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 


Delivered 

do 

do 

do 

do 

Wichita.   Kans. . 

Delivered 

do 

do 

do 

do 

do 

do 


.ao. 


do 

do 

do 

do 

do 

do 

do 

do 

do 

do 

do 

do 

do 

do 

do 

Kansas  City. 

Delivered 

do 

do 

do 

do 


.do. 
.do. 


.do. 
.do. 


1.2 

1.06 


12 

15 

Si/i 

11 

13 

15 

9y2 

15 

91/2 

15 

111/2 

15 

121/2 

15 

121/2 

15 

121/2 

15 

121/2 

15 

121/2 

15 

121/2 

15 

101/2 

13 

*17 

20 

13 

15 

101/2 

15 

121/2 

15 

13 

17 

91/2 

13 

91/2 

11 

121/2 

17 

121/2 

15 

121/2 

20 

12 

15 

121/2 

15 

12 

15 

13 

17        1 

111/2 

14 

111  2 

14 

10 1/2 

13 

IIV2 

13        1 

i2y2 

16 

10V2 

15 

111/2 

15 

11 

15 

12 

15 

11 

15 

11 

15 

12"i 

16 

ll'/i 

15 

3 

2.5 
2.5 
5^5 
5.5 
2.94 
2.5 
2.5 

2.5 

2.5 

2.5 

2.5 

3 

2 

4.5 

2.5 

4 

3.5 

1.5 

4.5 


1.5 
1.5 
3.5 
4.5 
3.5 
4 


3.5 
3.5 


•Probably  a  higher  grade.     Also  sells  "Perfection" 
a  common  lower  grade. 


oil — no  price  given — which  is  known  to  be 


WHOLESALE  AND  RETAIL  PRICES. 


Iv 


WHOLESALE    AND    RETAIL    PRICES    OF    ILLUMINATING    OIL 
(150°  test  or  less,  the  common  lower  grade,  unless  indicated). — Cont'd. 

KENTUCKY. 


Town. 

Maker. 

Shipping  point, 
■when  stated. 

Freight  rate.  If  paid  by 
dealer,   per  gallon. 

U 

p. 

"3 
u 

u 

<u 
0. 

<u 
0 
*C 
0, 

Id 

Oj  0 

Excess    above   whole- 
sale price,  freight  de- 
ducted,  per  gallon. 

C3 
0 

Standard  Oil  Co 

do     

Cents. 

1/2 

Cents. 

81/2 
81/2 
81/2 

Cents.  1 
10 
12 
10 
10 

61/4 
10 
12 
10 
12 
10 
10 
15 

9 
14 
11 
10 

9 

S— 10 

10 

15 

13—15 

7y2 

12—15 
11 
9 

12 
15 
12 
15 
15 

Cents.  1 
2 

3.5 
1.5 
1.5 

25 

do 

41 

Campbellsville 

do              

do  

17 

do 

.    do 

17 

do 

do            

do 

do 

8 

9 

8 
10 

9 

8% 
10 

7 

n2 
101/2 

7 
7 

101/2 

81/2 

fii/i 

9 

8V2 

71,2 

9 
11% 

9I/2 
10 

8I/2 

2 
3 
2 
2 
1 
1.5 

2 
2 

3' 

2 

1-3 

1.5 

4.5 

4.5 

1 

3 

2.5 

1.5 

3 

3.5 

2.5 

5 

6.5 

25 

do 

do 

33  1-3 

do       

do 

25 

do 

do 

20 

do  

do 

11 

do         

do  

17 

..  do 

do 

50 

.    do 

do    

28 

do       

do              ...  . 

16  2-3 

do 

.    do 

4% 

.    do 

do    

43 

Do          

do            

28 

Do 

..  do 

do 

14—43 

Do 

Chas.C.Stoll  Oil  Co 

Standard  Oil  Co 

do  

do 

17 

do            

43 

do 

53—76 

do 

do 

15 

do 

do 

33  1-3 

Pari" 

do 

do 

29 

do 

do 

17 

Do 

do 

do 

33  1-3 

do      

do 

30 

Shelbvville 

do 

do 

26  1-3 

.    do    

do 

50 

Uniontown 

do 

do 

76 

LOUISIANA. 


Amite  City 

Standard  Oil  Co 

do 

Delivered 

13% 
12% 

131/4 
10% 
9 
lOi/i 
14 
12 
11% 

IS 
15 

16 
15 
15 

4.50 

2.5 

1.75 

3.50 

3 

4.5 

3 
2.5 

33  1-3 

Houma 

do 

20 

Waters-Pierce  Oil  Co.t-. 
Standard  Oil  Co 

do 

14 

Lake  Providence.. 

1 

30 

Mandeville 

Record  Oil  Co 

33  1-3 

Mansfield 

Waters-Pierce  Oil  Co.t-- 
do 

43 

Munro 

do 

14 

Thibodaux 

Standard  Oil  Co  . 

25 

White  Castle 

do 

New  Orleans 

1 

20 

MAINE. 


Albion 

Alfred 

BanRor 

Belfast.... 
Berwick.. . 
Biddeford. 
Bluehill... 
Bridston.. 
Caribou... 
Clinton 


Standard  Oil  Co 
, do 


.do. 
.do. 
.do. 
.do. 


Wiscasset. 

Delivered. 

do 

do 

do 

do 

do Boston 

do Delivered. 

do do 

do do 


*May  be  higher  grade;  only  one  reported. 

tThis  company  is  a  branch  of  the  Standard     Company. 


101/4 

12 

9% 

12 

9% 

12 

11 

14 

91/4 

11 

9% 

12 

9% 

14 

11 

14 

12% 

15 

10V4 

12        1 

1.19 
2.50 
2..50 


3 

2.25 

1.75 


Ivi 


WHOLESALE  AND  RETAIL  PRICES. 


WHOLESALE    AND    RETAIL    PRICES    OF    ILLUMINATING    OIL 
(150°  test  or  less,  the  common  lower  grade,  unless  Indicated). — Cont'd. 

MAINE— Continued. 


Town. 


Eastport 

Freeport 

Hallowell 

Houlton 

Kennebunk 

Lewiston 

Lubec 

Machias 

McFalls 

Pittsfield 

Sanford 

South  Berwick. 

Thomaston 

Warren 

Waterville 

Winterport 

Winthrop 

Wiscasset 

Woodfords 

Yarmouth 

York ■ 


Standard  Oil  Co.. 

do 

do 

do 

do 

do 

do 

do 

Leonard  &  Ellis* 

Standard  Oil  Co.. 

Liberty  Oil  Co... 

Standard  Oil  Co.. 

do 

do 

do 

do 

do 

do 

do 

do 

Jenney  Mfg.  Co.. 


Shipping  point, 
when  stated. 


Delivered. 

do 

do.... 

do.... 

do 

do 

do.... 

do 

Boston 

Delivered. 

Cheilsea... 

Delivered. 

do 

do.... 

do 

Boston 

Delivered. 

do 

do 

do 

Boston 


.i:  o 

o — 


10 

91/2 
11% 

10 

10% 

91/2 

11% 
8V4 
9% 
9Vi 
9% 

10 

IIV2 

11 

10 
9% 

loy* 
sy2 


«- 


Cents. 
14 
13 

12 
14 
13 
12 
12 
13 
1.5 
14 
14 
12 
12 
13 
12 
14 
14 
12 
12 
13 
12 


^0,60 


to  J:;'^ 


Cents.   I 


1.50 

2.50 

2.25 

3 

2.75 

1.75 

3.50 

4.75 

2.75 

3.75 

2.75 

2.50 

3.50 

2.10 


2.25 
2.75 
2.90 


MARYLAND. 


Annapolis 

Baltimore 

Do 

Cumberland 

Ellicott  City 

Frederick  City.. 

Do 

Hagerstown 

Do 

Lonaconing 

Oakland 

Oxford , 

Snow  Hill 

Taney  town 

I'pper  Marlboro. 
Williamsport 


Standard  Oil  Co !  Delivered. 


.do. 
.do. 


Atlantic  Ref'g  Co.t-. 

Standard  Oil  Co 

do 

do 

do 

do 

Atlantic  Ref'g  Co | do 

Standard  Oil  Co do 

do do 

do ! do 


.do. 
.do. 
.do. 


.do. 
.do. 
.do. 


9 

3 

7i/„ 

9 

1.50 

7Vi 

10 

2.50 

6V7 

10 

3.50 

TV, 

10 

2.50 

Si.i 

10 

1.50 

,0 

1214 

2.50 

8 

10 

2 

8 

12 

4 

8 

12 

4 

SV? 

12 

3.50 

9"? 

12 

2.50 

w. 

14 

4.50 

8% 

10 

1.25 

9 

10 

1 

81/2 

10 

1.50 

MASSACHUSETTS. 


Standard  Oil  Co 

9% 

8% 

9% 

8% 

9V4. 

SVi 

8% 

9 

9% 

9 

12 
12 
11 
11 
11 
11 
12 
11 
11 
12 

2.75 
3.25 
l'.75 

1.75 

1.75 

3.75 

2 

1.75 

3 

29 

do 

do 



37V8 

do    

do 

17% 

Athol 

do 

do 

25 

.    do 

do 

isyg 

do       

do 

18% 
45 

do                       .  ..  . 

do 

Beverly 

do 

do. 

22 

do          

do 

18% 
33  1-3 

...    do 

do 

•Probably  a  wholesale  dealer. 
tThis  company  is  controlled  by  the  Standard 
jPossibly  a  higher  grade;  only  one  reported. 


Oil  Company. 


WHOLESALE  AND  RETAIL  PRICES. 


Ivii 


WHOLESALE    AND    RETAIL    PRICES    OF    ILLUMINATING    OIL 
(150°  test  or  less,  the  common  lower  grade,  unless  indicated). — Cont'd. 

MASSACHUSETTS.— Continued. 


Shipping  point, 
when  stated. 


Boston ,  standard  Oil  Co 


Broclvton. 

Brookfield 

Cambridge 

Do 

Do 

Do 

Do 

Cambridgeport. . 

Canton j do 

Chicopee !.'!!. .do 

Dalton (Jo 


Dan  vers 

East  Boston 

Kasthampton 

East  Lexington.... 
East  Weymouth.., 

Edgartown 

Everett 

Falmouth 

Fitchburg 

Foxboro 

Framingham ...... 

Georgetcwn 

Gloucester 

Hingham 

Hudson 

Hyannia 4 

Hyde  Park 

Ipswich 

Lancaster 

Lawrence 

Do 

Do 

Leominister 

Lowell 

Do 

Do 

Lvnn .< 

Do 

Maiden 

Do 

Manchester 

Mansfield 

Marblehead 

Mattapoisett 

Medfield 

Medford 

Melrose 

Methuen 

Millbury 

Milford ■ 

Nantucket 

New  Bedford 

Newton 

North  Adams 

Northampton , 

North  Andover — 

Norwood 

Orange , 


.    1  Delivered 

do do 

do do 

do do 

do do 

, do do 

do do 

do : do 

do do 

..    do 

..    do 

..    do 

do do 

do I do 

do do 

do do 

do 1 do 

do (  New  Bedford. 

do !   Delivered 

do i  Boston 

do I  Delivered 

do ' do 

do ; do 

do do 

do do 

do do 

do do 

Saml.  Walker  &  Co Boston 


0.4 
11/4 
1/2 


Standard  Oil  Co. 

do 

do 

do 

do 

do 


Delivered. 

do 

do 

do 

Boston  — 
Delivered. 


Saml.  Walker  &  Co 1  Boston. 

Standard  Oil  Co '  Delivered. 


.do. 
.do. 
.do. 
.do. 
.do. 
.do. 


.do. 
.do. 
.do. 
.do. 
.do. 
.do. 


do I  Boston 

do '  Delivered 

do do 

do do 

do do 

New  England  Oil  Co do 

Standard  Oil  Co do 

do do 

do do 

Saml.  Walker  &  Co do 

Standard  Oil  Co '   New  Bedford. 

do !  Delivered 

do I do 

do ! do 

do I do 

do ' do 

Jenney  Mfg.  Co Boston 

Standard  Oil  Co t  Delivered 


0.56 
1 


Cents. 
9 

*10V2 
8 
9 
9 
9 


8% 

8% 

81/2 

9 

9 

8% 

9% 

7% 

loy. 
81/2 
10 

9'/2 

9y2 

9V4, 

9'/4 

9% 
9V4 
10 
9 

9V4 
9 

914 
9 

9% 
9 

9V4 

9% 


9 
9 
9 

9'/2 

9 

9% 

914 

9  " 

9 

9V4 

9 

914 

9% 

9I/2 

9 

8V2 

8% 


*j  c 


Cents. 
12 
13 
10 
11 
12 
11 
13 
12 
11 
12 
11 
11 
11 
12 
11 
12 
12 
14 
10 
12 
12 
11 
12 
12 
12 
13 
12 
14 
11 
12 
12 
11 
12 
12 
12 
12 
11 
12 
12 
12 
11 
11 
12 
12 
11 
13 
13 
11 


v  V 


2    .  "J 

.g  0)  p. 


Cents. 
3 

2.50 
2 
2 
3 
2 
4 
3 
2 

3.25 
2.25 
2.50 
2 
3 

2.25 
2.35 
3.25 
3 

1.50 
.8 
2.50 
1.50 
2.75 
2.75 
2.75 
3.75 
2.75 
2.8 
2 
2.75 

1.75 
2.36 
2.75 
2.38 
2.75 
1.75 
2.75 


2 

2.44 

2.50 

2 

3.25 

3.50 

2 

3 

3.25 

2 

1.19 

4.25 

3.50 

4 

3.50 

3.25 

3.25 

1.60 

3.25 


•Probably  a  higher  grade. 


Iviii 


WHOLESALE  AND  RETAIL  PRICES. 


WHOLESALE    AND    RETAIL    PRICES    OF    ILLUMINATING    OIL 
(150°  test  or  lers,  the  common  lower  grade,  unless  indicated). — Cont'd. 

MASSACHUSETTS.— Continued. 


Peabody Standard  Oil  Co 

Pittsfield 1 do 

Plymouth ] do , 

Provincetown do 

Quincy j do , 

Do .! do 

Salem I do 

Do I do 

Somerville ' do 

Southbridge I do 

Stoughton I do , 

Taunton 1 do 

Wakefield ] do 

Ware do 

Watc^rtown do 

Webster 

West  Springfield 
Williamstown... 

Winchester 

Winthrop 

Worcester 

Do 

Do 

Do 


do 

Babcock  Oil  Co.. 
Standard  Oil  Co. 
do 


.do. 
.do. 
.do. 
.do. 
.do. 


Shipping  point, 
when  stated. 


Delivered. 

do.... 

do.... 

, do.... 

, do.... 

, do.... 

do.... 

do.... 

do.... 

do.... 

do.... 

do.... 

do.... 

do.... 

do.... 

do.... 

do.... 

do.... 

do 

do 

do.... 

do.... 

do.... 

do.... 


S  c 
rt  o 


ei  a 


0)  £ 


Cents 
2-5 


Cents. 

7% 
SVz 
9% 
10 
9Vi 
91/4 
9 
9 
9 
9 

9% 
SV* 
9 

7% 
9 
9 


Xi  a 

<v  o 

PS- 


Cents. 
11 
11 
13 
13 
12 
12 
12 
12 
12 
12 
13 
12 
10 
11 
11 
12 
11 
12 
12 
13 
11 
12 
U 
10 


oi  V  ba 


O.SU 


Cents. 
2. 85 
2.50 
3.25 
3 

2.75 
2.75 
3 
3 
3 
3 

3.75 
2.75 
1 

3.25 
2 
3 

2.25 
3.50 
2.75 
4 
2 
3 
2 
1 


MICHIGAN. 


Adrian Standard  Oil  Co Delivered. 

Albion do do. 

Ann  Arbor do do. 

Badaxe R.  A.  Pott  Oil  Co do. 

Bay  City do \ do. 

Belding 

Benton  Harbor 

Big  Rapids 

Birmingham... 

Cadillac 

Carson  City.... 

Cassopolis 

Cedar  Springs do do. 

Charlevoix do do. 

Charlotte do do. 

Cheboygan do do. 

Chelsea do ' do. 

Coldwater do do. 

Crystal  Falls do Iron  Mountain... 

Detroit ..! do ,  Delivered 

Do I do do 

Do do do 

Do Greenslade  Oil  Co do 

Do ,    Scofield,  S.  &T do 


Standard  Oil  Co 

do 

do 

R.  A.  Pott  Oil  Co... 

do 

Standard  Oil  Co ' do. 

do I do. 

do ' do. 

do do. 

do do. 

R.  A.  Pott  Oil  Co do. 

Standard  Oil  Co ' do. 


r)urand 1  Standard  Oil  Co. 

Ftnton do 

fl  lad  stone do 

Crand  Haven do 

Grand  Rapids , do 

Grayling I  Scofleld,  S.  &  T.. 


.do. 
.do. 
.do. 
.do. 
.do. 
.do. 


114 


10 

12 

m 

10 

v/2 

10 

9'/2 

12 

8 

10 

8 

12 

SVa 

10 

SV2 

10 

7 

9 

10 

12 

71/2 

10 

SVi 

10 

8 

10 

11 

13 

71/2 

10 

10 

12 

7 

10 

81/2 

12 

12% 

15 

6y2 

10 

6 

8 

6 

7 

5% 

10 

6 

8 

7'/2 

10 

8 

9 

9% 

14 

8 

10 

61^ 

10 

10V4 

13 

2 

20 

2.50 

33  1-3 

2.50 

33  1-3 

2.50 

26 

2 

25 

4 

50 

1.50 

171/4 

1.50 

nvs 

2 

28 

2 

20 

2.50 

33  1-3 

1.75 

21 

2 

25 

2 

18 

2.50 

33  1-3 

2 

20 

3 

42 

3.50 

41 

1.50 

11 

3.50 

53 

2 

33  1-2 

1 

16  2-S 

4.50 

81 

2 

33  1-3 

2.50 

33  1-3 

1 

12V4 

4.25 

43 

2 

25 

3.50 

53 

2.50 

24 

WHOLESALE  AND  RETAIL  PRICES. 


lix 


WHOLESALE    AND    RETAIL    PRICES    OF    ILLUMINATING    OIL 
(150°  test  or  less,  the  common  lower  grade,  unless  indicated). — Cont'd. 

MICHIGAN— Continued. 


Harbor  Springs.. 


Hartford 

Holland 

Holly 

Lakeview 

Lapeer 

Leslie 

Mancelona 

Marcellus' 

Marine  City 

Marquette 

Marshall 

Menominee 

Midland 

Morenci 

Mount  Clemena... 

Negaunee 

Niles 

Northville 

Ontonagon 

Oscoda 

Port  Huron 

Reed  City 

Saginaw 

St.  Johns 

South  Frankfort. 

Tecumseh 

Traverse  City 

Vassar 

West  Bay  City 

Whitehall 

Williamston 

Ypsilanti 


Standard  Oil  Co Delivered 


.do. 
.do. 
.do. 
.do. 
.do. 
.do. 


do 

do 

do 

do 

do 

do 

R.  A.  Pott  Oil  Co.... 

Paragon  Ref'g  Co.*. 

Greenslade  Oil  Co... 

Standard  Oil  Co 

do 


.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 


Paragon  Ref'g  Co.*. 

Standard  Oil  Co 

do 

do 

do 

do 

do 


Shipping  point, 
when  stated. 


do 

do 

do 

do 

do 

do 

do 

do 

do 

do 

do 

do 

do 

Toledo,   Ohio  — 

Delivered 

do 

do 

do 

do 

Cleveland,  Ohio. 

Delivered 

do 


.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 


"3° 


p:  M 


Cents. 

91/2 


10% 
8 

SV2 
9% 

7>/2 

9% 

^^2 

8 

8% 

9% 

81/2 

91/2 
9 

10% 

71/2 

81/2 

10 

81/2 

11 


8 


J. 

<u  u 

<C 

Ul 

o-Oc 

0 

b. 

^•&i 

01 

p. 

^■3  M 

qT 

o""  t 

^ 

"C 

•2  «' c 

m  P.^ 

cS 

<u  0 

Cents. 

Cents. 

10 

0.50 

0 

10 

1.50 

17% 

10 

2 

25 

10 

2 

25 

10 

2.50 

33  1-3 

10 

2 

25 

10 

2.50 

33  1-3 

14 

3.25 

30 

10 

2 

25 

10 

1.50 

17I/2 

12 

2.25 

23 

10 

2.50 

33  1-3 

12 

2.25 

23 

10 

2.50 

33  1-3 

11 

3 

37% 

10 

1.75 

21 

13 

3.25 

33% 

10 

1..50 

17% 

12 

2.50 

26 

16 

5.. 50 

52 

12 

1.70 

16% 

10 

3 

42 

12 

1.50 

14 

10 

2.50 

33  1-3 

9 

.50 

6 

12 

2 

20 

12 

3.50 

41 

14 

3 

27 

10 

2 

25 

10 

.50 

5 

10 

2 

25 

9 

1.50 

20 

11 

3 

37% 
1 

MINNESOTA. 


Albert  Lea I  Standard  Oil  Co Delivered 


Alexandria 

Anoka 

Caledonia 

Cannon  Falls.. 

Chatfield 

Detroit 

Duluth 

Fairmont 

Fergus  Falls.. 
Grand  Rapids. 

Hutchinson 

Jackson 

Kenyon 

Lanesboro 

Long  Prairie.. 

Luverne 

Mankato 

Mazeppa 

Minneapolis... 


.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 


•  do. 

do 

do 

do 

do 

do 

, do 

do 

do 

Duluth.... 

Delivered. 

do 

do 

do 

do 

do 

.....do 

do 

, do 


9% 

11% 

2 

21 

11% 

15 

3.25 

27 

9% 

13 

3.75 

40 

10% 

15 

4.50 

42 

9% 

13 

3.50 

37 

9% 

12 

2.50 

26 

121/4 

15 

2.75 

22 

7 

10 

3 

42 

91/4 

15 

5.75 

62 

11% 

15 

3.25 

28 

11 

15 

4 

36 

10 

12 

2 

20 

10% 

14 

3.25 

30 

11 

12% 

1.50 

13 

9% 

12 

2.50 

27 

12 

14 

2 

16  2-3 

10 

15 

5 

50 

10 

13 

3 

30 

91/2 

12% 

3 

31 

8% 

12 

3.50 

41 

•This  company  is  controlled  by  the  Standard   Oil  Company. 


Ix 


WHOLESALE  AND  RETAIL  PRICES. 


WHOLESALE    AND    RETAIL    PRICES    OF    ILLUMINATING    OIL 
(150"  test  or  less,  the  common  lower  grade,  unless  indicated). — Cont'd. 

MINNESOTA.— Continued. 


Town. 

Maker. 

Shipping  point, 
when  stated. 

Freight  rate,  if  paidby 
dealer,    per  gallon. 

Wholesale    price,     per 
gallon. 

U 

a 

o    _a, 

■°  a  0. 

CO    ZJ 

o 
o  rt 

V 
C    V 

o 

. 

Delivered 

do 

Cents. 

Cents. 
11 

i2y2 
11% 

10 

10 
9% 
9% 

12 

10 
9% 

10 

11% 

9y2 

8 
10 

11% 

10% 

9 

10% 
10% 

8 

10% 
10% 
10 

9% 

9% 

9 

8 
11% 

9% 

Cents. 
15 
15 
15 
13 
10 
12 
11 
15 
15 
12 
12 
15 
13 
10 
12 
16 
14 
12 
14 
14 
12 
13 
14 
10 
13 
11 
11 
10 
16 
12 

Cents. 
4 

2.50 
3.25 
3 

37 

Moorhead. . 

do 

20 

do 

do 

27 

N  ew  U I  m 

.do 

do 

30 

Cornplanter  Oil  Co 

do 

Northfield 

do 

2.50 

1.50 

3 

5 

2.50 

2 

3.25 

3.50 

2 

2 

4.50 

3.50 

3 

3.25 

3.75 

4 

2 

3.5 

26 

North  St.  Paul 

do 

do 

15 

do 

do 

do 

do 

50 

do 

do 

26 

do 

do 

20 

do 

do 

27 

Red  Wing 

do 

do 

Z6 

do 

do  .     . 

....do 

do 

20 

do 

do 

39 

.Springfield 

do 

do 

33  1-3 

do 

do 

33  1-3 

St.  Cloud 

do 

do 

30 

do 

do 

36 

St.   Paul 

do 

do 

50 

Stillwater 

do 

Minneapolis 

19 

Tracy 

do 

33  1-3 

do 

do  . 

do 

do 

3.50 

1.50 

2 

2 

4.50 

2.50 

36 

Waterville 

do 

do 

15 

do 

do 

22 

do 

do 

25 

do 

do 

39 

do 

do 

26 

MISSISSIPPL 


Amory 

Standard  Oil  Co 

14 

18 

15 

14 

20 

20 

20 

20 

13% 

14 

17 

17 

20 

15 

15 

20 

20 

4 

3.50 

2.50 

6 

6 

6 

6 

2 

1 

2.50 

5 

6.50 

3.50 

3.50 

5.50 

6 

28 

Bay  St.  Louis.. 

do 

do 

11% 
11% 
14 
14 
14 
14 

11% 
13 
•14% 
12 
13% 
11% 
11% 
14% 
14 

10% 
9% 
11% 

30 

Biloxl 

do. 

do 

21 

Brandon 

do 

do 

42% 

Columbus 

do 

do 

42% 

Crystalsprings 

do 

do 

42V6 

Gioster 

do 

do 

42% 

Greenville 

do 

, do 

17 

do. 

.  ...do 

7% 
17 

luka 

do 

do 

Kosciusko 

do 

do 

41 

Lexington 

do... 

do 

48 

do 

do 

30 

Oxford , 

do 

do 

30 

Ripley 

do 

do 

Shuqualak 

do 

do 

Vicksburg 

do 

do 

Do 

do 

do 

12% 
17 

3 
5.50 

Watervalley 

do 

do 

■  . 

48 

WHOLESALE  AND  RETAIL  PRICES. 


Ixi 


WHOLESALE    AND    RETAIL    PRICES    OP    ILLUMINATING    OIL 
(150°  test  or  less,  the  common  lower  grade,  unless  indicated). — Cont'd. 

MISSOURI. 


Shipping  point, 
when  stated. 


Ashgrove I  Waters-Pierce  Oil  Co.t  •  ■ 

Aurora I do •  • 

Bowling  Green i  Standard  Oil  Co 

Butler 1 do .•••■• 

Cape  Girardeau....  ,  Waters-Pierce  Oil  Co.... 

Carrollton Standard  Oil  Co 

Columbia Waters-Pierce  Oil  Co.... 

Eldorado  Springs...  Standard  Oil  Co 

Emma 1 do ■• 

Farmington I  Waters-Pierce  Oil  Co ... .    ^^ 

Festus {standard  &  W.P.Oll  Co.  | ^(, 

Fulton ;  Waters-Pierce  Oil  Co —  , ^q 

Gallatin | Standard  Oil  Co I do 

Glasgow ' do do 

Grant  City 1 do do 

Greenfield .Waters-Pierce  Oil  Co....  ; do 

Holden Standard  Oil  Co , do 

Hopkins I do '  Marysville 

Huntaville do i  Delivered.. 


Delivered 

do 

do 

do 

do 

do 

do 

Kansas  City. 

Delivered 

do 


V  c 


01  <v 


Cents. 


Independence.. 
Jefferson  City. 
Joplin , 

Do 

Kansas  City... 

Do 

Knobnoster.... 

Lagrange 

Laplata 

Lebanon 

Liberty 

Lockwood 

Louisiana 

Marionville 

Milan 

Monett 

Monroe  City.. . 
Mount  Vernon. 

Norborne 

Paris 

Pattonsburg  — 

Plattsburg 

Pleasanthill 

Richmond 

Rockport 

St.   Joseph 

Do 

St.   Louis 

Do 

Do 

Sarcople 


Scofield,   S.   &T do. 

.Vaters-Pierce  Oil  Co —  j do. 

Pa.   Refining  Co I do. 

iVaters-Pierce  Oil  Co —   do. 

Vational  Oil  Co do. 

Standard  Oil  Co do. 

do i do. 

do do. 


.do. 


-Vaters-Pierce  Oil  Co.. 

Standard  Oil  Co 

Waters-Pierce  Oil  Co.. 

Standard  Oil  Co 

Waters-Pierce  Oil  Co.. 

Standard  Oil  Co I do 

Waters-Pierce  Oil  Co ! do 


....do. 
....do. 
....do. 
....do. 
....do. 
....do. 


Standard  Oil  Co do 

.\aiers-Pierce  Oil  Co do 

jreatwestern  Oil  Co Kansas  City. 

Standard  Oil  Co Hannibal 

do ,  St.  Joseph 

do do 

do I  Delivered 

do do 

do j do 

Standard  Oil  Co i do 


L3 
1.1 
1.6 

1.7 


.do. 


A'aters-Pierce  OH  Co 

do , 

do 


.do. 
.do. 
.do. 
.do. 
.do. 


OS 
.s  si 


Cents. 
*1.3% 
10 

10% 

10% 

11 

10% 
•14 

llVs 
tl5 

10% 

10 
113% 

10% 

10% 

11 

10 

11% 

10% 

10% 

9 
113% 

11% 

12 
8% 
8% 

10% 

10% 

11 
•14 

10 

12% 

10% 

10 

11 

tl4 

10% 
•13 

11% 

10% 

10% 
§1.5 

10 

10 

10% 
9 

10 
7% 
7% 
71-4 

n2 


Cents 
20 
15 
13 
13 
15 
13 
17 


20 
15 
14 
15 
15 
15 
13 
15 
15 
15 
15 
13 
17% 
15 
15 
10 
10 
15 
15 
15 
18 
12% 
15 
15 
15 
15 
17 
12 
17 
15 
15 
15 
18 
13 
13 
15 
10 
12 
9 
10 
12 
20 


1^  = 

if « 

a,  g  M 


Cents. 
6% 
5 

2% 
2% 
4 

2% 
3 


4 

1% 

4% 

4% 

2 

5 

3% 

3.50 

4% 

4 

4 

3% 

3 

1% 

1% 

4% 

4% 

4 

4 

2% 

2% 

4% 

5 

4 

3 

1% 

4 

2.2 

3.40 

2.90 

1.30 

3 

3 

4% 

1 

2 

1% 
2 

41/2 

8 


•May  be  Eupion  oil;  only  one  reported. 

tThis  company  is  controlled  by  the  Standard  OH  Company. 

tEupion  oil.   reported  as  150°  test;   Brilliant   oil,    the    more    common    grade    of    the    Waters- 
Pierce  Oil  Company,  Is  stated  by  some  dealers  to  test  about  110°. 
§Eocene — higher  grade. 


"-.S 


33  1-3 

39 
40 
11 
43 
43 
18 
50 
30 
30 
43 
44 
30 
30 
25 
17 
17 
43 
43 
36 
28 
25 
20 
43 
50 
36 
21 
14 
30 
17 
30 
24 
7% 
30 
30 
43 
11 
20 
20 
26 
60 
66  2-3 


Ixii 


WHOLESALE  AND  RETAIL  PRICES. 


WHOLESALE    AND    RETAIL    PRICES    OF    ILLUMINATING    OIL 
(150°  test  or  less,  the  common  lower  grade,  unless  indicated). — Cont'd. 

MISSOURI— Continued. 


Shipping  point, 
when  stated. 


Delivered. 

do.... 

do.... 

do.... 


Savannah Standard  Oil  Co. 

Springfield Scofield 

Do Waters-Pierce  Oil  Co 

Stewart.-ville ■  Standard  Oil  Co. 

\'andalia i  Waters-Pierce  Oil  Co    St.  Louis^  Mo. 

Washington do ' do 

Wellsville Standard  Oil  Co [ do 

^^'estplains Waters-Pierce  Oil  Cq    Delivered 

Windsor Standard  Oil  Co ! do 

York I  Waters-Pierce  Oil  Cul  Springfield 


•a  G 
•3° 

«  to 
(d  P. 


—  o 


Cents. 

10% 
•13 
tl2 

IOV2 

iiy2 
9% 
iiy2 
12 

10 


o  o 


Cents. 
15 
18 
15 

i2y2 

17 
12 
15 
15 
13 
15 


j=2  o 

ojt. 
>  v.  t. 


Cents. 

4y2 


3Vi 

214 
1V2 

3 

3y2 
4.3 


MONTANA. 


Anaconda J  Continental  Oil  Co.t. ,  Delivered. 


Billings ' do. 

Boulder do. 

Bozeman do 

Butte do 

Do do 

Deerlodge do 

Orea  tf  a  lis do 

Helena Standard  Oil  Co 

Kalispel Continental  Oil  Co. 

Livingston do 

Missoula do 

F'hilipsburg do 

Red   Lodge do 

Virginia  City 1 do 


.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 


20 

25 

20 

25 

22 

25 

20 

23 

20 

25 

21 

25 

23 

30 

22 

25 

22 

25 

20 

25 

20 

25 

25  y2 

30 

24 

33 

20 

25 

26 

§35 

25 
25 
13y2 
15 

18 
30 

i3y2 

131/2 

25 

20 

17 

37y2 

25 

34 


NEBRASKA. 


Alliance !  Standard  Oil  Co Delivered. 

,\«>hland do Omaha,  Neb. 

.•\uburn do do. 

Beatrice ' do I  Delivered. 


Blair do. 

Central  City do. 

Columbus do. 

Crawford I do. 

Dorche-ster do. 

Falls  City do. 

Fremont do. 

Friend do. 

Geneva do. 

Gothenburg do. 

Holdrege , do. 

Indianola do. 

Lincoln do. 

Do do. 

Nebraska  City do. 

Norfolk do. 


do 

do 

do 

do 

do 

do 

do 

do 

do 

Omaha,  Neb. 

Delivered 

Omaha,  Neb. 

Delivered 

do 

do 

do 


1.3 

1.8 


1 

14 

18 

12  V" 

15 

11 

15 

11% 

15 

11 

14 

i3y2 

17 

iiy2 

15 

1121 

25 

11% 

15 

11 

15 

11 

15 

11  y2 

15 

12 

15 

11% 

20 

13% 

20 

i2y2 

25 

10 

15 

10 

12% 

10—11 

15 

12 

15 

4 

28% 

1  1-5 

9 

2  1-5 

17 

3'i 

30 

3 

27 

3% 

26 

3% 

30 

4 

19 

3% 

30 

4 

36 

4 

36 

3% 

30 

3 

25 

3  6-10 

22 

6% 

48 

7% 

42 

5 

50 

2.50 

25 

4 

40—36 

3 

25 

•May  be  Euplon  oil;  only  one  reported. 

tKupion  oil,  reported  as  150°  test:  Brilliant  oil,  the  more  common  grade  of  the  Waters- 
Pierce  Oil  Company,   is  stated  by  some  dealers'  to  test  about  110°. 

t'l'his  company  is  controlled  by  the  Standard    Oil  Company. 

§Not  on  railroad. 

IIThls  may  be  a  higher  grade.  Crawford  is  ii(>ar  Wyoming,  473  miles'  from  Omaha  on  the 
main   line. 


WHOLESALE  AND  RETAIL  PRICES. 


Ixiii 


WHOLESALE    AND    RETAIL    PRICES    OF    ILLUMINATING    OIL 
(150°  test  or  less,  the  common  lower  grade,  unless  indicated). — Cont'd. 

NEBRASKA.— Continued. 


0) 

1    -3 

'      i  i 

s 

13  C 

0 

0) 

p. 

ft  . 

0  cj 

Town. 

Maker. 

Sliipping  point, 

g  0. 

0. 

0 

0         OJ 

entage 
retail  de 

when  stated. 

—  0 

ft 

\  s^-g 

■sg 

Be 
^2 

"^1 

1 

0 

Cents. 

Cents. 

Cents. 

Cents. 

Standard  Oil  Co 

(Jo        

10 

13 

3 

30 

Do 

.  (Jo 

81/2 
SV2 
81/2 

13 
12 

12 

4.50 
3.50 
3.50 

53 

Do 

(3o           

do  

41 

Do 

'fecofleld,  S.   &  T 

(Jo 

41 

Do 

..do 

8 14 

12 

3.50 

41 

(3o           .' 

do 

12 

131/2 
9 
llVa 
11 
11 

11 V2 
111/2 

15 
18 
16 
15 
15 
14 
15 
15 

3 

4.50 

3.75 

2.3 

4 

3 

3.50 

3.50 

1 

25 

Shelton  

(Jo               

do          

33  1-3 

St     Paul 

Omaha,  Neb 

..do 

3% 
2.2 

30 

(Jo      

18 

..(Jo 

36 

(Jo 

do 

27 

Wilber 

(Jo                

do 

30 

York 

(Jo 

do 

30 

NEVADA. 


Carson 

Virginia  City 

Standard  Oil  Co 

do 

Reno.  Nev 

do , 

1.6 

0.96 

21% 

•271/2 

30 
35 

6.9 
6.54 

30 

22% 

NEW  HAMPSHIRE. 

Bartlett I  Standard  Oil  Co Delivered. 

Belmont do >  do 

Canaan 1 do do 

Claremont | do .' do 

Concord do 1 do 

Conway , do ' do 

Epping ;  Jenney  Mfg.  Co j do 

Exeter Standard  Oil  Co • do 


Farmlngton do 

Haverhill do 

Hinsdale do 

Keene Independent  Ref.  Co. 

Laconia Standard  Oil  Co 

Littleton do 

Manchester do 

Marlboro do 

Newport I do 

Portsmouth .| do 

Til  ton ; do 

Winchester I do 

W  oltsboro ,; do 


.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 


10 

14 

91^ 

12 

91/2 

14 

81/2 

11 

91/2 

12 

10 

13 

9y4 

12 

9% 

12 

9y* 

12 

10 

12 

8% 

12 

1014 

14 

91/* 

11 

9 

13 

91/* 

12 

9 

12 

9 

13 

91/4 

12 

91.4 

12 

9 

12 

9 

12 

2% 

2  I/O 

3  ' 
2% 
2% 
2?4 

31  i 

3% 

1% 

4 

2% 


40 

29 

47 

29 

26 

SO 

29 

29 

29 

20 

41 

33  1-3 

18 

44 

29 

33  1-3 

44 

29 

29 

33  1-3 

33  1-3 


NEW  JERSEY. 


Bayonne 

Belvidere 

Beverly 

Bloomfleld... 
Bordentown. 
Bridgeton 

Do 

Burlington.. 
Camden 

Do 


Standard  Oil  Co Delivered. 

Atlantic  Ref.  Co.t..-    do 

Standard  Oil  Co do 


.do. 
.do. 
.do. 
.do. 
.do. 
.do. 


Crew,  Levick  &  Co.. 


.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 


, 

1 
10 

8Vi 

12 

71/2 

10 

8% 

11 

7 

9 

m 

11 

81/2 

10 

7 

10 

9 

10 

7 

8 

2 

3% 

21/2 


41 
33  1-3 

30 

28 

30 

17% 

42 

11 

14 


•Probably  a  higher  grade  or  includes  charge  for  barrel. 
tThis  company  is  controlled  by  the  Standard  Oil  Company. 


Ixiv 


WHOLESALE  AND  RETAIL  PRICES. 


WHOLESALE    AND    RETAIL    PRICES    OF    ILLUMINATING    OIL 
(.150°  test  or  less,  the  common  lower  grade,  unless  indicated). — Cont'd. 

NEW  JERSEY— Continued. 


Town. 

Maker. 

Shipping  point, 
when  stated. 

"5° 

d  ft 

Wholesale    price,     per 
gallon. 

Retail   price,   per  gal- 
lon. 

Excess    above    whole- 
sale price,  freight  de- 
ducted,   per  gallon. 

0 

ft  ^. 
— 

0  d 
J 

Cape  Mav 

Standard  Oil  Co 

.   .     do > 

Cents. 

Cents. 
9 

81/2 

9 
9 
9 
9 

S'/o 

7 

8 

8 

9 

9 

9 

9 

SV2 

8 1/2 

Cents. 
12 

12 
12 
11 
11 
12 
12 

9 
10 

9 

12 
12 
12 
12 
12 
11 

Cents. 

31,4 

3 

2 

2 

3 

i 

3 
3 
3 
3 

3% 
21/2 

33  1-3 

East  Orange 

Elizabeth 

do 

41 

do 

do 

33  1-3 

Flemington ' do 

. ..   .do  

22 

Garfield '            rin               

do           

22 

Hackettstown 

Harrisonville 

do 

.   .do 

33  1-3 

do 

do     

41 

do 

22 

Jersey  Citv ,            do 

do 

25 

Do do 

.   ...do 

121^ 
33  1-3 

Kevport fin.   

do 

Lambertville 

Leonardo 

Long  Branch 

Milburn 

Millville 

Morristown 

Do 

do 

do 

33  1-3 

do 

do           ...          

33  1-3 

do 

do 

do 

33  1-3 

41 

do 

do 

do 

do 

30 

Trew    Levick  <t  Co.. 

do 

71/2 
71/2 

*10i/4 
S1/2 
&V2 
8 1/2 
9 
8 
9 
9 

*10V4 

81/2 

SV2 

9 

9 

9 

9 

81.-; 

9 

9 

9 

SI/2 

9 

7 

8 

8% 

7% 

8 

10 
10 
15 
10 
13 
10 
11 
10 
11 

9 
14 
12 
11 
11 
11 
10 
12 
12 
11 
12 
12 
10 
12 

9 

10 
12 
10 
10 

21.2 
2% 
4% 
1% 
41/2 
n'2 

0 

3% 
3I/2 
21/2 

2 

1 

3 

31/^ 

2 

3 

3 

ll/o 

3 

2 

3y2 
2% 
2 

33  1-3 

Mount  Hollv Standard  Oil  Co 

do 

do 

do     

33  1-3 

Newark do    

46 

Do 1 do 

17 

Do ,' do 

do 

do 

do  

53 

Do do 

17 

New  Brunswick 

Paulsboro - 

Plainfield 

Newton .- 

Orange , 

Do 

Do 

Paterson 

Do 

do 

22 

do 

do 

do 

do  

25 

22 

do 

.   do 

0 

do 

do   

36 

do 

do     

41 

do 

do 

29 
22 

do 

..do 

do 

do     

22 

do      

11 
33  1-3 

Perth  Amboy 

Plea.»antville 

do 

..do 

do 

do  

do 

...do 

33  1-3 
33  1-3 

Rutherford do 

..do 

Salem do 

do 

South  River do 

do 

33  1-3 

28 
25 

West  Hoboken 

W  est  Orange 

do.... 

do 

do.... 

41 

W  oodburv '      ....''-i 

do 

do 

33  1-3 

95 

NEW   YOR 

K. 

Standard  Oil  Co 

do 

7'/i 

SV2 

$'; 

81^ 
8% 
1 

9 

11 

12 

10 

11 

9         1 
9         1 

13        1 

10       1 

12        i 
1 

1 
1% 

2'/2 

2' 4 
3U 
1..50 
2 

3.50 
1.50 
3.50      1 
1 

20 

-Vmstordam 

Athens 

do 

29 

do 

do 

41 

An 

do 

33  1-3 

...   .do 

46 

Binghamton 

Do 

..do 

do 

do 

20 

do 

do 

28 

do 

36 

Brorkport 

Buffalo 

Vacuum  Oil  Co.t ^ 

Star  Oil  Co ,| 

du 

do 

17 

41 

1 

•Higher  grade. 

tThi.s  company  is  controlled  by  the  Standard 


Oil  Company. 


WHOLESALE  AND  RETAIL  PRICES. 


Ixv 


WHOLESALE    AND    RETAIL    PRICES    OF    ILLUMINATING    OIL 
(150°  test  or  less,  the  common  lower  grade,  unless  indicated). — Cont'd. 

NEW  YORK— Continued. 


Buffalo 

Do 

Do 

Cambridge 

Canajoharie 

Canastota 

Carthage 

Cattaraugus 

Clayton 

Cobleskill 

Cohoes 

Cooperstown 

Corn  wall -on-the- 
Hudson. 

Coxsackie 

Cuba 

Dansville 

Dobbs  Ferry 

Dundee 

Dunkirk 

Do 

East  Patchogue... 

EUenville 

Elmira 

Fairport 

Far  Rockaway 

Frankfort 

Fredonia 

Friendship 

Fulton 

Geneva 

Genesee 

Glenns  Falls 

Gloversville 

Herkimer 

Homery 

Honeoye  Falls 

Ithaca 

Do 

Do 

Irvington-on-Hud. 
Islip. 


Standard  Oil  Co. 
do 


Shipping  point, 
when  stated. 


.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 


do 

do 

do 

Vacuum  Oil  Oct---- 

Standard  Oil  Co 

Pa.  Petroleum  Co... 

Standard  Oil  Co 

do 

do 

do 

do 

Vacuum  Oil  Co.t.--- 

Standard  Oil  Co 

do 

do 

Independent  Ref.  Co 

Standard  Oil  Co 

do 

Vacuum  Oil  Co.f  — 

Standard  Oil  Co 

do 


.do. 

.do. 

.do. 

.do. 

.do. 

.do. 

.do. 

.do. 

Jamaica ' do. 

Jamestown do. 

Do do. 

Johnstown | do. 

Keeseville ! do. 

Kingston ' do. 

Lansingburg ' do. 

Little  Falls do. 

Lockport I do. 

Do do. 

Lyons do. 

Malone do. 

Mamaroneck do. 

Massena do. 

Mattituck do. 

May  vi  lie do. 

Medina I do. 


Delivered. 

do.... 

, do 

Albany.... 
Drfivered. 

do 

do 

do 

do 

do 

do 

do 


do 

do 

do 

, do 

, do 

, do 

, do 

do 

do 

do 

do 

....do 

....do 

do 

do 

Oil  City,  Pa. 

Delivered 

do 

do 

do 

do 

do 

do 

do 

do 

do 

do 

Yonkers 

Delivered  — 

do 

do 

do 

do 

do 

do 

do 

do 

do 

do 

do 

do 

New  York . . . 

Delivered 

do 

Jamestown.. 

Delivered 


iiS. 


Cents. 



Cents. 

8 

10 

8 

10 

8 

10 

8V2 

10 

8 

11 

9 

11 

•loy* 

13 

7 

10 

9 

12 

8 

10 

6'/2 

10 

S'/z 

12 

81/2 

11 

8 

12 

6% 

10 

SVz 

10 

10 

12 

8 

11 

7 

10 

7 

10 

9 

12 

8 

10 

7 

10 

9 

11 

9 

12 

8 

10 

7 

9 

9 

13 

81/2 

11 

81/2 

10 

9 

11 

81/2 

10 

81/2 

11 

8 

10 

71/2 

10 

81/2 

10 

81/4 

10 

8 

10 

S 

3 

9Vi 

12 

91 2 

14 

9 1/2 

11 

S 

10 

7i'i 

10 

8'2 

11 

S'z 

12 

8V2 

10 

7 

10 

8 

10 

71,., 

10 

71,., 

10 

SV2 

10 

Sl/2 

10 

tll'2 

15 

S'/. 

12 

91^ 

10 

6% 

10 

7% 

10 

H 


«j  'O 


Cents. 
2 
2 

2 

.8 
3 
2 

2.75 
3 
3 
2 

3.50 
3.50 

2.50 
4 

3.50 
1.50 

3 
3 
3 
3 
2 
3 


2.40 

2.50 

1.50 

2 

1.50 

2.50 


21/2 
11/2 
1% 


IV2 

21/2 
2% 
31/2 
IV2 
3 
2 

21/2 
2 1/2 
IV2 
1% 
2.70 
3.50 
.50 
2.50 
2.50 


25 

25 

25 

8% 

37V4 

22 

26 

42 

33  1-3 

25 

53 

41 

30 
50 
53 
17 
20 

37y2 

42 
42 

33  1-3 
25 
42 

33  1-3 

25 

28 

23 

30 

17 

22 

17 

30 

25 

33  1-3 

17 

17 

25 

12% 

17 

47 

15 

25 

33  1-3 

30 

41 

17 

42 

25 

33  1-3 

33  1-3 

17 

17 

22 

41 

5.14 
33  1-3 
33  1-3 


•May  be  higher  grade;  only  one  reported. 

tThis  company  is  controlled  by  the  Standard  Oil  Company. 

JProbably  a  higher  grade   or  includes  charge  for  barrel. 


Ixvi 


WHOLESALE  AND  RETAIL  PRICES. 


WHOLESALE    AND    RETAIL    PRICES    OF    ILLUMINATING    OIL 
(150°  test  or  less,  the  common  lower  grade,  unless  indicated). — Cont'd. 

NEW  YORK— Continued. 


Shipping  point, 
wlien  stated. 


**edina i  standard  Oil  Co... 

Middleburg jq 

Middletown .." ! !  !!do 

Montgomery , ,,,,,, ^o.. 

Montour  Falls .!.!!!do.! 

Moravia i !!!!!. do 

Mount   Kisco I  ......do.............. 

Naples American  Oil  Works.! 

New  Brigliton Standard  Oil  Co 

Newburg I jo 

New  York  City do 

Do do 

Do do 

Do do 

Do ! do 

Olean do 

Do Acme  Oil  Co.* 

Do Standard  Oil  Co..... 

Oswego , do 

Do do 

Oxford j do 

Penn  Yan i do 

Phelps I  American  OirWork'?! 

Plattsburg .Standard  Oil  Co 

Port  Chester do 

Do j do 

Port  Jarvis do 

Do I do 

Port  Jefferson i do 

Port  Richmond do 

Potsdam i do 

Rensselaer I do 

Rochester j  Vacuum  Oil  Co.*...'. 

Do do 

Rome American  Oil  Works 

Do !  Standard  Oil  Co 

Rondout \ do 

Rosly  n .j do 

Rouse  Point do 

Rye I do 

Sag  Harbor i do 


Delivered 

do 

do 

do 

do 

do 

do 

do 

do 

do 

do 

do 

do 

do 

do 

do 

do 

do 

do 

do 

do 

do 

Titusville,  Pa. 

Delivered 

do 

do 

do 

do 

New  York 

Delivered 

do 


do 

do 

do 

do 

do 

do 

Long  Island  City 
Delivered 

do 


.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 


Do 

Salamanca 

Saratoga  Springs 

Do 

Schenectady 

Do 

Sandy  Hill 

Seneca  Falls 

Southampton 

Southold 

St.  .lohnsville 

Do 

St.  Regis  Falls , do 

Stamford do 

Syracuse I  --Vmerican  Oil  \A'ork 

Theresa Standard  Oil  Co 

Troy do 

Do do ' ' 

Tuokahoe do 

T'nion  Springs do 

Utica I do 


j do. 

I do. 

I do. 

do. 

' do. 

: do. 

I do. 

do. 

do. 

do. 

do. 

American  Oil  Works,' do. 

Standard  Oil  Co...        do. 

do. 


.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 


8 

81/2 


91/2 


81/2 
9 

81-2 

71/^ 

71/2 

9 

8V2 
S 
8 

r-i 

9 
9 

8 
8 

nwz 
91/2 

81/2 

7 

7" 

8 

8 

8y2 

91/2 

9 

9 

91/2 

9% 

8 


81/2 
SV2 
9V2 
W2 


9% 


7 
7 


«-2 


Cents. 

11 

12 

10 

12 

10 

10 

10 

10 

12 

11 

12 

12 

11 

11 
9 

10 

12 

10 

10 

10 

12 

12 

10 

12 

11 

12 

10 

10 

13 

12 

12 
10 

10 
10 
10 
10 
11 
12 
12 
12 
12 
12 
10 
12 
12 
10 
10 
12 
10 
12 
13 
11 
10 
10 

11 

10 
12 
10 
10 
13 
10 
10 


1     1 

^j 

o-°£ 

2 

0  S 

><S    u 

•9  <u  ft 

bca 

m  p,'^ 

Co! 

see 
ale 
uct 

01  t. 

g^-O 

^^ 

Cents. 
3 
4 
2 

3.50 
2 
2 

.50 
2 

2.5 
2.50 
4 
4 

2.50 
2 

.50 
2.50 
4.50 
2.50 
1 

1.50 
4 
4 

1.72 
2.25 
2 
3 


1.50 

2.50 

3.50 

3 

2.50 

3 

2 

2 

2.50 

1.82 


2.50 
2.50 
2.50 


1.50 
3.50 
1.50 
2.50 
3.50 
2  ''5 


1.75 
2.50 

3 

3 

3.50 

2.50 

3 


•This  company  is  controlled  by  the  Standard  Oil  Company. 
tProbably  a  higher  grade  or  includes  charge  for  barrel. 


WHOLESALE  AND  RETAIL  PRICES. 


Ixvii 


WHOLESALE    AND    RETAIL    PRICES    OF    ILLUMINATING    OIL 
(150°  test  or  less,  the  common  lower  grade,  unless  indicated). — Cont'd. 

NEW  YORK— Continued. 


Town. 

Maker. 

Shipping  point, 
when  stated. 

Freight  rate,  If  paid  by 
dealer,   per  gallon. 

Wholesale    price,    per 
gallon. 

Retail  price,   per  gal- 
lon. 

Excess    above    whole- 
sale price,  freight  de- 
ducted,  per  gallon. 

o 

0. 

o  «) 
a 

4,  ■a 

■4-1   CQ 


Standard  Oil  Co 

do 

Delivered 

do 

Cents. 

Cents. 

7 
7 
7 
8 
9 
7 
7 
8 
8 
8 

m 

8 

7 
9 
7% 

8 

1 

Cents. 
10 
10 

10 

11 

12 
10 
10 
10 
10 
10 

9 
10 
10 
12 

9 
12 

9 

Cents. 
3 
3 
3 
3 
3 
3 
3 
2 
2 
2 

1.50 
2 

3 

1.50 

2.50 

1 

42 

Do             

42 

..   .'..do      

do 

42 

do                   

. .     .  do  . 

37'4 

do 

do 

33  1-3 

do 

do 

42 

Do      

..   . .  do 

do 

42 

. .   . .  do 

do 

25 

Do  ." 

do 

do 

25 

Vacuum  Oil  Co.* 

Standard  Oil  Co 

do 

do.     . 

25 

\\ell=ville     

do 

20 

do 

25 

Weetfleld  

do. 

do  . 

42 

do 

do 

33  1-3 

do 

do 

20 

do 

do 

26 

do 

do 

12V4 

NORTH  CAROLINA. 


Clinton 

Durham 

Kerner?viIIe. 

Lenoir 

Lincolnton. . . 

Madison 

Maxton 

Monroe 

Mooresville. . 
Mount  Olive. 

Newbern 

Raleigh 

Salem 

Shelby 

Statesville..., 

Washington.. 

Wilmington.. 

Do 


Standard  Oil  Co 

do 

do 

Red"C"OiIMfg.Co.» 
Standard  Oil  Co 

do 


.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 


Red"C"OilMfg.Co.». 
Standard  Oil  Co.. 
do 


Delivered. 

do 

do.... 

do.... 

do.... 

do.... 

, do 

do 

do 

do 

do.... 

do.... 

do.... 

do.... 

do.... 

do.... 

do 

do 


11 

15 

WVz 

15 

llVa 

14 

121/2 

16 

10% 

15 

12% 

15 

11V4 

15 

lOVz 

13 

10 

15 

11  Vz 

15 

loy* 

12         1 

11 

15 

lOVa 

15 

13 

18 

11 

15 

9% 

11% 

10 

12Vi 

10 

i2y2 

4.50 
2.50 
3.50 
4.25 
2.25 
3.75 
2.50 

3.50 

1.75 

4 

4.50 

5 

4 


36 

43 

21% 

28 

40 

18 

33  1- 

23 

50 

30 

17 

36 

43 

38 

36 

24 

25 

25 


NORTH   DAKOTA. 


Bisinarck 

Cooperstown... 
Fargo 

Do 

Do 

Grand  Forks... 

Hillstooro , 

Jamestown 

Mandan j do 

May  vi  lie j do 

MInot I do 

Wahpeton ' do 

Valley  City I do 


Standard  Oil  Co. 
do 


.do. 
.do. 
.do. 
.do. 
.do. 
.do. 


Delivered. 

do 

do.... 

do 

do.... 

do..   . 

do.... 

do 

do.... 

do.... 

do 

do 

do 


15 

20 

13 

18 

12'^ 

17 

12^2 

16 

131,2 

16 

12'^ 

17 

I2V2 

15 

nv2 

18 

15 

20 

13 

15 

tl6 

20 

121/2 

15 

13 

17 

5 

5 

4.50 

3.. 50 

2.50 

4.50 

2.50 

5.50 


I  33  1-3 
38 
36 
28 
18 
36 
20 
44 

33  1-3 
15 
25 
20 
30 


•Thig  company  is  controlled  by  the  Standard   Oil   Company. 
tApparently  both  prices  are  for  Eocene,  a  h  igher  grade. 


43 


Ixviii 


WHOLESALE  AND  RETAIL  PRICES. 


WHOLESALE    AND    RETAIL    PRICES    OF    ILLUMINATING    OIL 
(150°  test  or  less,  the  common  lower  grade,  unless  indicated). — Cont'd. 

OHIO. 


Town. 


Akron 

Alliance 

Antwerp 

Ashtabula.. 
Barnesville. 

Bedford 

Berea 


Cleveland  Ref  g  Co. 

Standard  Oil  Co 

do 


.do. 
.do. 
.do. 
.do. 


Shipping  point, 
when  stated. 


Delivered. 

do.... 

do.... 

do.... 

do 

do 

do 

do 

do 

do 

do 


•o  c 

■52 
»-5 
5;  M 


% 

p. 

cT 

o 

a 

(S> 

<A 

<s> 

c 
o 

o 

Hi 

1 — 

bo 

Bluff  ton I do 

Cadiz ■ do 

Cardington <    Pennsylvania  Oil  Co," 

CarroUton |  Standard  Oil  Co ' 

Cedarville do |  Xenia  &  Dayton.  I 

Celina do 4    Delivered 

Chagrin    Falls ! do , do i 

Cincinnati ' do , do 

Do ^ do ; , do 

Circleville i do do , 

Cleveland : do do 

Do I do do 

Do do do 

Cleves do Cincinnati .... 

Clyde Sun  Oil  Co.* Toledo 

Collinwood Cleveland  Ref'g  Co.    Delivered 

Freedom  Oil  Works.    Freedom,    Pa. 

Standard  Oil  Co I  Delivered 

do 1 do 

Connorville I  Freedom   Oil  Works.]  Steubenville. . 

Cortland i  Standard   Oil   Co J  Delivered 


Columbiana 
Columbus. . . 
Columbus  Grove. 


Delta 

Deshler 

East  Liverpool 

Findlay 

Fremont do. 

Garrett.s(ville ' do. 

Greenville ! do. 

Greenwich \ do. 

Hamilton ,' do. 

Harrison do. 

Hillsboro do. 

Holgate do. 

Jackson do. 

Lancaster do. 

Leetonia , do. 

Lima do. 

London do. 

Lorain do. 

Loudon  vl  lie i do. 

Manchester do. 

Man.cfield do. 

Marion i do. 

Maumee ! do. 

.do. 

.do. 

.do. 

.do. 

.do. 


Medina 

Miamisburg 

Millersburg 

Monroevllle 

Montpelier.. 

Mount   Gilead 

Mount  Vernon... 
Xewcomerstown . 
New   London...., 


Independent  OU  Co 
Standard  Oil  Co... 

do 

do 


.do. 
.do. 
..do. 
.do. 
.do. 
..do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
-do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 


0.6 
0.56 


Delivered. 

do.... 

do.... 


Cents. 

Cents. 

5% 
7% 

8 
10 

8% 
8 

71/2 

10 
10 
12 

6V2 

8 

7% 

10 

tV4. 

10 

8 

10 

8 

10 

81^ 

12 

7V2 

10 

m 

12 

9y2 

12 

6V2 

7y2 

evi 

9 

8% 

10 

61/2 

10 

ey* 

8 

6 

9 

8 

10 

6 

9 

8y2 

i2y2 

8% 

10 

7 

10 

8y4 

10 

7% 

9 

5y2 

7 

sy* 

10 

sy* 

12 

6V2 

9 

8% 

10 

7% 

10 

8% 

10 

7y2 

10 

8y4 

12 

7y2 

9 

8 

10 

m 

10 

8% 

10 

7% 

10 

9% 

11 

6% 

10 

8y4 

12 

7% 

10 

5% 

9 

8 

n 

7V4 

10 

7 

9 

8% 

11 

eyo 

8 

5y2 

8 

7% 

10 

sy* 

12 

7 

10 

m 

10 

V/2 

10 

8y* 

10 

8 

12 

8V4 

10 

J3  — 

V  to 


fe-c  — 


^'S'O 


H 


Cents. 
2.25 
2.50 
1.75 
2 

4.50 
1.50 
2.50 
1.75 
2 
2 

3.50 
2.12 
3.75 
2.50 
1 

2.50 
1.75 
3.50 
1.75 
3 

1.40 
2.44 
4 

.45 
3 

1.75 
1.50 
1.50 
1.75 
3.75 
2.50 
1.25 
2.25 
1.75 
2.50 
3.75 
1.50 
2 

2.50 
1.75 
2.25 
1.75 
3.25 
3.75 
2.25 
3.25 
3 
2 
2 

2.75 
1.5 
2.5 
2.5 
3.75 
3 


•This  company  Is  controlled  by  the  Standard   Oil  Company. 


WHOLESALE  AND  RETAIL  PRICES. 


Ixlx 


WHOLESALE    AND    RETAIL    PRICES    OF    ILLUMINATING    OIL 
(150°  test  or  less,  the  common  lower  grade,  unless  indicated). — Cont'd. 

OHIO. — Continued. 


New   London , 

New  Philadelphia.. 
New  Straitsville.... 
Niles 

Do 

North  Amherst 

North  Baltimore... 

Norwalk 

Oberlin 

Oxford 

Painesville t 

Paulding 

Quaker  City 

Sabina 

Salineville 

Sandusky 

Shelby 

Springfield 

St.   Marys 

St.  Paris 

Toledo 

Do 

Upper  Sandusky.... 

Urbana 

Wadsworth 

Wauseon 

^A■ashington 

AVesterville 

Wilmington 

Youngstown 


Standard  Oil  Co 

do 

do 

do 

Freedom  Oil  Co 

Standard  Oil  Co.... 
do 

Sun  Oil  Co.* 

Standard  Oil  Co 

Cleveland  Ref  g  Co.. 

Standard  Oil  Co 

, do 

do 

do 

do 

do 

Independent  Oil  Co. 

Standard  Oil  Co.... 

do 

do 

do 

do 

do 

do 

Scofield,  S.  &  T 

Standard  Oil  Co.... 

do 

do 

do 

do 


Shipping  point, 
when  stated. 


Delivered... 

do 

Nelsonville. 
Delivered.. . 

do 

Cleveland... 
Delivered.. . 

do 

, do 

do 

do 

do 

Cambridge. 
Delivered... 

, do 

do 

Mansfield... 
Delivered... 

do 

do 

do 

do 

do 

do 

do 

do 

do 

do 

do 

do 


2  c 
"3° 


.72 


—  o 
o  — 


Cents. 

8'^ 

81/4 

til 
514 
6 

-5% 
7% 
7 

5% 
7V2 
914 
8% 
9 

8% 
6% 
7% 
8 
7 

7 

6V2 

8V4 

71/4 

7 

SVa 
t9% 
7l^ 

8y4 

7% 


<U  o 


Cents. 
12 
12 
15 

8 

8 

10 
10 
10 

8 
10 

9% 
10 
12 
10 
10 
10  ^ 
12 
10 
10 

9 
10 

9 
10 
10 
10 
12 
12 
10 
10 
10 


£  ° 
>i^  I. 

O         o 

■°<o  p. 


Cents. 
3.75 
3.75 
3.28 
2.5 
2 

3.75 
2.25 
3 

2.25 
2.5 
.5 
1.75 
2.5 
1.75 
3.25 
2.25 
3.40 
3 

1.75 
1.75 
3 

2.5 
1.75 
2.75  ' 
3 

3.5 
2.25 
2.75 
1.75 
2.5 


OREGON. 


Standard  Oil  Co 

do                        .... 

Delivered 

do 

14% 

141/2 

13M: 

20<^ 

13 

131/2 

16 

12% 

14 

15% 

16% 

13% 

20 

19 

20 

25 

18 

20 

20 

17% 

17    - 

18 

22 

18 

5.5 
4.5 
5.8 
4.5 
3.75 
6.5 
4 

4.2 
•    3 
2.5 
5.5 
3.3 

38 

Do              .             .. 

31 

'.'..'...60 

Portland,  Oreg.. 

Delivered 

Portland,  Oreg.. 
do 

.62 

41 

do                  

22 

Independence 

Junction  City 

do 

do  

1.25 

26 
48 

do 

Delivered 

Portland,  Oreg.. 

Delivered 

do 

'"".'s  "" 

25 

do 

31 

Portland 

..  ...do 

21 

do                  ..  .  . 

16 

The  Dalles 

do 

do 

33  1-3 

do 

Portland,  Oreg... 

1.2 

22 

PENNSYLVANIA. 


Allegheny 

Waverly  Oil  Co 

Warden  &  Oxuard... 
Atlantic  Ref'g  Co.* 
do 

5% 

8% 

8 

7% 

9% 

10 

11 
10 
14 

4.25 

3.25 

3 

2.5 

4.5 

74 

Do 

do 

37 

Allentown 

do 

37% 
33  1-3 

Annville 

do 

A.shland 

Standard  Oil  Co... 

do 

47 



•This  company  is  controlled  by  the  Standard  Oil   Company. 

tEocene,  a  higher  grade.  tlSO"  test,  the  common  grade. 


Ixx 


WHOLESALE  AND  RETAIL  PRICES. 


WHOLESALE    AND    RETAIL    PRICES    OF    ILLUMINATING    OIL 
(150°  test  or  less,  the  common  lower  grade,  unless  indicated). — Cont'd. 

PENNSYLVANIA.— Continued. 


•32 


Shipping  point, 
when  stated. 


-\then3 Standard  Oil  Co Delivered. 

Auburn Atlantic  Refg  Co..   j do 

Audenried : do do 

Barnesboro Standard  Oil  Co do 

Beaver ;   Freedom  Oil  Works    do 

Beaver  Falls '  The  People's  Oil  C(  |  Pittsburg. 

Bellwood '.  Atlantic  Ref'gCo..    ,  Delivered. 

Bennett Waverly  Oil  Works    do 

Boiling  Springs Capital  City  Oil  Co.    do.... 

Boyertown Atlantic  Ref'g  Co do 

Brockwayville Standard  Oil  Co do 

Bradford Kendall   Refg  Co do.... 

Bryn  Mawr Atlantic  Refg  Co do.... 

Carnegie j   standard  Oil  Co do.... 

Carrick ! do I do 


Catasauqua Atlantic  Ref'gCo...! do. 

Centralia do do. 

Chambersburg Standard  Oil  Co , do. 

Christiana Atlantic  Ref'g  Co do. 

Clarion do i do. 


Claysville ; do 

Clifton  Heights '  Crew,  Levick  Co 

Coraopolis '  Atlantic  Ref'g  Co... 

Cressona \  Standard  Oil  Co 

Darby '   Atlantic  Refg  Co... 

Dauphin 1 > 

Dunbar ! do < 

Duncansville 
Dushore 


E.  Downingtown.. 

Elizabethtown 

Elklick 

Emlenton 

Erie 


Standard  Oil  Co 

Falls  Creek \ do 

Frankford Atlantic  Rerg  Co 

Do j do 

Franklin Franklin  Oil  Works. 

Girardville ; 

Glen  Campbell Atlantic  Ref'gCo. 

Greatbend Standard  Oil  Co... 

Greencastle .\tlantic  Ref'g  Co. 

Greensburg '   Standard  Oil  Co... 

(Jrove  City '  Eclipse  Refg  Co.t 


do 

do 

Pittsburg. 

Delivered. 

do.... 

do 

Pittsburg. 
Standard  Oil  Co — ij  Delivered. 

Atlantic  Ref'g  Co. . .   do 

do do 

Standard  Oil  Co do 

Atlantic  Refg  Co...   do.... 

Eclipse  Refg  Co.t....   Franklin.. 

Delivered. 

do 

do 

do.... 

do 

do 

do 

do 

do 

do 

do 


Harrisburg Capital  City  Oil  Co.. 

Hawley Standard  Oil  Co 

Homer  City j   Atlantic  Refg  Co.... 

Honesdale I 

Houtzdale DenVingerBros.'6iiCo. 

Hughe-sville ,   Atlantic  Ref'g  Co.. .. 

Huntingdon do 

Irvona do 

Irwin do...... 

.leannette do 

JfTfnyn Hendrick  Mfg.  Co.... 

Jersey  Shore .Vtlantic  Refg  Co.... 

Jf'ssup do 

Kingston ' do 

Lancaster i  Crew-Levick  Co 

I^ansdale 


.do. 
.do. 
.do. 
.do. 
.do. 
.do. 


.00. 


do 

do 

do 

do 

do 

do 

do 

do 

Philadelphia. 


^2 


\ 

1  Cents. 

! 

Cents.  1 

8 

10 

8 

10 

S'i 

15 

8'/2 

10 

c% 

10 

VA 

12 

sy* 

12 

GVa 

8 

9% 

12 

SVa 

12 

eVi 

10 

6% 

12 

6V2 

10 

71/2 

9 

S% 

10 

8 

11 

8 

10 

9 

12 

8 

10 

7% 

10 

8 

10        1 

7 

10 

6V2 

11 

8V2 

12 

6% 

8 

9'i 

12 

S% 

10 

10 

13         ! 

7 

*         1 

7% 

10        1 

7 

9 

8% 

12 

IV* 

11 

7 

10 

7 

10 

7 

10 

7 

10 

7y2 

12 

9 

15 

81/2 

12 

7% 

10 

9 

12 

9% 

15 

10% 

13 

7% 

12 

7y2 

10 

8% 

12 

7 

10 

•IOV2 

14 

8% 

10 

9 

12 

8 1/2 

12 

SV2 

12Vi 

7% 

15 

8 

10 

8V2 

10 

8 

10 

7 

10 

V/o 

9 

7Vi 
1 

9 

•§  <""=^ 


Cents. 
2 
2 

6.75 
1.50 
3.25 
4.25 
2.75 
1.50 
2.5 
3.5 
3.75 
5.25 
3.5 
1.5 
1.25 
3 
2 
3 
2 
2.25 

3 
4 

3.5 
1.5 


2.5 
2.85 

3 
3 

4.5 

6 

3.5 

2.5 

3 

5.5 

2.5 

4.5 

2.5 

3.25 

3 

3.5 

1.5 

3 

3.5 

4 

7.25 

2 

1.5 
2 
3 

1.5 
.94 


•Water  White,  the  common  grade. 

tThls  company  is  controlled  by  the  Standard  Oil  Company. 


WHOLESALE  AND  RETAIL  PRICES. 


Ixxi 


WHOLESALE    AND    RETAIL    PRICES    OF    ILLUMINATING    OIL 
(150°  test  or  less,  the  common  lower  grade,  unless  indicated).— Cont'd. 

PENNSYLVANIA.— Continued. 


l^ebanon 

I^ehighton 

Lewisburg 

Lewistown 

Liberty 

Lockhaven 

Luzerne 

Lykens 

Mahanoy  City.. 

Marietta 

Martinsburg 

Manheim 

Mauchchunk 

Meadville 

Morcer 

Meyersdale 

Midway 

Mo(:ire.-4 

Mount  Carmel.. 

Do 

New  I'righton.. 
Newcastle 

Do 


Atlantic  Ref'gCo. 

do 

Standard  Oil  Co... 
do 

Atlantic  Refg  Co. 
do 


Shipping  point, 
when  stated. 


Standard  Oil  Co... 

do 

do 

Atlantic  Ref'g  Co. 
Keystone  Oil  Co. 


Delivered. 

do 

do 

do 

do 

do 

do 

do 

do 

do.... 

Altoona... 

Delivered. 


do 

do.... 

do.... 

Pittsburg. 
Delivered. 

do.... 

do.... 

do.... 

do.... 


Xi-iri'istown 

I'ar;-ons 

Patton 

I'en  Argyl 

Philadelphia 

Do 

Do  

Do 

Do 

Philipsburg 

Pittsburg 

Pittson 

Reynoldsville 

Royersford 

Schuylkill  Haven 
Scranton 


Sharon 

Sharpsburg... 
Sheridanville. 

Slatington 

Siimeipet 

Stroudsburg.. 

St.  Clair 

Sunbury 

Tarintum 

Titusville 


Towanda 

I'ninn  City.. . 
Washington.. 

Wayne 

Waynesburg. 

Wt-llsboro 

W  estchester.. 
Wyoming 


Standard  Oil  Co | do 

Eclipse  Oil  Co.* 

Atlantic  Ref'g  Co 

do 

do 

do 

do 

do 

Standard  Oil  Co 

Atlantic  Ref'g  Co 

Freedom  Oil  Co.   and 
Penna  Oil  Co. 

Atlantic  Ref'g  Co 

do 

do 

do 

do 

Standard  Oil  Co 

Pure  Oil  Co 

Atlantic  Ref'g  Co ' 

Crev.-Levick  Co 

Denlinger  Bros.  Oil  Co. 

Waverly  Oil  Co 

Standard  Oil  Co 

do 

Atlantic  Ref'g  Co 

do J 

Atlantic  Ref'g  Co.  and 
Maloney  Oil  Co. 

Atlantic  Ref'g  Co 

do 

do 

do 

do 

do 

do 

do 

do 

Atlantic  Ref'g  Co.  and 
American  Oil  Works. 

Atlantic  Ref'g  Co 

do 


Continental  Oil  Co.. 
Atlantic  Ref'g  Co... 

Standard  Oil  Co 

Crew-Levick  Oil  Co. 
Atlantic  Ref'g  Co... 


.do., 
.do., 
.do., 
.do., 
.do., 
.do., 
.do., 
.do., 
.do., 
.do., 
.do., 
.do., 
.do., 
.do., 
.do., 
.do.. 

.do., 
.do., 
.do., 
.do., 
.do., 
.do., 
.do. 
.do. 
.do. 
.do. 

.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 


91  I. 


^ 

Oi 

V 

o 

u 

j 

o 

cd 

!i^ 

c 

o 

ffl 

■^ 

^  , 

Cents. 


Cents. 

7% 
101/2 
8 
» 

81/2 

SV2 

7 

8 

7 

7 

9 

7 

81/i 

7% 

8% 

8% 

81/2 

7V4 

7 

7 

6 

61/2 


Q>  O 


Cents. 
9 

12 
10 
12 
10 
12 
10 
12 

9 

9 
12 

9 
13 
10 
10 
12 
12 
10 
10 
10 
10 
10 


gi   <V  00 


Si/i 

11 

8 

11 

7 

12 

61,2 

10 

6% 

7 

8 

11 

71/4 

10 

7 

9 

9 

12 

9% 

12 

S% 

10 

8 

10 

71/4 

10 

.  <y 


•5  «» 
Sill 


6 

10 

4 

71/i, 

9 

1.5 

10 

3 

81/^ 

12 

3.5 

8 

12 

4 

6 

8 

2 

6 

8 

2 

6 

8 

2 

7 

10 

3 

7 

9 

2 

12 

15 

3 

51,^ 

6 

.5 

71/2 

10 

2.5 

7 

12 

5 

7% 

10 

2.2 

8 

12 

4 

8 

10 

2 

7% 

10 

2.5 

81/2 

10 

1.5 

61/i 

9 

2.5 

8 

12 

4 

2.25 
1.5 


Cents. 
1.5 
1.5 
2 
3 

1.5 
3.5 
3 
4 
2 
2 

2.10 
2 

4.5 
2.25 
1.5 
3.5 
3.06 
2.5 
3 
3 
4 
3.5 


♦This  company  is  controlled  by  the  Standard  OU   Company, 
tincludes  charge  for  barrel. 


Ixxii 


WHOLESALE  AND  RETAIL  PRICES. 


WHOLESALE    AND    RETAIL    PRICES    OF    ILLUMINATING    OIL 
(150°  test  or  less,  the  common  lower  grade,  unless  indicated). — Cont'd. 

RHODE  ISLAND. 


Town. 

Maker. 

Shipping  point, 
when  stated. 

Freight  rate.  If  paid  by 
dealer,   per  gallon. 

(4 
o 

p, 

o 
a 
a 

o  s 
1 

Retail  price,   per  gal- 
lon. 

Excess    above    whole- 
sale price,  freight  de- 
ducted, per  gallon. 

C 
0 

n 
.. 

Block  Island 

Standard  Oil  Co 

Providence 

Cents. 
1 

'  Cents. 
10 

SVi 

9V4 

91/2 
91/2 
91/2 
9% 

9y4 

9% 

914 

91/4 

9 

9% 

8V2 

8% 

Cents. 
15 
12 
12 
12 
13 
12 
12 
12 
12 
11 
12 
11 
12 
11 
13 

Cents. 
4 

2.75 
2.75 
2.50 
3.50 
2.50 
2.25 
2.75 
2.75 
1.75 
2.75 
2 

2^50 
4.25 

37 
29 

Do 

do  

do 

29 

do 

do 

..   ..  do 

26 

do 

36 

do 

do 

26 

do 

do 

do 

do 

do 

23 

....  do 

29 

Do 

do 

29 

do 

18 

Valley  Falls 

A\'akefield 

do 

do 

29 

do 

do 

22 

do      

do           

23 

A\'esterly 

Wickford 

do 

do 

30 

do 

do 

4S 

SOUTH  CAROLINA. 


Anderson 

Beaufort 

Columbia 

Edgefield 

Florence 

Greenville 

Mount  Pleasant. 

Xewberry 

Pacolet 

Pelzer 

Rock  Hill 

Spartanburg 

Walhalla , 


Standard  Oil  Co 

do 

Stand'd&Red"C"OilCo* 

Standard  Oil  Co 


.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 


Delivered 

do 

do 

Augusta,    Ga. 

Delivered 

do 

Charleston 

Delivered 

do 

do 

do 

do 

do 


111/2 

15 

i2y2 

14 

10 

i2y2 

tl5 

20 

11 

15 

121/2 

14 

13 

15 

11  Vo 

15 

121^ 

20 

12 

15 

lOVi 

15 

11V2 

15 

13 

20 

3.5 
1.5 

2.5 

2.84 

4 

1.5 

1.4 

3.5 

7.5 

3 

2.5 

3.5 

7 


SOUTH  DAKOTA. 


Dcadwood Standard  Oil  Co. 

Eureka do 

Madison do 

Sioux  Falls , do 

Do 1 do 

Sppaiflsh do 

Yankton J do 


Delivered. 

do.... 

do.... 

do.... 

do.... 

do.... 

do.... 


18 

25 

13 

IS 

11 

15 

lOVz 

15 

10  y2 

13 

19 

25 

13 

20 

4 
4.5 


•Controlled  by  Standard  Oil  Company. 

tMay  ba  higher   grade — only   one   reported — or  includes  charge  for  barrel. 


WHOLESALE  AND  RETAIL  PRICES. 


Ixxiii 


WHOLESALE    AND    RETAIL    PRICES    OF    ILLUMINATING    OIL 
(150°  test  or  less,  the  common  lower  grade,  unless  indicated). — Cont'd. 

TENNESSEE. 


Town. 

Maker. 

Shipping  point, 
when  stated. 

Freight  rate,  if  paid  by 
dealer,    per  gallon. 

Wholesale    price,    per 
gallon. 

Retail  price,   per  gal- 
lon. 

Excess    above    whole- 
sale price,  freight  de- 
ducted. p§r  gallon. 

o 

O. 



Alexandria 

Standard  Oil  Co 

Delivered 

do 

Cents. 

Cents. 
12% 
14 
13% 

15% 
10 
13% 
13% 
10% 
11% 
12 
12 
11 

12% 
15% 
*15% 
16 
15 

13% 
13 

Cents. 
15 
18 

17 

20 

12 

18 

16 

12% 

15 

IS 

15 

12% 

14 

17 

IS 

18 

20 

18 

20 

Cents. 
2.5 
4 

3.5 
4.5 

4.5 
2.5 
2 
3.0 

3 

1.5 
1.5 
1.5 

5 

4.0 

7 

20 

.  do 

28 

do           

. .  do 

25 

do                 

do 

29 

Clarksville 

do                    

do      

20 

do 

do 

33  1-3 

do            

.   ...60 ., 

18 

.  ...do 

do 

19 

do    

do ' 

30 

do 

1 


38 

Knoxville     

do 

Delivered 

do 

25 

Do 

do 

13 

Do 

Lawrenceburg.. . . 

do                 

do :' 

12 

do                    

do 

9 

.     .  do 

do ' 

16 

Do 

do                 

do 

12% 

Maryville 

Rogersville 

do 

33  1-3 

do 

..   ..  do 

33  1-3 

do               

do 

53 

TEXAS. 


Amarilla 

Bartlett 

Beeville 

Bowie 

Brackettville 

Waters-Pierce  Oil  Co... 
do                            . 

J 

14 

13.5 
12.5 
13 
1', 
13.5 
16 
13 
15 
13 
118 
13.5 
13 

tie 

12 

s 

10 
tl2 

10 
tl7 
§20 

13.5 

12 
1110 
II 10 

12.5 
$13 

12.5 

12 
§16.5 

15.5 

10 

13 

tie 

tl6 
10 
10 

17 

17 

15 

17 

25 

17.5 

IS 

17 

20 

20 

20 

18 

20 

3 
3.5 

2.5 

4 

9.33 

4 

2 

4 

7 

4.5 

7 

21 

do 

26 

do                 

do 

20 

do                          

do 

30 

do        

Spofford,  Tex 

.m 

59 

Bridgeport 

Brownsville 

do                    

29 

do 

do  

12% 

do                  

do 

29 

do                  

do 

33  1-3 

.  do 

do 

53 

do 

do 

11 

do            

.     ..do 

33  1-3 

do 

do 

53 

do 

Corpus  Christi 

.  do 

.     ..do 

15 

11 

12.5 

15 

13 

20 

25 

18 

15 

13 

13 

15 

17 

15 

IS 

25 

20 

15 

15 

20 

3 
3 

3 
3 

3 

4.5 

3 

3 

3 

2.5 

4 

2.5 

6 

S.5 

4.5 

4 

25 

do  

do      

37>/2 

Dallas 

Do                

do             .... 

25 

Waters-Pierce  Oil  Co... 
do 

do 

25 

Do 

do 

30 

do 

do 

17 

Kagle  Pass 

do 

25 

Waters-Pierce  Oil  Co... 
do 

..     ..do , 

33  1-3 

do 

25 

do 

30 

Do 

do 

.  do 

30 

do 

do 

20 

do 

do 

30 

Gatesville 

do 

..     .  do 

20 

Georgetown 

do 

do 

50 

do 

do 

51 

do 

do 

29 

do 

do 

50 

do 

do 

15 

do 

do 

25 

Hico 

do 

.     ..do 

do 

do 

1.-) 
12 
1 

2 
1 

50 

Do 

do 

20 

1 

•Correspondent  says  this  is  120°  oil 
IHigher  grade;  also  sells  Brilliant. 
JEupion  oil,   higher  grade;  said  to  test  150 
is  said  to  test  110°. 

§Possibly  higher  grade;  only  one  reported. 

ilBrilliant;   stated  to  be  110°   test;   Eupion  costs   12  cents. 


and  no    good." 

Brilliant,    the   more  commonly   reported   grade, 


Ixxiv 


WHOLESALE  AND  RETAIL  PRICES. 


WHOLESALE    AND    RETAIL    PRICES    OF    ILLUMINATING    OIL 
(150°  test  or  less,  the  common  lower  grade,  unless  indicated). — Cont'd. 

TEXAS.— Continued. 


UTAH. 


Town. 

Maker. 

Shipping  point, 
when  stated. 

•a  c 
•55 
«-3 

a  0, 

if -5 

fa 



Wholesale    price,    per 
gallon. 

Retail  price,  per  gal- 
lon. 

Excess    above    whole- 
sale price,  freight  de- 
ducted,  per  gallon. 

0 
a 
u 

5"3 

Huntsville 

Waters-Pierce  Oil  Co... 
do  

Cents. 

Cents. 

13 

12.5 
•17 
tl5 

12 

13.5 

14 

12 

12 

121/2 
t20 

12 

14 

12 

12 

13 

13 
tl5 

11% 

11% 

13 

Cents. 
15 

15 
20 
20 
15 
16 
20 
16 

Cents. 
2 

2.5 
3 

3 

2.0 
6 

4 

15 

Italy 

do 

20 

(Jo            

do 

17 

Kyle 

do                            .... 

do 

33  1-3 

do        

do 

25 

do 

do 

IS 

do 

do 

42 

.  do 

do 

33  1-3 

do      .          

do 

do 

do 

17 
25 
15 
17 
14 

4.5 

3 
2.5 

36 

do 

do 

9", 

do 

do 

do 

do 

25 

do 

IS 

do 

16  2-3 

.     .  do 

do 

Tyler 

Do 

do 

do 

15 
20 
20 
15 
15 
17 

2 

7 

3.5 
3.5 
4 

15 

do 

53 

do 

.  ...do 

33  1-3 

do 

do 

30 

Do  

do 

do 

do 

30 

Wichita  Falls 

do 

37 

Brigham 

Continental  Oil  C0.5 

do 

Ogden 

.9 

21 
21 

20 
21 
21 
22 
21 
20 
20 
21 
20 
20 

24 
25 
25 
25 
25 
35 
23 

2.1 

4 
5 
4 
4 
13 
2 

9 

19 

Kavsville 

do 

do 

Standard  Oil  Co 

do 

25 

Lehi 

do 

19 

do 

19 

Park  City 

Continental  Oil  Co 

do 

do 

do 

do 

59 

Pleasant  Grove... 

do 

9% 

Prove  Citv 

do 

Salt   Lake   City... 

do 

23 
25 
25 
25 

2.44 
5 

... 
15 

Smithfield 

do 

do 

do 

Ogden 

1.56 

10 

SpanLsh  Fork 

Delivered 

25 

Springville 

do 

25 

VERMONT. 


Boston,  Mass. 

Delivered , 

do 

do 

do 


Barton  Landing..      Leonard  &  Ellis 

Bellows  Falls Standard  Oil  Co 

Bethel do 

I  ?ra  d  f  ord I do 

Derby  Line 1  American  Oil  Works. 

Hardwick Standard  Oil  Co i   Boston,  Mass. 

Hartford do Delivered 

Middleburg do do 

Montpclior do do 

Morrisville do 

Newport .Standard  &  American 

Oil   Co do 

Northfield Standard  Oil  Co do 

Randolph do do 

Royal  ton do do 

Rutland do do 

Saint  Auburns do do 

Do do do 

Stowe do Waterbury 

Swan  ton do Delivered 

Windsor Standard  Oil  Co.  &  In- 

dcpond.ont  Ref.  Co.       ' do 

AVoodstock Independent  Ref.  Co i   Windsor 


11% 

10 

sn 


9'2 

9% 

9 1/2 

10 
9% 
12% 
11 

S 

9% 
9% 
10 
9% 

11% 
10 


13 

3.5 

10 

1.:. 

13% 

2.25 

14 

4 

14 

0.0 

12 

3.6 

13 

3.5 

14 

4.5 

14 

4.5 

13 

3.5 

3..-, 
4.56 
2.25 

3.75 
1 


•Possibly  higher  grade;  only  one  reported. 

lEupion  oil,   higher  grade;  said  to  test  l.^O".     Brilliant,    the   more  commonlv   reported   grade 
is)  said  to  te.st  110". 

^Brilliant;  stated  to  be  110°  test;   Euplon  co;- ts  V>  cents. 


WHOLESALE  AND  RETAIL  PRICES. 


Ixxv 


WHOLESALE    AND    RETAIL    PRICES    OF    ILLUMINATING    OIL 
(150°  test  or  less,  the  common  lower  grade,  unless  indicated). — Cont'd. 


VIRGINIA. 

Town. 

Maker. 

Shipping  point, 
when  stated. 

Freight  rate,  if  paidby 
dealer,   per  gallon. 

Wholesale    price,    per 
gallon. 

1    -3 
u 

I. 

ft 

1         O' 

a 

Q)    0 

"•3I 



Cents. 
4 
3 

J. 5 
1.25 
2.25 
3 
3 
4 
3 

3.5 
3 
2 

2.25 
.25      1 

2 

ft 

M- 

1- 

Buena  Vista 

Standard  Oil  Co          .... 

Cents. 

Cents. 

10 
914 
10 

8% 

9% 

9 

9 
11 

9 

9% 

9 
10 

9% 

9% 

*5 
6 

Cents. 
14 

12% 
12% 
10 
12 
12 
12 
15 
12 
13 
12 
12 
12 
10 

9—10 
8 

40 

do 

do 

31 

Farmville 

do 

do 

25 

Fredericksburg 

do 

do 

14 

Hampton 

SouthernOil&SupplyCo. 

23 

Leesburg 

33  1-3 

Luray 

do 

do 

33  1-3 

Lynchburg 

do          

do 

36 

Marion 

do 

do 

33  1-3 

Newport  News 

do 

do 

36 

Norfolk 

do 

do 

33  1-3 

Petersburg 

.     .do       .    . 

do 

20 

Portsmouth 

.  do 

do 

23 

Richmond 

do 

do 

2V2 

Do 

Standard  Oil  Co.  and 

do 

80—100 

Winchester 

Standard  Oil  Co 

do 

33  1-3 

WASHINGTON. 


Ballard 

Standard  Oil  Co 

do 

Seattle 

% 

1 

0.62 
1.1 

13'/i 

131/2 

13V, 

191,2 

191,2 

231-2 

151,2 

Hi,'2 

14 

15 

131/2 

21 

I3I/0 

I3I2 

20 

I9I2 

13  Vi 

131/2 

17 
IS 

20 
25 
25 
28 
20 
20 
20 
IS 
20 
25 
17 
20 

IS 
IS 

2.75 

3.25 

5.50 

4.88 

4.4 

4.5 

4 

6 

3 

5.5 

4 

3.5 

5 

5.5 
4.5 
4.5 

19 

do 

do 

Tacoma 

3S 

do  ... 

24 

Davenport 

do 

do 

21 

do 

19 

do 

Aberdeen 

u. 

25 

do 

38 
42 

do 

do 

do 

20 
38 
19 
26 
33  1-3 

do 

Seattle 

' 

do 

Seattle 

do 

do 

do 

Seattle    .. 

1% 

do 

Do 

do 

do 

28 

33  1-3 
33  1-3 

do 

do..     . 

Do 

do 



WEST   VIRGINIA. 


Beaver Atlantic  Ref'g  Co.t. 

Clarksburg do 

Shepherdstown....    Standard  Oil  Co 

\Vellsburg Freedom  Oil  Co 

Weston '  Atlantic  Refg  Co.. 

Wheeling ' do 


Delivered. 

do.... 

do.... 

do.... 

do.... 

do.... 


sy* 

14 

s 

10 

7 

10 

8% 

11 

9 

10       1 

•"A  cut  rate  between  oil  companies;  has  been   selling  at  9  and  10  cents.' 
spondent. 

tThis  is  controlled  by  the  Standard  Oil  Company. 


4.25 

3.50 


2.25 
1 


Report  of  corre- 


Ixxvf 


WHOLESALE  AND  RETAIL  PRICES. 


WHOLESALE    AND    RETAIL    PRICES    OF    ILLUMINATING    OIL 
(l50°  test  or  less,  the  common  lower  grade,  unless  indicated). — Cont'd. 

WISCONSIN. 


Appleton Standard  Oil  Co. 

Arcadia I .. do 

Barron , do 

Barronette 1 do 

Beloit I do 

Berlin do 

Do I do 

Black  River  Falls  j do 

Burlington ! do 

Cedarburg do. 


Shipping  point, 
when  stated. 


.do. 
.do. 
.do. 


Chilton 

Darlington 

Delavan 

Elkhorn do. 

Elroy ' do. 

Grand    Rapids....! do. 

...do. 

...do. 

...do. 

...do. 

...do. 

...do. 

...do. 

...do. 

...do. 

...do. 

...do. 

...do. 

...do. 


Delivered. 

do.... 

do.... 

do.... 

; do.... 

do.... 

do.... 

do.... 

do.... 

do.... 

do.... 

do.... 

do.... 

do.... 

do.... 


Green  Bay 
Hartford.. . 

Horicon 

Hudson 

Janesville.. 
Kenosha.. . 
Lancaster.. 
Madison.. .. 
Manston.. . 
Marinette. . 
Menonionie 
Milwaukee. 

Do 

Mineral   Point — [ do. 

Necedah I do. 

Oconto I do. 

Onalaska do. 

..do. 
.do. 

,.do. 

..do. 

,.do. 
.do. 


Prairie  du  Chien. 

Princeton 

Reedsburg 

Richland  Center. 

Ripon 

River  Falls 

Shawane ' do 

Sheboygan I do 

Sturgeon  Bay.. 

Waupun 

Wausau 

West   Superior. 


.GO. 

.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
■  do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 
.do. 


do I  Milwaukee. 

do 1 do 

do 1  Delivered... 

do do 


2  d 
"3° 

<u  b 


<0  cu 


0.7 
1.76 


Cli 

o  — 


i3  C 
q;   o 


Cents. 

Cents. 

8% 

11 

9Vi 

12 

9% 

14 

*10% 

12 

8 

12 

8 

10 

8 

10 

9V2 

12 

7 

9 

9 

10 

8 

10 

9V2 

13 

8% 

11 

8 

10 

9 

10 

9% 

12 

8% 

11 

8% 

10 

8% 

11 

IOV2 

14 

8 

12 

8 

10 

91/2 

i2y2 

S 

10 

10 

13 

9% 

13 

91/2 

13 

SVa 

9 

8 

10 

91/2 

12 

9% 

12 

9% 

i2y2 

9V2 

12 

9y2 

11 

gy* 

12 

8% 

10 

9y2 

12 

8 

10 

10 

14 

91/2 

12 

8y4 

H 

ioy2 

14 

9 

12 

9y2 

12 

7 

12 

fe.c- 
■^  tOcj 

>  ^  , 


B  P.  « 
g  a^  o 


Cents. 

2.25 

2.50 

4.25 

1.25 
■4 

2 

2 

2.50 

2 

1 

2 

3.50 

2.25 

2 

1 

2.25 

2.25 

1.25 

2.13 

3.5 

4 

2 

3 


3.25 
3.50 
.50 
2 

2.50 
2.50 
3 

2.50 
1.50 
2.75 
1.25 
2.50 
2 
4 

2.50 
2.75 
2.8 
1.24 
2.50 
5 


WYOMING. 


Carbon. 


Cheyenne 

Laranii<' 

Do 

Rock  Springs. 
Sheridan 


Standard  Oil  Co.  and       i 

Continental  Oil  Co.        ;  Cheyenne. 
Continental  Oil  Co I  Delivered. 


.do. 
.do. 
.do. 
.do. 


.do. 
.do. 
.do. 
.do. 


•Perfection— a  standard  grade. 


'.. 

30 

16 

20 

19 

22V4 

18 

25 

20 

25 

20 

25 

3.5 
7 
5 
5 


CONTENTS. 


Page. 

Preface 3 

Chapter  I — Introduction 6 

Chapter  II — Formation  of  the  United  States  Industrial  Commission 9 

Chapter  III— Garbled  Testimony 25 

Chapter  IV — Misleading  statements  in  the  Commission's  "Review"  and 

"Digest"  of  Evidence   36 

Chapter  V— The  Pure  Oil  Trust 50 

Chapter  VI — Testimony  of  Mr.  John  D.  Rockefeller,  President,  and  Mr. 
S.  C.  T.  Dodd,  Solicitor,  of  the  Standard  Oil  Company  of  New 
Jersey 65 

Chapter  VII — Testimony  of  Mr.  J.  W.   Lee,  President  of  the  Pure  Oil 

Trust 71 

Chapter  VIII— Testimony  of  Mr  Theodore  B.  Westgate,  a  director  of  the 

Pure  Oil  Trust 124 

Chapter  IX — Testimony  of  Mr,  M.  L.  Lockwood,  of  Zelienople,  Pennsyl- 
vania, oil  producer , 136 

Chapter     X— Testimony  of  Mr.  Frank  S.  Monnett,  Attorney-General  of 

the  State  of  Ohio 166 

Chapter  XI — Testimony  of  Mr.  T.  F.  Davis,  of  Marietta,  Ohio,  oil  pro- 
ducer     170 

Chapter  XII— Testimony  of  Mr.  John  D.  Archbold.  Vice-President  Stand- 
ard Oil  Company  of  New  York 186 

Chapter  XIII — Testimony  of  Mr.  H.  H.  Rogers,  Vice-President  of  the 
Standard  Oil  Company  of  New  Jersey  and  President  of  the 
National  Transit  Company  of  New  York 255 

Chapter  XIV— Testimony  of  Mr.  Thomas  W.  Phillips,  of  the  Pure  Oil 
Trust,  and  popularly  known  as  the  "father  of  the  Industrial 
Commission,"  of  which  he  was  the  Vice-Chairman 261 

Chapter  XV — Mr.    Thomas    W.    Phillips,    Vice-Chairman    of    the    United 

States  Industrial  Commission 290 

•Chapter  XVI — Testimony  of  Mr.  Lewis  Emery,  Jr.,  a  stockholder  of  the 

Pure  Oil  Trust 294 

Chapter  XVII — Testimony  of  Mr.  W.  H.  Clark,  of  Newark,  Ohio,  dis- 
charged employe  of  the  Standard  Oil  Company 410 

Chapter  XVIII — Testimony    of    Mr.    B.    A.    Mathews,    Manager    of    the 

Standard  Oil  Company  for  Central  and  Southern  Ohio 414 

Chapter  XIX — Testimony  of  Mr.  George  Rice,  of  Marietta,  Ohio,  pro- 
ducer and  refiner  of  oil 421 

Chapter  XX — Testimony  of  Mr.  Howard  Page,  of  New  York,  Vice- 
President  of  the  Union  Tank  Line  Company 466 

Chapter  XXI— Testimony  of  Mr.  Patrick  C.  Boyle,  statistician  of  the  oil 
industry  and  editor  and  proprietor  of  the  Oil  City  Derrick, 
Oil  City,  Pa 498 

Chapter  XXII — Testimony  of  Mr.  Andrew  D.  Gall,  of  Montreal,  Canada, 

President  of  the  Gall-Schneider  Oil  Company.  Limited 580 

Chapter  XXIII — Extracts  from  the  testimony  of  Mr.  F.  B.  Thurber,  Mr. 
Henry  O.  Havemeyer,  Mr.  G.  Waldo  Smith,  Mr.  Martin  R.  Cook, 
Mr.  Charles  C.  Clarke,  Mr.  George  J.  Kindel,  Mr.  Samuel 
Spencer,  Mr.  Martin  A.  Knapp,  Mr.  C.  A.  Prouty  and  Mr. 
P.  E.  Dowe 593 

Appendix — Affidavits  of  Henry  Demarest  Lloyd,  Charles  B.  Mathews, 
M.  L.  Lockwood,  F.  S.  Monnett,  James  W.  Lee  and  .John  D. 
Archbold.    Wholesale  and  retail  prices  of  illuminating  oil. 


CONTENTS. 


WITNESSES. 

Page. 

Archbold,   John   D 186 

Boyle,  P.  C 498 

Clarke,  Charles  C 599 

Clark,  W.  H 410 

Cook,  M.  R 597 

Davis,  T.  F 176 

Dodd,  S.  C.  T 69 

Dowe,  P.  E 604 

Emery,  Jewis,  Jr 294 

Gall.   Andrew   D 580 

Havemeyer,  Henry  0 595 

Kindel,  George  J 600 

Knapp,  Martin  A 602 

Lee,  James  W 71 

Lockwood,  M.  L 136 

Mathews,  B.   A 414 

Monnett,   F.   S 166 

Page,   Howard    466 

Phillips,   Thomas  W 261 

Prouty,   C.   A 602 

Rice,   George    421 

Rockefeller,  John  D 65 

Rogers,  H.  H 255 

Smith,   G.   Waldo 597 

Spencer,  Samuel  601 

Thurber,  F.  B 593 

Westgate.  T.  B 124 

APPENDIX. 

Affidavits — 

Page. 

Archbold,  John  D xxvii 

Lee,  James  W xxvi 

Loyd,   Henry  Demarest ii 

Lockwood,    M.    L xvii 

Mathews,   Charles   B xi 

Monnett,  F.  S xxiii 

Wholesale  and  retail  prices  of  illuminating  oil xli 


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